Quality Management Issues in Toyota - Coursework Example

? Quality Management Issues in Toyota of the Quality Management Quality management is measured and defined in empirical studies as the practice of organizations to implement different principles such as continuous product improvement, customer focus as well as teamwork for developing the quality of goods and services (Prajogo & McDermott, 2005). Quality management is a recent phenomenon that came into existence only a few decades back (Sousa &Voss, 2002). The notion of quality management has strong associations with a number of business sectors. The specific definition of quality management however does not aim in assuring ‘good quality’; rather attempts to ensure that the products and services offered by a company remain consistent. Generally, the term quality management embraces four main components namely quality assurance, quality planning, quality improvement and quality control (Prajogo & Sohal, 2006). Hence, it is evident that quality management does not focus solely on the quality of products and services offered by a firm but also takes into account the ways by which a company can achieve it. In order to ensure the company achieves quality, control of processes and quality assurance techniques are put into practice. As a result of the number of opportunities provided by quality management, companies around the world have implemented quality management programs into their system of operation (Kaynak, 2003). This study will shed light on the quality management issues faced by a company and along with that it will also try to identify the principal causes of the issues. Once the root cause of the issue is identified, the report will recommend techniques by which the firm can overcome those problems. The company chosen in this context is Toyota and, for better understanding of the report, the study will present a brief overview of the company. Toyota: An Overview Toyota is regarded as one of the largest automobile manufacturing companies in the world. Toyota also ranks among the global fortune 500 companies and is one of the leading corporation of the world in terms of revenue and profit margins. The history of Toyota can be traced back to the early 19th century. The company was founded in the year 1937 by Kiichiro Toyoda. It is currently headquartered at Toyota, Aichi, Japan. The company is involved in the manufacturing and marketing of automobile products. The company creased its first engine and named it as Type - A engine during the year 1936. The first passenger car launched by the company was Toyota AA. The company operates in almost every part of the world and is therefore regarded as one of the global companies. Although headquartered in Japan, the company believes in decentralized decision making and as a result of that the company operates independently in every part of the world. As of financial year end 2013, the total revenue of the company was ?22.064 trillion and the profit margins were ?962.1 billion. The company employs 333,498 people across the globe (Yahoo Finance, 2013). The above financial results clearly highlight the strong financial situation of the company. The company has 522 subsidiary companies. It has two divisions, namely Lexus and Scion, and both the companies operate under the Toyota Group. Some of the best selling products are automobiles, engines, commercial vehicles and motorcycles. Apart from the manufacturing of automobile parts, the company is also involved in financing, banking and leasing. Despite the numbers of positive factors, the company has faced several issues related to the quality of the products and services offered by the company (Yahoo Finance, 2013). Problem Poor quality management can act as a major constraint for a project. Due to poor quality of management the overall quality of the outcome degrades and results in a negative consequence. This not only harms the reputation of the company in the market place, but alongside the customers also shifts to other sellers. Therefore from this fact it is evident that poor quality management results into a number of negative factors that has direct impact on the overall progression of a company. In the recent past, a number of companies are facing with the issue of quality management and surveys reveal that core cause for the same is absence of proper management and technology (Dhillon, 2002). In addition, some scholars and industry experts believe that the lack of knowledge and absence of proper strategy is the biggest reason. Even companies such as Toyota also have to deal with these issues. In this section of the study, the major problem of Toyota pertaining to the management of quality will be identified and along with that the study will state some of the ways by which they can get rid of the same. There was a time when the name ‘Toyota” was synonymous with quality. This is principally because Toyota has perfected and originated the philosophy of management known as the Total Quality Management (TQM). The situation was even that managers and executives from different parts of the world and different industries used to visit Toyota’s offices and factories in order to understand how the company has been consistently offering quality products and how it has been achieving success continuously. According to an article published by the Harvard Business Review, the production system of Toyota is the reason for their colossal success. Even the university chapters and several text books highlights about the quality management techniques implemented by the company and referred it as the “Toyota way”. Despite strong market situation and effective production system, the company witnessed a drastic fall and as a result of that lost its reputation of being a ‘quality company’ (Harvard Business Review, 2007). It was in the year 2009, when the biggest quality outbreak of Toyota came into limelight. The company recalled a number of vehicles from the United States. It recalled a whopping 3.8 million vehicles in the United States (Cole, 2011). The problem cited by the company was incorrect or poorly placed floor mats below the seat of the driver. The company also mentioned in their recall notice that for this incorrect mat placement, uncontrolled acceleration can be experienced. The recall initiative was further triggered by the reports of fiery crash in California. In this case the accelerator of a Lexus model got wedged and resulting in the death of the driver. This case resulted in loss of reputation of the company. From the perspective of the car buyers Toyota is not a mere car manufacturing company, but represents sheer class. Similarly, for manufacturing executives and fitters of other companies, who have struggled for decades for the sole purpose of emulating the Quality of Toyota, discovering about the quality issues of Toyota was an upsetting fact for them. This made the manufacturing executives think that they are actually running behind a manufacturing model that consists of serious quality errors (White, 2010). Despite Toyota’s reputation of manufacturing low-defect, reliable and durable cars, the perception of people about the quality of the car were greatly influenced by the reports of media and other publishing houses. However, it is also evident that the quality of products manufactured by the company has definitely fallen in the last few years. To add to this downfall, the competitors of Toyota such as Hyundai, Chevrolet, Ford and Volkswagen have been producing better quality products than Toyota. Now the key is question is: what is the root cause for the problems being faced by the company? On researching various articles and papers, it has been identified that the principal cause was associated with the manufacturing system and quality management. Hence, the question which will be analyzed in the following section is: To what level the company originated with the assembly and design of the products and to what level the company could be pegged to its manufacturing system? Several studies have revealed that although the root cause of the problem is associated with manufacturing but in addition to that other factors also played critical roles in increasing the intensity of the problem. For example, the lack of leadership from the senior management is also a cause of concern and along with that dysfunctional organization structure and flaws in the product development system are affecting the overall quality of the product. Figure 1 – Factors Responsible for Poor Quality (Source: Mojonnier, 2012) Nevertheless, the major flaw was identified in the production system of Toyota. The company followed its own style of production and deemed it as Toyota Production System (TPS). During the period of 1985 to 2008, the production output of the company nearly doubled. The sales figures also witnessed a dramatic growth. Although, growth was witnessed but since then, the company failed to impart the required features into their manufactured products. TPS was the production that was meant for producing products according to the requirements of the customers, but unfortunately the company failed to provide the required features in the car. Moreover, it has been also identified that the company is using common parts or raw materials as well as the designs across a number of product lines. In addition, the company is also reducing the number of suppliers so as to obtain raw materials in greater scale. This can be a boomerang for the company if quality control issues take place. Hence, from the overall findings and discussion it can be stated that the company is facing multiple problems pertaining to defects in manufacturing and also inability in managing the quality due to the absence of any quality control measures. According to reports, the inspections done by the company before launching the products in the market are not up to the mark (Nhandan, 2011). Hence, it is obvious that the major issue of the company is related to the quality of its products and management of the same. The next section of the study will recommend certain actions or processes by which the company can get rid of the prevailing issues. Recommendation for Solution Quality management issues have become one of the most evident issues in the organization. As a result of that organizations around the world are investing huge sums of money and resources for the sole purpose of managing quality and deliver better output to the consumer. In curbing and dealing with the issue of quality management companies adopt different types of technique and the results depends upon the way it has been implemented and the way it is being managed by the organization. One of the key strategies or the way by which management of quality is possible is implementation of total quality management. Since Toyota is dealing with the issue of quality management, this act prove to be winning strategy for the company. In the recent years, total quality management (TOM) has become predominant in almost every reputed company. The concept was initiated by W. Edwards and since then it has become a part of almost every company’s strategic decision. The principal aim of TQM is to enhance the quality of operation and along with than help companies to maintain a certain quality standard. Thus, it is often dubbed as the managing tool. Some of the biggest advantage of TQM is that it ensures the following: - Cost reduction: - When the concept of total quality management is applied over time, it can reduce the cost of operation drastically. Especially, the role of total quality management becomes visible in the areas such as filed service, rework, scrap and reduction of the warranty cost. These cost reductions have direct impact on the bottom line profit of the organization and thus can straight away increase the overall profitability of the firm. Defect Reduction: - TQM puts strong emphasis on the improvement of quality through the manufacturing process of the company. In addition, TQM also plays pivotal role in the development of the process. It also provides the company with the opportunity to inspect the quality and along with that detect the possible errors in it. On the basis of that the company will be able to take the necessary steps to curb and get rid of the issue. However, the biggest advantage is that it greatly reduces the overall time required to fix the errors. Customer satisfaction: - The level to which the customers of a company are satisfied has a great impact on the overall progress of a firm. A company with satisfied customer base enjoys a number of benefits and added advantages in the market place. For a company such as Toyota, which is involved in the business of manufacturing and marketing of automobile products high level of customer satisfaction is pivotal. Toyota is known for quality products and services except few cases of quality complaints and product recall. However, the implementation of total quality management will ensure the company does not compromises on the quality and with better products and services it is obvious that the customers will remain highly satisfied. One area that the company needs to concentrate is the quality of service delivery and after sales services. From the above discussion it is evident that implementation of total quality management system in an organization can be advantageous as it offers numerous benefits. Hence, recommending Toyota to implement total quality management is justified. Another common ways by which the company can resolve the issues is by changing or modifying the manufacturing system of the company. Since the root cause identified by the company is related to the manufacturing errors implementation of six- sigma will greatly help in serving the purpose (Akpolat, 2004). Six-sigma is a group of techniques and tools used for the purpose of developing the process of a company. It was developed by Motorola in the year 1981 (Pande & Holpp, 2002). However, the popularity increased when General Electric implemented this strategy for the reason of business development and better quality output. In general six-sigma seeks to enhance or develop the quality of process delivery by identifying and simultaneously eradicating the errors or the causes of the defects. Hence, implementation of six- sigma in Toyota will help them to recognize the problems related with the management of quality and also remove the problems. In addition, improving the business process and minimizing the variability in the manufacturing is also another function of six-sigma that can greatly help Toyota to overcome the issue of quality management (Snee & Hoerl, 2003). Another viable option for the company is to implement lean manufacturing system. With the implementation of lean manufacturing system, the company can eliminate different types of wastes and can create efficiencies for the company (Wakabayashi, 2010). This would help Toyota to save the production costs. On the contrary, the amount saved by the company can be utilized for quality checking and inspection purposes. It has been found that the risks of the company are getting magnified as companies are expanding globally. In addition, the growing technological complexity is making it harder for the companies to detect the quality problems at the initial stages. In this regards, Toyota is recommended to establish a benchmarking system which will allow them to test the quality of the product before launching in the market. The establishment of the benchmarking system will also allow the company to diagnose the quality issues at the initial stage and help the company resolve it quickly. This will not allow the company to save quality control cost but will also improve the company’s reputation in the market. Conclusion The study was meant to analyze the quality management problems of Toyota. In order to find the issue, the study mainly relied on the secondary research. It has been found that the company is mainly facing issues related to manufacturing errors. The study also discovered that the company had to recall a number of cars from the market as they detected major manufacturing flaws. Moreover, the study also found that the recall was only made after outbreaks of several accident cases that took place due to poor braking and acceleration system of Toyota. The company is almost making use of similar design in many of its product lines which is also acting as a negative point pertaining to the issue of quality management. In order to get rid of these issues the company has been recommended three options. The options are implementation of six-sigma, lean manufacturing and establishment of benchmarking system. References Akpolat, H. (2004). Six Sigma in transactional and service environments. Burlington, VT: Gower Publishing Ltd. Cole, R. E. (2011). What really happened to Toyota? Retrieved from http://sloanreview.mit.edu/article/what-really-happened-to-toyota/ Dhillon, B. S. (2002). Engineering and technology management tools and applications. Bosston, MA: Artech House. Harvard Business Review. (2007). Lessons from Toyota’s Long Drive. Retrieved from http://hbr.org/2007/07/lessons-from-toyotas-long-drive/es Kaynak, H. (2003). The relationship between total quality management practices and their effects on firm performance. Journal of Operations Management, 21 (4), 405-435. Mojonnier, T. (2012). Troubles in Toyota City. Retrieved from http://businesstheory.com/troubles-in-toyota-city-2/ Nhandan. (2011). Toyota faces inspections for possible production errors. Retrieved from http://nhandan.com.vn/en/business/item/167802-.html Pande, P., & Holpp, L. (2002). What is six sigma. New York, NY: McGraw-Hill Education. Prajogo, D. I., & McDermott, D. M. (2005). The relationship between total quality management practices and organizational culture. International Journal of Operations & Production Management, 25 (11), 1101-1122. Prajogo, D. I., & Sohal, A. S. (2006). The integration of TQM and technology/R&D management in determining quality and innovation performance. Omega, 34 (3), 296-312. Snee, R. D., & Hoerl, R. W. (2003). Leading Six Sigma: a step-by-step guide based on experience with GE and other Six Sigma companies. Upper Saddle River, NJ: FT Prentice Hall. Sousa, R., & Voss, C. A. (2002). Quality management re-visited: a reflective review and agenda for future research. Journal of Operations Management, 20 (1), 91-109. Wakabayashi, D. (2010). How lean manufacturing can backfire. Retrieved from http://online.wsj.com/article/SB10001424052748704343104575032910217257240.html White, T. (2010). Toyota experiences more quality problems. Retrieved from http://www.tutor2u.net/blog/index.php/business-studies/comments/toyota-experiences-more-quality-problems Yahoo Finance. (2013). Toyota Motor Corporation (TM) –NYSE. Retrieved from http://in.finance.yahoo.com/q/pr?s=TM Read More