Process Improvement

Project: Toyota

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PROCESS IMPROVEMENT FOR TOYOTA: THE

NEED FOR TOTAL QUALITY MANAGEMENT

TABLE OF CONTENTS
Introduction...........................................................................................2
Current Project Management of Toyota............................................2
Supply chain of components...........................................................3
Total Quality Management by Toyota................................................4
Requirement Of The Process Improvement..................................5
Objectives of the Process Improvement........................................5
Implementation of TQM Process Improvement...............................6
Jidoka...................................................................................................6
Just In time.........................................................................................7
Kanban................................................................................................7
Kaizen..................................................................................................7
Smart Tool For Analysis.......................................................................8
Conclusion..............................................................................................9
References...........................................................................................10

PROCESS IMPROVEMENT FOR TOYOTA: THE NEED FOR

TOTAL QUALITY MANAGEMENT
INTRODUCTION
Founded in 1937 by Kichiro Toyoda Toyota Motor Corporation is
headquartered in Aichi, Japan. Until early 2013 Toyota has more than
333,400 employees globally. The net revenues for the past year were
declared as $216 Billion, net income of $9.47 Billion and operating income
of $13 Billion (Toyota Annual Report, 2012). The product line for Toyota
includes Hybrid electric vehicles; plug in hybrids, all-electric vehicles,
hydrogen fuel cells, SUVs, pickup trucks and Toyota Racing Development
(TRD). In addition it also operates non-automotive actions including
aerospace, philanthropy, robotics and agricultural technology (Morgan et
al., 2006). In the UK the manufacturing plant is located at Deeside, North
Wales where only engines for hybrid cars are manufactured through
processing of aluminium casting, assembly and machining. The report
discusses the project management strategies which Toyota can develop
for its further progress.

CURRENT PROJECT MANAGEMENT

OF

TOYOTA

Japanese based manufacturing companies are on the road to success

among the international markets and thus capturing the overseas
production systems. The accomplishments of their enterprises have
increased the interests of organisations towards Japanese firms. The non
Japanese organisations are adopting the business and organisational
behaviour of Japanese ethics especially in the automobile industry (Bing,
2000). Hence the pace of spreading this eagerness among companies is
getting faster day by day for international production. The strategic
management of Japanese companies includes three main ingredients
including total quality management, human resources management and
lean system management. These three main components are interrelated
for giving out a successful organisational strategy. Similar is the case with
Toyota Motor Corporation which is considered to be the chief player in
global automobile market. The managerial system is considered to be on
top due to large profit earnings and principles which are followed for
achieving organisational strategies including Toyota Way. These
principles are categorised into four main groups including problem solving,
process, philosophy and partners or people which encompasses the short
term as well as long term management system. They cover the human
innovation and motivational strategies for lean production system, one
piece flow, just in time and jidoka (Langfield, 1998).

SUPPLY CHAIN OF COMPONENTS

Globally the automobile industry has a foundation upon the components
required for car manufacturing hence forming a pyramid. However there is
a difference between the supply chain pyramid in European market and
Japanese market (Pauwels et al., 2004). This is due to the occurrence of
Industrial Revolution as in Europe it took place in late eighteenth century
after the establishment of applied and auto industries whereas in Japan it
took place during the 1930s with the development of industrialisation.
Hence Toyota also was forced to build up the component industries with
its suppliers. Currently there are two main component suppliers for Toyota
including Nippon Denso Company Limited and Aisin Seiki Company
Limited which holds an utmost importance for Toyota. Following is the
summary for Toyota for the key suppliers (Christopher, 2012):
Feature
Quantity of suppliers
Quantity of components
Monthly purchasable
Purchased components worth
Distribution of suppliers
(Overseas)
Distribution of Suppliers
(National)

Description
200
Over 2 billion units
150,000 kinds
Over $ 250 Million per month
UK, USA, France, Canada, Sweden
Tokyo district, Toyota district and Osaka
district

Toyota follows a strict principle for purchasing the components from

suppliers which includes that it does not acknowledge offers from lowpriced components until the original price is confirmed and whether that
cost is based upon the actual cost. If the situation is contradictory the
initial low price does not last long enough as low concentration is given to
the maintenance of the quality (Womack et al., 2007). The suppliers
management should be appropriate enough for recovering the quality and
upholding the low cost of the products. Hence the overall scenario
requires superiority of the products. Additionally the company always
search for better and strong managerial systems of the suppliers through
which all the components are acquired. It also asks the suppliers for
enviable long transactions. Consequently Toyota upholds long term
business interrelationships which ask for trust from the suppliers and does
not give value for transactions which are for limited time and unattractive.
This principle followed by Toyota is known to be Toyota Monroe Doctrine in
which such transactions are looked forward which gives mutual

advantages along with excellent managerial and technological aspects.

With foreign suppliers it deals indirectly as compared to the national
suppliers (Spear, 1999).
Toyota is strict while dealing with suppliers and follows the rule regarding
basic control of component transaction while following long term stable
transaction. On these grounds it tends to create lifelong prosperity among
the parties for facilitating quality assurance for the customers. While a
deal is being finalised the management of company specifies the rules
and regulations for quality controlling for every component manufacturer.
These rules also include the removal of bad quality or defective products
from the stock while validating the incoming products (Liker, 2004). For
fulfilling these purposes numerous means are made available for
supporting the suppliers for recovering their management including
Guidance of Toyota production system, Toyota quality control reward and
mutual development by suppliers organisation. All these forms of rewards
are based upon strengthening the managerial control of the suppliers
through reconsidering the shortcomings of their plants and listing down
the key points through which managerial and administrative issues can be
resolved and improved. Hence the suppliers can decide upon that which
kind of reward they can adopt however they are firstly advised to take
upon Superiority Reward for pacing towards excellence in management
system (Liker and Hoseus, 2007).

TOTAL QUALITY MANAGEMENT

BY

TOYOTA

Good quality products are said to have ground-breaking capabilities which

make them differ from the other products in the market (Holweg, 2007).
Quality management is a methodology through which firms firstly
understand the needs of the customers and deliver them with the
products that fulfil their requirements while keeping the details of
elements of quality. This in return gives an evaluation about the
organisational performance and services. It also creates a stable worth in
the eyes of stakeholders for sustaining the operations of the firm. The
efficient quality management system makes certain that such products
are delivered which not only just satisfy but exceed the needs of the
customers. The end result would be customer loyalty for the organisation
and it will be at the forefront from its competitors.
For Toyota there are three main aspects for quality control including
customers, managerial team concerned for the progress of policies
followed by the company and pioneering methodology adapted by the
company for introducing innovative products in the market with slightest
impact on the environment (Monden, 1993).

Toyota wholly stress upon the customers as their first priority. If this was
not done by the company the operations would have been ceased due to
unsustainable market value. Hence customer satisfaction, their
requirements and feedbacks holds upmost importance which can evaluate
the level of quality control and assurance. For fulfilling these aspects the
company invests in research and development for ensuring that all
vehicles meet the customers needs. Each set of products target specific
types of customers. For instance hybrid models are for the people who are
mindful about the environment and are ready to pay more for this
purpose. In addition Gas Guzzling models including Toyota Land Cruiser
are for the customers who are ready to spend more for accomplishing fuel
needs and economy class models including Toyota Vits and Yaris for
people who are concerned about the fuel consumptions (Monden, 2011).
Toyota provides its employees including the management team with
incentives as employees are the one who makes the operations
triumphant through their skills and acquaintance regarding customers.
The company endow them with proper training sessions for the purpose of
acquiring customer satisfaction. However every employee is held
accountable for maintaining the quality control process of Toyota.
Innovation is also a priority for Toyota which is achieved through research
and development projects. The product life cycle is analysed prior to the
launch of new products and models. It also involves establishing new
technology in the market into the models and phasing out the older
models (Holweg, 2007).
REQUIREMENT OF THE PROCESS IMPROVEMENT
During the staring months of 2010 the company faced a serious problem
regarding the cars and over 6 million cars were summoned up again at the
manufacturing plants. The issue was due to the gas pedals and was
considered as a quality failure by the company. The analysts examined the
whole scenario and recalled the management of the company for adopting
new and pioneering strategies which can in return regain the market value
and increase the revenue generation. Hence this required the
improvement in employee involvement in accomplishing operations and
association with suppliers (Ward et al., 2012).
OBJECTIVES OF THE PROCESS IMPROVEMENT
The major focus was upon the development of such schemes which are
customer driven and attention-grabbing for the employees. For such
schemes to be implemented the management highlighted the following
aspects including importance upon the quality of end product, continually
reviewing the customer requirements, investigation of organisational
performance level, surveys which depicted customer satisfaction level and
strengthening manufacturing processes. Following procedure for Quality

Management Process (QMP) was followed for accomplishing the tasks

(Dyer, 2002):
Defining scope
and purpose of
QMP

Producing
references for
QMP
(implementation
manual)

Quality Control

Evaluation by
management
team

IMPLEMENTATION

Analysis of
quality
objectives

Quality
Assurance

Application of
QMP activities
and methods

Implementation
review and
audit

QMP activity
status

OF

Observance of
QM standards

TQM P ROCESS IMPROVEMENT

The basic aim for Toyota is to provide people with products that are
trouble free and are exactly designed with respect to specifications and
feedback given by the customers. Reduction in manufacturing costs helps
the company to play an important role to compete in the hard-line market
for increasing market share. The quality improvement for the products can
be achieved through the following procedure (Serge, 2007): 1) Improving
quality; 2) Reducing costs; 3) Developing productivity; 4) Reducing prices;
4) Enhancing market; 5) Staying in business; 6) Offering job opportunities;
7) Return on investment
Hence the bottom line for the follow up of the path is to augment the
market share through the reduction in costs. Moreover the ROE can be
amplified if people are provided with opportunities for employment.
The project was aimed for gaining profit through cost reduction principles.
The sales price of the product is concluded through market and customer.
As the consumers demand annual cost reductions and for meeting such
requirements waste is continuously eliminated.
JIDOKA

Jidoka refers to the aptitude of machinery and humans for detecting

anomalous and abnormal conditions in the products, materials and even
methods which are followed for accomplishment of tasks. This is done for
preventing future abnormalities or malfunction in the system. Toyota uses
this In-station process controlling methodology for structuring quality
through the prevention of mass production of substandard products.
Additionally the main objective also includes the prevention of damage to
equipments and tools due to an abnormal condition and separating
machine work from human work. For achieving these aims Toyota
reorganised its structure which can lend a hand in promoting the
supportive systems and tools which can handle the abnormal conditions
(Baudin, 2007).
For ensuring the maintenance of quality among all products Toyota
structured an inspector who used conventional methods for inspecting
and examining the finished parts. The defective parts were sent to the
manufacturing plant for repairing purposes through finding out the root
cause (Won et al., 2001). Hence the corrections were made stronger when
determination was increased. However the process yielded no added
value adding to the fact that Toyota focused upon manufacturing products
which engage less inspectors. In addition if the root cause was not
investigated thoroughly the imperfection would carry on for developing
problems. Hence implementing the ethics related to standardisation work
was implemented. With respect to these rules every employee at each
process observed the principles which resulted in lower repair- required
products and the level of repair was reduced. In return this also helped in
reducing the manpower and labour costs increasing the value added
services for inspection work. The machine intensive production areas were
also improved though introducing technological sensors among the
detection systems.
Standardisation work chart was implemented in which human movements
were centred and merged the aspects of job with effectual work sequence
irrespective of waste. It also fulfils the purpose for visual control tool for
the managerial team for determining the problems in the working
environment. Hence the documentation is a vital tool for constant
improvement and hence doles management out with an operative
environment (Chung, 2012).
JUST IN TIME
The strategy focuses upon the delivery of products within the specified
time through the utilisation of minimum resources. Suitable quantity of
products were produced and delivered within an instant effect once the
order is received. Hence Toyota utilised the concepts of work in progress

or WIP and elimination of all inventory for manufacturing and increasing

efficacy in each part of the system. The usability of stock build up was
removed as excess amounts of stock could mean the problems in
production systems which are hidden and sided over through which
working site is negatively affected. WIP helps to perfecting the processing
of inventories with increased operational rate. Pull system was also
implemented in the production system for keeping an eye on production
schedule. The over and under production of parts were limited through
using this methodology as mandatory quantity of parts, materials and
equipments were produced in the producing units. This further facilitated
the balancing of upstream and downstream processes for reimbursing the
indiscretion of products (Schweitzer, 2012).
KANBAN
Kanban refers to the visual signal given or received which encapsulates
the instructions for producing products or pulls out to develop a product.
Hence it includes withdrawal Kanban and signal Kanban. Toyota employed
the pull system through proper Kanban technique for allowing the flow of
manufactured products. The production was perceived when the customer
intimates Kanban for replacement of purchased product. Hence the
customer order was then transferred to higher authorities for the final
assembly through correspondence of needed components. The needs
were fulfilled through the line side market area and the moulding
operations then refilled the items that were depleted from the market.
Hence the Kanban card is highly a usable tool used by Toyota for calling
up the components when they were necessitated which lead to the fact
that lowest stock of components were withheld into the assembly area
(Amasaka, 2002).
KAIZEN
Kaizen includes the concept of involving all employees to look for
enhancing the operations. This is a vital aspect for process improvement
followed by Toyota for attaining the positive attitude towards
manufacturing and goals for improvement. The team members were given
time to ponder upon the processes rather than hastily decisions for
creating success of the process along with the quality of items to be
delivered. It does not involve managerial teams but all employees relying
on their knowledge, experience and abilities. These teams forwarded a
proposal upon which improvements are made at an organisational level.
The concept of 5 whys was applied for accomplishing this task which
includes the testing of every improvement in the form of why.
Consequently this approach decreased the risk for developing changes
without sufficient justification. For the further facilitation of process
improvement the through employees the concept of 5S was used which

included Sifting (Seiri), Sorting (Seiton), Sweeping and cleaning (Seiso),

spic and span (Seiketsu) and sustain (Shitsuke). These rules made certain
that each member was eagerly participating for effectual results (Shimizu,
2000).

SMART TOOL FOR ANALYSIS

SMART framework refers to Specific Measurable Attainable Relevant
Timely steps for any project management. It includes all the indicators for
key performance including targeted objectives, quantifying the success
through using tools, setting up achievable goals, setting out the goals with
respect to available resources and acquiring the targets within time
(Hartman, 2002). Toyota needed to apply the SMART outline for
establishing fast and rapid production among the manufacturing plant
within the environs of UK. This gave rise to project scope which made
available the necessary data for initiating project. The time, cost and full
data related to project planning can be obtained through following the
footsteps of project management triangle represented as follows (Jaafari,
1998):

Cost

Quality

Time

Scope

The three constraints of time, scope and cost are necessary for success of
any project while maintaining the quality. Time indicates the amount of
time available for the completion of project within a budgeted amount and
covering the capacity and scope of the project. Toyota followed the
procedure of Project Management Body of Knowledge or PMBOK in which
every activity is measured with its definition, sequencing, resourcing, and
developing and schedule management (Ika, 2004). For cost there are
numerous features that need consideration including risk management,
cost escalation and cost contingency by using tools including cost of
quality analysis, reserve analysis, bottom up estimating and resource cost

rates. The methodologies for cash flows were used including Internal Rate
of Return and Net Present Value which determined the primary needed
investment and expected return and scope on the project (Atkinson,
1999).

CONCLUSION
Toyota is the leading car manufacturer in the world with high financial
position. It has a brand image of being environmental friendly along with
customised range of products. However it needs to improve its production
capacity for increasing the strategic position and benchmark.
Implementation of process improvement techniques required the support
of tools, systems and unswerving effort from the managerial team of
Toyota. For achieving the goals in high global competency of automobile
industry and provide precise needs of the customers it was necessary to
establish strong grounds for total quality management. Hence this
required the participation of all employees and experts in order to pursue
with Toyota production system. Production at each level was required
which was only possible when employees were given motivation,
attractive wages, employment security and bonuses. Interests of investors
were also developed through high return on investment and security for
long term relationship whereas customers were attained through
providing quality products along with lower costs. The process related to
the manufacturing of fault free components was improved by the
company through the utilisation of TQM techniques. The operational
competence was enhanced in the current political and economic
instability. No doubt the car plants require huge investments but there
was a need for following appropriate project planning techniques for
increasing organisational competency.

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