How Toyota Achieve Its Objectives by Implementing TQM Marketing Essay

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HowToyotaAchieveItsObjectivesByImplementingTqmMarketingEssay
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How Toyota Achieve Its Objectives By

Implementing Tqm Marketing Essay
Published: 23, March 2015
The Toyota motor company of Japan has taken this challenge seriously and has
proved its ability to compete with the once emperors of the industry such as Ford,
Volvo, Chevrolet et al. Buy careful adoption of cutting edge technologies such as
Total quality management, Toyota has turned itself into a game changer in the
industry.
This assignment focuses on how Toyota achieved its objectives using TQM. It unfolds
in three stages starting with TQM and its scope. Secondly competitive environment
analysis with SWOT and PESTLE analyses and \nally it arrives at conclusion based on
a thorough evaluation of the organization.
Company Overview
Toyota Motor Company (TMC) is the crown of Japanese auto industry. Started as a
small car manufacturer on August 28, 1937 it gifted many quality innovations to the
world throughout its history. In the early 1980s Toyota won its \rst quality control
award in Japan.
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The company launched its luxury brand Lexus in 1989 which became a massive
success. It also manufactures Scion an economical automobile brand that targets
young adults. Toyota also conquered the hybrid car market with the launch of its
iconic car Prius in 17.
Today with a work force of 71,116 and an annual sale of US$228+ billion, Toyota is as
pro\table as all the other car companies combined. In 2007 it became the world's
largest auto manufacturer beating General Motors.
(Info - http://www.toyota-global.com/)
Literature Review
Total Quality management
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Total Quality management

Total quality management can be de\ned as
"A management psychology that seeks to integrate all organizational functions such
as marketing, \nance, design, engineering, production, customers satisfaction et al.
to focus on meeting customer needs and organizational objectives."
[Abstract Bester\eld D, Michna Bester\eld C, Bester\eld Glen and Bester\eld-Sacre
Mary Total Quality Management (3rd Edition) (2002)]
The team of the organization that the TQM is implementing tries to take part in
improving processes, products, services as well as the culture which they work. This
approach is inspired by quality leaders such as Philip B Crosby, W. Edwards Deming,
Kaonru Ishikawa and Joshep M. Juran.
According to Deming TQM involves 14 principles.
1. Create constancy of purpose
2. Adopt a new philosophy of cooperation
3. Cease dependence on mass inspection to achieve quality
4. End the practice of awarding business
5. Improve constantly, and forever
6. Institute training
7. Adopt and institute leadership for the management of people,
8. Drive out fear and build trust
9. Break down barriers between departments.
10. Eliminate slogans, exhortations, and targets asking for zero defects or new levels
of productivity
11. Eliminate numerical goals, numerical quotas and management by objectives
12. Remove barriers that rob people of joy in their work
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation.
Today The concept of quality is signi\cant more than ever before. The history of
quality goes as far as 1920s to the times of gurus such as F.W. Taylor who is the
"father of scienti\c management".
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It erupted in 1950s in Japan in a time where the Japanese were searching ways to
boost their economy that was ruined by World War 2. By 70s high quality Japanese
goods had ooded the US and European markets. It took 20 years for the west to
catch up the Japanese quality system.
By today the growing global competition the quality has become a decisive factor
and is inspired by changing customer needs. Today the customer is the person who
de\nes the quality of a product. Quality management is important because
achieving a higher quality is ever changing.
Also failing to meet the quality standards continuously would result in losing
customers.
An organization can take many initiatives to assure quality of its products.
Standardization is one such initiative that assures quality. Standardization can be
carried out by round interchangeability, variety reduction; improved communication
of technical criteria, commonly agreed safety and performance parameters.
Standardization applies to raw materials, testing, sampling methods as well as
processes
Institutional learning is another way of ensuring quality. Here the training process
for workers are recorded and will be used in the learning process. The learning
forms such as lessons as well as good practices are the primary sources of the
knowledge working process. The institutional learning process can be further
enhanced through training workshops, evaluation material as well as electronic
training media.
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Also by way of knowledge management an organization can assure the quality of its
products. Under knowledge management the capacity to retain knowledge,
educational capacity, design and training methods, the training programs as well as
quali\ed trainers are the majors concerns under knowledge management.
The fruits of knowledge management can only be picked when
The learnt knowledge puts in to practice.
The knowledge is material in innovation.
Turning tacit knowledge in to explicit knowledge
Gathering and preserving knowledge from every possible source such as
information, experience etc.
SWOT Analysis
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SWOT Analysis
SWOT analysis is a method used to analyze the internal and external environment of
an organization. Following is a comprehensive SWOT analysis of Toyota Motor
Company.
Strengths
Toyota operates factories in US and China that led to increase in company pro\ts
since 2005.
The organization through careful segmentation, Targeting and positioning oers the
right product mix to the market.
Toyota is highly ecient in its manufacturing which uses total quality management.
Toyota has a strong brand name which is a house hold brand name all around the
world.
Weaknesses
Toyota is excessively focused on US and Japanese markets. Thus suers from
uctuating economic and political conditions of these countries.
Toyota has few layers in its hierarchy and as a result there are few opportunities for
promotions.
Heavy emphasize on techniques such as kaizen has led to higher level of stress
among workers.
Opportunities
Toyota and Lexus has pioneered the environmentally friendly technologies. The
world needs vehicles inspired by such technologies more than ever.
The company is targeting the urban youth market which has a huge potential.
The European Union is emerging as a world of opportunities for auto
manufacturers. Toyota already has a large market share in countries such as
Denmark, Finland, Ireland et al.
Threats
Global recession has drastically aected the performance of the global auto
industry.
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Rising gas prices due to the OPEC decision of price hike is a severe damage.
In 200, 2010 the product recall of Toyota was estimated to be million units. This can
have adverse eects the organizations reputation.
Toyota faces strong competition from rivals. New entrants from China, South Korea
and India are growing rapidly.
(Info http://www.marketingteacher.com/swot/toyota-swot.html)
PESTLE Analysis
The PESTLE stands for
P - Political
E - Economical
S - Social
T - Technological
L - Legal
E - Environmental
Political
Since it is a global organization Toyota needs to observe the global political situation.
For the past few years Toyota has been enjoying from some of the governments key
decisions. The government's decision to limit vehicle imports to Japan and the US
government's introduction of quota system in vehicle importing eases the pressure
of heavy competition from the outsiders.
The Japanese government has provided stimulus packages and tax reliefs to deal
with the recent economic down turn.
Economical
The global recession has hit the global auto industry severely. With inevitable losses
companies tend to cut jobs. The same is applicable to Toyota.
Due to sky rocketing cost of living people might be prioritizing the ful\llment of their
needs at primitive levels. In such a background the industry might get a serious
blow. Also during the past 5 consecutive years the global auto mobile sales in major
markets have sharply dropped.
Social
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Social
Social factors are vital in deciding the demand for a certain good. Throughout the
past decade Japan is experiencing a growing adult population. It is estimated that by
2030 the 65 year old population will be 25.6% of the total population of Japan. Some
critical changes in the age structure of the country can be observed. Also the
country's negative population growth rates provide serious implications for the
business organizations. Because the shrinking population implies that the business
organizations will have to face a shortage in skilled labor in the near future.
[Source Matsumoto Yoshiko Faces of Aging: The Lived Experiences of the Elderly in
Japan ]
Technology
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With the introduction of cutting edge production technologies adoption of such
technologies in the auto industry can be widely seen. Use of robotics for production
in Japan has become a major trend.
In this information age people have more ways to know about products which
makes the present consumer a highly aware one compared to some decades back.
The development in World Wide Web led to many organizations going online. The
organization will have to adapt to the new ground realities of online marketing to
stay ahead of the curve.
Legal
Today although the free trade is been heavily promoted some key player in the
global economy are following protectionism. Countries such as India, Brazil et al are
imposing legal restrictions on foreign auto manufacturers in order to promote
indigenous manufacturing.
With its recall of some of the car models in 2010 Toyota had to face several court
cases over accidents occurred due to defect Toyota cars. It was reported that Toyota
has paid $ 1.2 million in settlement of a case that was \led against the company.
(Info http://www.dailymarkets.com/stock/2010/12/28/toyota-pays-10m-crashcompensation/)
Environment
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The global warming and climate change has become a burning problem in today's
world. The changes in this regard have a major in uence on the global auto mobile
industry.
The global warming has insisted the global auto manufacturing \rms to come up
with less emission solutions. Governments all around the world are raising the
standards and tightening the environmental laws on this matter.
In addition to the global warming problem the dwindling oil reserves in Middle
Eastern countries which are expected to come to an end as soon as 2040s has urged
the auto manufacturers to seek more sustainable and energy ecient solutions for
the future.
The green marketing has become a major weapon for any organization competing in
todays auto industry. Today the green products as well as green production
methods has become a threshold in many cases. Thus any organization lagging
behind its counterparts in green marketing is in the path to destruction.
Analysis
Although the total quality management is widely adopted in today's highly dynamic
business environment Toyota motor company has its own version of quality
management called the Toyota production system or TPS. The TPS includes just in
time production which means manufacturing products in required amounts
avoiding excess inventories Kanban and Jidoko or automation.
According to the \eld research done and published by Harvard's Steven J. Spear it
leads to the conclusion that Toyota has achieved a dynamic capability by following
the 'Rules-in-Use' for
Organizational design, improvement, and adaptation.
[Source Spear J Steven Just-in-Time in practice at Toyota: Rules-in-Use for building
self-diagnostic, adaptive work-systems Harvard Business Review Oct 2002]
The paper identi\es that in TPS managed organizations every operation is
performed by carrying out hypothesis testing experiments that makes accelerated
generation and accumulation of individual and organizational learning about
coordinating delegating, and performing work done collaboratively. This also
includes work which is done repeatedly few times.
The \ndings adds literature by explaining the most tools that got lot of attention in
the operations research process were trustworthy and were giving uninterrupted
service without any malfunctioning.
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lean_cs_toyota.gif
[Source
http://www.icsti.su/rus_ten3/1000ventures_e/presentations/production_systems.ht
ml]
Just in time
The idea behind just in time is manufacturing the required amounts in required
numbers at the required time. For instance the assembly line of a car arrives all the
sub assembly lines should reach the main assembly line in right quantities. This will
eliminate the need for inventories thus removing the requirement for warehouses
and storage facilities. As a result the inventory cost will be drastically reduced giving
a higher capital turn out to the company.
The JIT manufactures quality products in an ecient manner by completely
eliminating waste, inconsistencies and unwanted use of production lines. According
to the JIT the Toyota by adhering to the following guidelines can manufacture a car
which was ordered by a customer in a soonest possible manner.
No sooner an order is received for a vehicle the instructions as well as speci\cations
of the vehicle reach the start of the production line.
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The assembly line is stored with sucient parts and components to enable the plant
to assemble any kind of vehicle model without any delays.
The assembly line must replace the parts used by retrieving the same number of
parts from the parts-producing process.
The preceding process should store a small number of all types of parts to
manufacture only the numbers of parts that were retrieved by an operator from the
next process.
Although it proves to be a success of following JIT method it is a complicated
exercise at Toyota as its business involves hundreds of spare parts and components.
Kanban system
Although many believe that kanban is TPS, the kanban method exist to manage the
just in time method. Simply it is an information system which controls the quantities
in every process.
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In kanban the required amount of units and types are written in a card called
kanban. It is send to the people in preceding process to the subsequent process
which connects many processes in a Toyota plant. This method is supported by
followings.
Smoothing of process
Reduction of machine set up time
Autonomation
Standardization of jobs
Improvement activities
Kanban uses two cards. One a withdrawal card and the other a production order
card.
jit.gif
(Source - http://www.toyota-global.com/)
According to the above \gure there are two operational ows as production
instruction kanban and the operational ow of parts retrieval kanban.
In the production instruction kanban it involves 3 distinctive steps. Firstly a
production instruction kanban A is removed when an operator retrieves parts. Then
the numbers of parts that are indicated in the kanban card are only manufactured.
Thirdly the kanban is attached to the newly manufacture parts ready for the next
process.
Then the next process starts on the operational ow of parts retrieval kanban. The
parts
are transferred to this process from the preceding process. Then as the \rst
step the parts retrieval kanban is removed when an operator uses parts. Secondly
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the operator carries the kanban to retrieve replacement parts. As the third step the
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operator
removes the production
instruction kanban and replaces it with a parts
retrieval
kanban. Finally (https://twitter.com/intent/tweet?
the parts that are displaying the parts retrieval kanban are
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transported
to the next process.
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Autonomation
To gain maximum of just in time 100% good units must reach the prior process. And
this process should continue without any interruptions. This means quality control
must co-exist with JIT to get the best out of kanban.
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The idea behind autonomation is built in a mechanism means to avoid mass

production of defective items in product lines. It involves autonomous inspections
for abnormalities in the process. At Toyota all machines are autonomous where
every machine is attached with automatic stopping device. This avoids mass
production of defective items and also alarms machine break downs if there are any.
The above theory also applies to the manual works at Toyota where an employee
pushes the stop button if something abnormal happens in the production line. This
would eventually cease the operations of his whole lines.
In order to detect discrepancies in the process a device called andon, an electric light
board is hung very high in the factory that it is visible to everyone this is called
Toyota's visual control system.
Conclusion
The Toyota production system is a practical and eective as it popped out from the
real life experience of the organization. This system is enriched with practical eects,
actual practices and implications over the analysis.
This system has a vital role in developing the quality of operations of the companies
all around the world. Even to this date hundreds of western companies are using the
Toyota quality management methods which are a clear indication of Toyotas
success.
Since Toyotas founding we have adhered to the core principal of contributing to
society through the practice of manufacturing high quality products and services.
Our business practices and activities based on this core principal created values,
beliefs and business methods that over the years have become a source of
competitive advantage. these are the managerial values and business methods that
are known collectively as the Toyota way. - Fujio Cho, president Toyota
[Source Liker Jeery, The Toyota Way, McGraw-hill, 2003]
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