The sole purpose of this report is to give a detailed analysis of the different quality and/or innovation approaches used at Toyota Motor Corporation, and show if the company has been using one approach or if it has changed its approaches from its roots up to recently. The report also gives business results gathered from the analysis and the kind of lessons adopted through researching the company.
1.2 Company information
1.2.1 Company Background: Toyota Motor Corporation (TMC).
According to Toyota Global (2014), Sakichi Toyoda founded TMC in 1926 to become the largest vehicle manufacturer. Toyota Global (2014), notes that the company sells its manufactured vehicles across one hundred and seventy countries worldwide and again it has employed about three hundred thousand people in countries where it has its plants. The success of the corporation’s hybrid technology (for example the Prius and the hybrid Camry) has made it to lead the auto industries. (Toyota Global 2014).
1.2.2 Company Strategy
Takeuchi, (2008) says that TMC’s quality and innovation philosophies are revealed by the terms lean manufacturing, and just in time production, and the Toyota way which it adopted in 2001 where they practice continuous improvement also known as Kaizen. All these management philosophies found in TMC’S production system and management has advanced from the corporation’s backgrounds. (Takeuchi, 2008).
1.2.3 Diversity
Magoshi and Chang, (2009) points out that TMC’s employees vary in culture, ages, sex, race and beliefs and under its heading Respect for people; the employees are expected to realise and accept their differences and be tolerant towards one another. Magoshi and Chang, (2009) explain that diversity gives the company an advantage because it is a multinational corporation which is why TMC is proud of this dynamic mix.
1.2.4 Consumer-customer base
Ward, Liker, Cristiano and Sobek II, (2012) say that TMC supports its employees’ and customer’s lives worldwide by providing them with a variety of products and services in standard of living, plantation improvement, engineering resources, insurance and locomotive equipment.
1.3 Assumptions
This report is a result of several assumptions that are backed up by the facts that are defined in the report. The report assumes that Toyota uses different approaches to quality and innovation and assumes that the approaches are used in a way that gains Toyota a high quality rank amongst its competitors.
1.4 Methodology
To gather information on the report, the Toyota website together with academic journals was used. The website was mainly used on the approaches Toyota has adopted and implemented over the years while the academic journals were used to give balanced information on these approaches.
1.5 Plan of report
The report first of all gives an introduction for the reader to understand the topic at hand, followed by identification and analysis of some of the approaches to quality/innovation that are used at TMC, then a brief discussion on how Toyota has used different approaches since 1949. This is followed by the business results and the lessons learnt from the information provided by the report and lastly a conclusion of the report.
2.0 TMC’s approaches to quality and innovation
Monden, (2011) reviews that Edward Deming who was an American specialist came up with evolutionary approaches to quality assurance and so did many quality specialists. To guarantee quality of products, they made innovative changes to customary quality control methods which during the 1940s Japanese manufacturers grasped and re-developed these basic approaches to quality. (Monden, 2011).
Ichijo and Kohlbacher, (2007) state that the Toyota Company uses the ‘Toyota Way 2001’ as a quality management approach; this is a declaration that entails the values and business methods all employees should embrace. The Toyota way was built on two main philosophies which are ‘kaizen’ also known as continuous improvement and ‘respect for people’. Toyota believes that no method is perfect but that there is always room for improvement (Toyota global, 2014).
According to Amasaka, (2007) TMC over the years has adopted approaches to quality control and quality assurance which are exclusive to it and developed them to an extent where it has a reputation of producing very high quality vehicles all over the world, for example the Toyota Corolla which started from 1966 and still continues today, with the new Toyota Corolla, 2014.
Amasaka, (2007) goes on to say that TMC has a goal to produce goods and services which surpass customer satisfaction by making quality control an integral part of the company’s accomplishments. Amasaka, (2007) also explains that in order for Toyota to surpass customer satisfaction, the company includes all its members in quality control and quality assurance activities and all its employees are guided by what they call ‘Companywide quality control’ which puts customers and consumers of TMC’s products and services at the soul of the company’s accomplishments. Unlike how everyone perceives quality assurance, for example inspecting a vehicle part after manufacturing it, at TMC quality is inspected at every stage of production and quality is continually improved which is why they adopted the Kaizen way of doing things. (Toyota global, 2014).
2.1 Kaizen
Al Smadi, (2009) defines Kaizen as a Japanese management way of improving quality in an organisation; the philosophy was introduced by Maasaki Imai. The philosophy embraces that everything should be improved continuously business and corporate level because no process can ever be perfect, there should always be an opportunity for improvement and every employee is responsible for the improvement in their sector. (Al Smadi, 2009). Kato and Smalley, (2010) argues that continuous improvement has helped TMC to be declared an innovative company and has at the same time made TMC one of the highest quality vehicles producing company amongst its competitors such as General Motors (GM), Volkswagen (VW) and Ford.
Al Smadi, (2009) also highlight that at TMC, since the subordinates rather than the management are always available in the production of a vehicle, they are empowered with making small but sound changes to the material being manufactured because sometimes the management has no idea of what is going on the production line but the employees work with the actual material therefore they know better. The management’s work in this approach is to evaluate and implement the ideas brought about by the worker. (Kato and Smalley, 2010). For example a worker in the production of the Toyota Land Cruiser, might realize that for the vehicle to work properly they need to increase the horse power or use a different company for that such as Advanced Metallurgical Group (AMG), he/she has to run the idea through management because Kaizen does not mean doing what the worker wants. If the manager approves the change which he/she has evaluated and see it will benefit the company then they can make the good change to the Land Cruiser. (Kato and Smalley, 2010).
2.2 Quality circles
These are volunteer groups of workers that do similar tasks that come together to discuss problems they face and try to come up with ways to solve them. (Toyota, 2014). This approach yields great results and issues are solved and improvements are implemented. For instance through these circles employees come up with ideas they pitch to their managers (Toyota, 2014)
2.3 Total quality management
To TMC this is a concept whereby everyone is accountable for the quality of a product, for instance, when raw materials are received, those involved in the handling of it are responsible for its quality, till it gets to be processed up to being sold and the sales person is also responsible for delivering the quality to a client. TQM involves training all employees.
2.3 Just In Time (JIT)
Just in Time is a stock control method which is used to purchase stock when it is needed; this improves quality in that the raw materials used are of good quality and haven’t been damaged in storage. It also allows the organization to save money on storage and security cost. Toyota uses it to produce quality products efficiently through the complete removal of waste, irregularities, and unreasonable requirements on the production line (Toyota, Toyota production system, 2014)
2.4 Lean manufacturing
Lean manufacturing is a set of ways used to reduce waste in production (Dennis, 2007). Waste is all the activities that do not add value to a product. It is a philosophy that shortens the lead time between orders from a customer to till the order is ready (Alukai, G. & Manos, A., 2006). It identifies seven different kinds of waste, these are; over producing, waiting, transportation, over processing, waste of inventory held, waste of movement, waste of making defective products (Alukai, G. & Manos, A., 2006). Waste no production has direct impact on cost, quality and delivery (Alukai, G. & Manos, A., 2006).This process of Lean manufacturing is important to Toyota in that it helps them to compete in the global community, helps relieve the customer pressure on the reduction of prices and it also allows them to cope with fast changing economies (Alukai, G. & Manos, A., 2006)
3.0 How well are the approaches used?
In 2011 they announced the introduction of Toyota New Global Architecture (TNGA) under the Kaizen approach (Toyota, 2014). The TNGA revolutionized the car development framework which involves the testing of their cars at testing sites that has different climates. The TNGA purpose was to make cars that can respond to different climatic conditions, be it extreme cold or extreme heat in order to see if their engines will survive in the different parts of the world (Toyota, 2014). This is evidence of how well Toyota is improving its product quality. Through quality circles, Toyota came up with the idea of automatic crash notification (Toyota, 2014). This system notifies emergency services whenever a Toyota car crashes; this is quality improvement as they have improved the safety of their cars.
3.1 Case study: Toyota Manufacturing (UK)
Pardi, (2007) identifies that at Toyota Manufacturing UK every member is involved in the production system to guarantee that only the best work is passed to the subsequent process. Benchmarking, were they compare the work in progress is used together with visual work to control quality and this is advantageous to the company because the assemblers can spot problems and deviations as they occur, this approach to quality is more like a Feedforwad control. (Pardi, 2007). For example in manufacturing the Toyota Camry, every experienced worker is in the production room, with each worker working on a different part of the car, and once he/she finishes the quality inspectors visually look at the part to spot unusual conditions or they compare it to the standard set. (Pardi, 2007). The use of ‘pokayoke’ was introduced to TMC, UK, to spot inaccuracies. ‘Pokayoke’ is a device put in many products at TMC, which robotically stops the production of any vehicle if an inaccuracy is detected. (Amasaka, 2007).
For example, if the Toyota Corolla works with six nuts and they need to be tightened in order for it to function properly, the device counts the nuts and see if they are tightened and if not, it automatically stops the production line of the Corolla. For it to detect this, a tune specifically for the nuts plays, and then the Maintenance crew detects which part of the vehicle requires responsiveness. . (Amasaka, 2007).
4.0 Did the approaches used change over time ‘ or was there a single approach employed consistently?
Toyota Global, (2014) states that Toyota Motor Corporation has over the years used and adopted various approaches to quality and innovation under Kaizen/continuous improvement. In 1949 the Total Quality Management team introduced the statistical quality control technique (SQC), in which they used quality control charts for engine defects. (Toyota Global, 2014). If a defect is identified, countermeasures will be used. In about ten years the company adopted the Total Quality Control technique (TQC), this technique saw the company improving the quality of vehicle models like the Corona PT20, Corona RT40 and the Crown RS40 which its latest passenger cars at that time. (Toyota Global, 2014). The difference in these two techniques was that the TQC did not use control charts but instead used a quality control division which helped in building quality in the production process. (Toyota Global, 2014). Before adopting the Toyota way in 2001, TMC introduced the Zero defect campaign and they won the TQM award in the following year. (Toyota Global, 2014). The ‘Toyota Way’ was introduced in 2001 under two headings, continuous improvement and respect for people and since then they have been using these two heading to achieve total quality. (Toyota Global, 2014).
4.1 Can the approach be characterised as planned and carefully staged, or was it ad hoc and haphazard?
The approaches used at Toyota differ in their characters because the company did not use one approach to quality or innovation, some of them are planned and some of them are ad hoc. For example, they added the concept of automation (Chen, Kao, & Wang), and this is the use of automated production lines with a human touch involved which was a planned change as they had to implement the change over many different plants and also there was consideration on the impact of automation in regards to human resources.
5.0 What were the business results in the case?
What were the business results in the case?
The Toyota Production System fulfills customer demand efficiently and promptly by linking all production activity to real marketplace demand. Just-in-time production relies on finely tuned processes in the assembly sequence using only the quantities of items required, only when they are needed (Toyota, 2014). This minimised inventory costs because the car components were delivered to their point of use only when they were needed.
The TPS leaves no space for compromise in relation to quality. The TPS belief of Jidoka builds quality checks into each step of the production process (Toyota, 2014). Jidoka ensured that all of Toyota’s processes were visible and thus helps ensure that abnormalities are easily visible and can be addressed immediately. Jidoka helps identify and address product abnormalities before the product leaves the production floor. As a result Toyota products recalls were less frequent for malfunctions and defects than rival car companies.
Toyota Motor Corporation’s use of the Kaizen Philosophy through employee empowerment showed that empowering non-managerial employees can lead to greater efficiency and will not result in workplace chaos (Greg, 2009). Due to Kaizen, individual employees will know more about their particular segment of the production process above everything else. Consequently, workers in a process have greater knowledge and expertise to deal with any problems that can arise during the production process. When encountered with a problem management can provide the leadership and empower employees to solve production problems using the workers expertise. Thus, helping the firm achieve greater efficiency
6.0 What were the key lessons to be learnt from this case?
From the case study of Toyota it is evident that quality can be continuously improved and innovation takes place at every stage of the production stage. Toyota improves its quality through involvement of employees in gathering innovative because:
There is no substitute for direct observation. Improvement of production processes is unattainable without direct observations of how those processes. Studying how business processes are being executed is the only way to discover process improvement possibilities.
Proposed changes should always be structured as experiments. If a firm desires to improve business processes it should invest in workforce training, new technology and then implement. Whichever option proves the most effective relative to money and time spent is the option that the firm should implement.
Workers and managers should experiment as frequently as possible. TPS advocates the standardisation of a business or production process and once it is standardized it emphasizes constant improvement. If the approach is used in business process improvement you can get significantly better results. This underlying principle can make a lot of difference than specific tactics and tools that are used without prior experimentation.
Mangers should coach, not fix. This is especially true in manufacturing and as such the Toyota Production System. Many process improvement activities are organized and conducted by management rather the employees who put in the work. Through management’s coaching of employees it helps ensure that the non-managerial employees buy-in to the objectives of the company.