total quality in toyota

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


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.


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


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


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


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,


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


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


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


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


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


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


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.


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


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


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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