Toyota recognized at a very early stage that the quality costs were a decisive factor. That is why the production process was re-engineered to give priority to quality. In the next step, Toyota developed its vehicles in such a way that as many production stations as possible could be used for a number of model series, reducing lead-in costs and equipment investments and increasing the utilization of assembly line capacity while in turn cutting down inventories. The benefits of the continuous improvement process (CIP) have far-reaching consequences, and the learning curve always applies simultaneously to a number of models. Toyota’s production system is a recognized benchmark in the production industry.

 VW has strong, independent brands in the corporation, including VW, Audi, Seat, and Skoda. Quality costs played less of a role here than the achievement of effects of scale throughout the corporation, accelerated by the shift to the supplier pyramid. Complexity was reduced by utilizing common parts throughout the corporation, a process which was encouraged from the top down. This favors the issue of tender invitations for vehicle projects to various plants in the corporation, which must re-engineer their production processes and adapt them further as a consequence of the use of the common  parts (concurrent engineering). 

Ford’s production system is relatively demanding on capital and depends heavily on benchmarking. Quality costs are systematically reduced by DFSS (Design for Six Sigma) and machinery use as well as the extensive application of Six Sigma procedures, an approach which requires and promotes the use of common parts across generational boundaries. The capital intensity of the production in combination with benchmarking and constant internal tenders for vehicles and modules increases pressure in the direction of standardization.

Understanding of the cost-effect chain is essential

Standardization is generally viewed as a promising measure for cost reductions. The classic view: standardization of products and processes makes benchmarking possible; the results can be used as a basis for re-engineering processes. Everything that is not counted as one of the core competences is outsourced (outsourcing/off-shoring).

Once products and production processes have been standardized, the next step is the standardization and the resultant shortening of product lead-in times. Multi-product launches become possible for the first time because complexity and risks have been reduced beforehand. The art of multiple product production is the ability to produce flexibly, i.e., to produce a number of products on a single line. These two points – multi-product lead-ins and multiple product production – are often the topics which enable realization of the envisioned savings.

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