total quality in toyota
TRANSCRIPT
TOTAL QUALITY IN TOYOTA 1
Total Quality in Toyota
Names:
Khalid Hassan Al Shebnai
Abdulaziz Ahmed Laram
Mohammad Yousuf Al Noimi
Instructor: Mohammed Nishat Faisal
TOTAL QUALITY IN TOYOTA 2
Abstract
Toyota’s TQM is embedded in its famous and widely-researched TPS. It is a
management principle and production system that embraces people and productivity
measures. Toyota also actively applies kaizen company-wide. Quality management
system is also standardized and open to continuous improvement efforts. Finally,
services and quality concepts revolve around customer satisfaction. Toyota is open
to suggestions from internal and external customers, which makes it highly
competitive across diverse markets and labor pools.
TOTAL QUALITY IN TOYOTA 3
Table of contents
I. Introduction 4
II. History of Toyota 4
III. Toyota’s total quality management 5
A. Leadership 6
B. Employee motivation 6
IV. How Toyota maintains quality 7
A. Foundation of the quality 9
B. How quality is important for Toyota 11
V. How do they improve quality in Toyota 12
A. Tools used for quality improvement 12
VI. Toyota’s customer relations 13
A. Services provided for the customers 13
VII. How managers measure the performance of the company 14
VIII. Conclusion 15
IX. References 16
TOTAL QUALITY IN TOYOTA 4
I. Introduction
Today’s global automobile production system is historically molded by the
paradigm shift from mass production to total quality management production system
(Kakuro, 2004, p.3691). Japanese enterprises led the quality management revolution
during the 1950s, when it adopted quality management principles from western
quality management gurus, such as Deming, and when they developed production
systems and principles that have a comprehensive approach in the management of
its people, products, and production facilities (Toyota, 2010). Though Toyota did not
originally develop the fundamental concepts of total quality management (TQM),
such as just-in-time production (JIT) and jidoka (in-station quality), its production
system become widely studied and imitated across the globe (Gonzalez-Molina,
2003, p.1).
TPS is based on kaizen or continuous quality. Kaizen is enforced across the
company, so that every employee is committed to cutting costs and making
incremental forms of improvement in processes and products. This paper explores
Toyota’s total quality management system, which has been famously called as the
Toyota Production System (TPS). It begins with the history of Toyota, and describes
its total quality management system in human resource (HR) management, quality
TOTAL QUALITY IN TOYOTA 5
maintenance, quality improvement, customer relations, and performance
measurement.
II. History of Toyota
Kiichiro Toyoda, founder of Toyota Motor Co., Ltd., is an innovator who
started research on small gasoline-powered engine in 1930. In 1937, he established
the Toyota Company and a year after that, production in Toyota’s Honsha Plant
commenced. In 1951, using its profits, Toyota created a “five-year plan for the
modernization of production facilities” (Udugawa, 1995, p.108). The modernization
plan ensured that Toyota could remain productive, even without the adoption of
foreign technology. In 1955, Toyota produced its first fully fledged national
passenger car, the Crown and a small four-wheel truck, the Toyoace (Udugawa,
1995, p.109). Several more plants opened as demand for Toyota cars increased. In
1959, Toyota reached the production of 100,000 units, the first time that a Japanese
manufacturer reached that number (Udugawa, 1995, p.109). When Toyota decided
to export to the United States (U.S.), it faced several challenges, namely satisfying
the procurement requirements of the U.S. Army Procurement Agency (APA),
automotive problems became evident (i.e. body weight problems and high-speed
instability), and liberalization of foreign imports increased competition, which forced
Toyota to withdraw from the export business temporarily (Udugawa, 1995, pp.109-
110).
To respond to these product problems and competition, Toyota implemented
two programs, Total Quality Control (TQC) and company-wide adoption of kanban
(Udugawa, 1995, p.110). During this time, Taiichi Ohno and his technical peers,
which included Shigeo Shingo, asserted that the Japanese industry could only
effectively compete globally through devising a continuous flow of small-lot
TOTAL QUALITY IN TOYOTA 6
production, where dozens of product copies were used, instead of millions (Towill,
2006, p.20). Instead of following Ford’s manufacturing system of mass production,
they developed a system that was more flexible to changing customer needs. They
also changed equipment and layout to ensure the efficiency and flexibility of
production. By 1961, Total Quality Control (TQC) is adopted throughout company.
In 1965, these quality management efforts were rewarded when the company
received the Deming Prize for widespread efforts in quality improvement.
Production of Toyota products spread globally. In 1988, Toyota Motor
Manufacturing, Kentucky, Inc. started its production. In 1991, Toyota Motor
Manufacturing (U.K.), Ltd. (TMUK) began producing Toyota automobiles. Soon,
even American automobile makers were scrambling to adopt TQM; however, they
adopted one or a few components only, and not many were effective in replicating
the TPS success (Pardi, 2007, p.3). Up to now, with numerous brands that cater to
different market segments (i.e. offering less costly and luxury car lines), Toyota
continues to improve quality management efforts, until it toppled the Big 3 in terms
of cars sold using lean thinking and lean production. Lean thinking pertains to
eradicating all the waste in the system, so that only value-adding activities endure,
which can be attained by realizing what the company seeks to accomplish in terms
of quality and customer services (Amasaka, 2009, p.6).
III. Toyota’s total quality management
A. Leadership
Toyota’s total quality management system is more than a production system;
it is also a management and leadership philosophy (Bodek, 2008, p.40; Liker &
Morgan, 2006, p.9). The management is trained to think of quality in a holistic
manner, which encompasses the hard and soft side of management (Udugawa,
TOTAL QUALITY IN TOYOTA 7
1995, p.111). The hard side of management involves technical capabilities, wherein
innovation, efficiency, and customer satisfaction goals are deeply intertwined, while
the soft side of management concerns motivating employees to work for common
quality management goals (Bodek, 2008, p.40; Liker & Morgan, 2006, p.9).
TQM is central to lean thinking management in Toyota. The JIT system is
embedded in the Toyota Production System (TPS), a manufacturing system that was
made by Toyota Motor Corporation (Amasaka, 2009, p.6). These are the
rudimentary notions of JIT which seeks to obtain “quality and productivity”
instantaneously by effectively applying Total Quality Control (TQC) and Total Quality
Management (TQM) to the automobile manufacturing process (Amasaka, 2009, p.6).
It also goes after maximum efficiency (optimal streamlining, which is called a Lean
System) while also being attentive and responsive to principles of cost reduction,
and hence, improving overall product quality (Amasaka, 2009, p.6).
In the JIT operation stage, managers are expected to constantly respond to
the customers’ needs, stimulate flawless production activities, apply timely QCD
(Quality, Cost and Delivery) research, and implement research results into practice
(Amasaka, 2009, p.6). Toyota also worked closely with suppliers, so that costs are
reduced and inventories are kept at a minimum. Strong supplier relations are critical
to the success of JIT, because suppliers should also have knowledge of current and
future projections for product demand. Through these efforts, Toyota launched TPS
and TQM as the primary management technologies for attaining “reasonable
manufacturing” and these management technologies are frequently compared to the
wheels on an automobile, which must run smoothly together in order to execute
genuine total quality management. Hence, in Toyota, leaders act as quality
TOTAL QUALITY IN TOYOTA 8
managers, who are concerned of details in improving production, as well as in
leading people to be devoted to TQM principles and practices.
B. Employee Motivation
In Toyota, employee motivation is engendered in lean management practices
and performance management system. Managers motivate employees to practice
kaizen or continuous management (Sohal & Samson, 1994, p.434). All employees
are motivated to enhance their place of work by contributing their ideas (Sohal &
Samson, 1994, p.434). Some of the methods used are quality circles and suggestion
schemes, so that communication and innovation would be simultaneously improved
(Sohal & Samson, 1994, p.434). A specific example is that Toyota employees are
asked to make things cheaper by a yen, which is equal to a penny (Bodek, 2008,
p.40). Toyota encourages employees to constantly think about ways of reducing
costs and wastes, because these pennies can be accumulated to millions of dollars.
In fact, Toyota asserted that 20% of its profits come from cost savings (Bodek, 2008,
p.40). This is a simple but powerful motivator for kaizen, because people think about
improvement in their own respective levels. Employees then tend to feel empowered,
because they can contribute to kaizen in their own ways.
Toyota has also integrated employee motivation into its performance
management system. Toyota uses non-financial rewards to motivate employees to
attain their full potential as employees (McPhaul, 2005, p.32). "People want to be
recognized by their peers. They are willing to exchange the financial incentive for
belonging to a circle of people recognized for their excellence," according to Soraya
Soto, president of Casa Grande Interactive Communications that uses a recognition
system to motivate employees (McPhaul, 2005, p.32). In the sales department where
TOTAL QUALITY IN TOYOTA 9
employees used to receive extra money based on the number of cars they sold per
month, they are also presently awarded to be part of the elite category of Toyota
employees system to motivate employees (McPhaul, 2005, p.32).
Rewards also comprise of membership in the so-called "Circle of Excellence,"
which allows members to take a cruise with their spouses in the company of fellow
Circle members, where they relax (McPhaul, 2005, p.32). The employees or the
dealership also employ the Circle of Excellence logos on publicity material. Heriberto
Gines, Toyota human relations director said: “With the monetary incentive, they just
go out and spend the money, but when they are recognized in a special way it gives
them more initiative to be part of something they will always remember” (McPhaul,
2005, p.32). Hence, Toyota is able to motivate employees through its TQM principles
and performance management system.
IV. How Toyota Maintains Quality
A. Foundation Of The Quality
Toyota maintains quality through TQM, which applies lean thinking in
management and production. See Figure 1 for the Toyota Production System
House.
Figure 1: Toyota Production System House
TOTAL QUALITY IN TOYOTA 10
Source: Liker & Morgan (2006, p.7)
Just-in-time (JIT).
JIT is one of the most popular and widely practiced components of TPS. It
refers to making material flow through processes fast enough, by getting the right
part to the right place at the right time (Liker & Morgan, 2006, p.7). Instructions from
the customer, termed kanban, incite the replenishment of materials and parts. This
changes the push production approach to the pull approach, by replenishing stores
and coordinating closely with raw material suppliers (Liker & Morgan, 2006, p.7).
Jidoka.
Jidoka is a less popular and more complicated concept. This pertains to an
intelligent machine that can be stopped any moment, when a worker detects a
deviation and halts production (Liker & Morgan, 2006, p.7). Toyota uses andon, or
TOTAL QUALITY IN TOYOTA 11
lights and sounds to call for help (Liker & Morgan, 2006, p.7). Workers can pull the
andon and as a result; music plays and lights are turned on, which calls the
attention of the team leader (Liker & Morgan, 2006, p.7). The leader rushes, not in
a matter of hours, but mostly in minutes, even seconds, so that he can help the
worker resolve the product or production problem (Liker & Morgan, 2006, p.7). This
practice and system ensures that problems are contained and solutions are attained
at the root of the problem (Liker & Morgan, 2006, p.7). It also supports the essence
of quality management, because improvements are made incrementally and at
bottom-up levels.
Heijunka and standardized processes.
The groundwork of the house indicates providing the stability of JIT systems,
wherein problems are resolved upon recognition (Liker & Morgan, 2006, p.7).
Heijunka refers to the process of leveling (Liker & Morgan, 2006, p.7). The main
objective is to generate a “leveled stream of orders and a level work load” (Liker &
Morgan, 2006, p.7). Leveling creates opportunities to standardize processes.
Stable and standard processes simplify production and allows for economies of
scale in the TPS across the globe (Lander & Liker, 2007, p. 3681).
B. How Quality Is Important For Toyota
Quality is important for Toyota because it allowed the company to adopt from
and innovate on the quality systems Western automakers. The three main strategic
management imperatives that emerged in the late twentieth century are low cost,
high quality, and enhanced responsiveness (both delivery time and flexibility of
product delivery) (Vokurka, Lummus, & Krumwiede, 2007, p.14). Cost efficiency
drove Henry Ford's mass production paradigm, with huge production volumes
TOTAL QUALITY IN TOYOTA 12
providing low per-unit cost (Vokurka et al., 2007, p.14). The studies and ideas of W.
Edwards Deming and Joseph M. Juran in Japan underscored the importance of
quality as the next strategic imperative (Vokurka et al., 2007, p.14). The
marketplace mandated efficiency and low prices, but also stressed the importance
of the quality of products and services in product purchasing decisions (Vokurka et
al., 2007, p.14). As global competition became steeper in the 1970s,
responsiveness turned as the third strategic imperative (Vokurka et al., 2007, p.14).
Buyers became more sophisticated and demanded for additional customization and
shorter product life cycles (Vokurka et al., 2007, p.14). Just-in-time concepts were
used to decrease inventory and cycle times. TPS ensured internal synchronization
and integration of operations and enriched relationships with suppliers, which
improved the competitiveness of Toyota as a global automaker.
V. How Do They Improve Quality In Toyota
A. Tools Used For Quality Improvement
The basic principle of manufacturing via the TPS is lean system production,
which is the primary production tool for quality improvement. In this system,
manufacturing is through a one-by-one (single part) production and its objective is to
accomplish the synchronized realization of quality and productivity (Amasaka, 2009,
p.7). The first principle of lean manufacturing is a thoroughgoing quality control by
means of a one-by-one production. It employs a manufacturing line using an
assembly conveyor and provides the assembly worker the ability to execute a self-
check on each piece (Amasaka, 2009, p.7). If a faulty item comes to their assembly
point from the preceding process, they can then stop the conveyor and distinguish
TOTAL QUALITY IN TOYOTA 13
the defect without fail (Amasaka, 2009, p.7). This practice enables assembly
workers to offer 100% quality products to the downstream processes.
The second basic principle of manufacturing is the exhaustive combination of
quality into the process via a one-by-one production (Amasaka, 2009, p.8). See
Figure 2 for good and bad examples of sequencing. The diagram shows an
operation where a worker takes a piece (work) from the parts box, does the
machining process operation on it from process #01 to #10 in the order shown, and
then puts the completed piece into the completed parts box (Amasaka, 2009, p.8).
Through a production process done in a predetermined cycle time, the worker can
constantly perform the prepared standard operation in a flowing manner (Amasaka,
2009, p.8). It supports a self-check process, where “incorporation of quality” leads to
the “stabilization of production” (Amasaka, 2009, p.8).
Figure 2: Good and bad examples of sequencing
Source: Amasaka (2009, p.9)
The third principle is standardization, wherein Toyota standardizes all
processes. Standardized processes engender safety precautions also.
TOTAL QUALITY IN TOYOTA 14
Standardization, however, does not mean that the processes will be static. Instead,
they are flexible to changes that will improve quality and cut costs.
VI. Toyota’s Customer Relations
Toyota’s notion of quality is based on quality according to the specifications of
customers or kanban. As a result, production and management revolve around
bolstering customer relations, so that continuous TQM is based on strong customer
relationships.
A. Services Provided For the Customers
A case in point is Toyota in Australia. QAD in Toyota Australia have created a
customer profile within the company. Information was collected from “dealer reports
and visits, warranty data, customer surveys, fleet visits and the customer assistance
center and used to help control quality policy, high incidence/high cost problem
resolution, customer satisfaction issues, plant improvement activity, new model
planning issues, plant quality targets and safety issues” (Sohal & Samson, 1994,
p.435).
An important measure of customer feedback on TMCA's products, and a
gauge of the company's domestic competitiveness is the information collected by the
Automotive Research and Marketing Survey (ARMS) (Sohal & Samson, 1994,
p.435). The data are examined by QAD and findings are provided to the suitable
divisions for corrective action (Sohal & Samson, 1994, p.435). Quality monitoring
becomes systematic and customer-centered, which also contributes to
manufacturing competitiveness (Sohal & Samson, 1994, p.435). For this plant, the
satisfaction of export customers is also significant. The present market is still small
TOTAL QUALITY IN TOYOTA 15
but Toyota seeks to exploit emerging export opportunities. Surveys and feedbacks
are regularly collected and used to enhance product competitiveness (Sohal &
Samson, 1994, p.435).
The services then provided to customers are warranties on repairs and
ensuring that their feedback are respected and used to improve TPS. These services
also guarantee the quality of Toyota products. There are also service centers where
there are mechanics that are expert in maintaining Toyota automobiles and fixing
emerging problems. These services enhance the importance of post-purchase
customer services.
VII. How Managers Measure the Performance of the Company
Managers measure performance of the company through financial indicators,
such as profits, revenues and number of automobiles sold. Furthermore, they also
measure performance through the actual contribution of employees to the success
and development of TPS (Liker & Morgan, 2006, p.9). Toyota management is greatly
concerned of the fit between the people and its organizational culture and TPS. The
management monitors performance that leads support kaizen and other cost-
management efforts (Kakuro, 2004, p.3699). These efforts are rewarded both
monetarily and non-monetarily through a combination of bonuses and recognition
rewards. The example provided of elite circle of employees ensures that Toyota
responds to the internal needs of achievement and recognition of employees. There
is a deal of recognition efforts also that reward employees with praise and elite
rewards.
VIII. Conclusion
TOTAL QUALITY IN TOYOTA 16
Toyota’s TQM is represented by its TPS. It is a management principle and
production system that embraces people and productivity measures. Toyota also
leads in management by applying kaizen company-wide. Quality management
system is also standardized and open to continuous improvement efforts. Finally,
services and quality concepts revolve around customer satisfaction. Toyota is open
to suggestions from internal and external customers, which makes it highly
competitive across diverse markets and labor pools.
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