Quality Systems In Toyota General Electronics And Intel Accounting Essay

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Analysis of ISO 9000, TQM and Six Sigma concepts relating to improve service quality and productivity in Toyota, General Electric and Intel corporations.

Table of Contents

Introduction

In this assignment, the attempt has been made to analyse the three major quality concepts such as ISO 9000, TQM and Six Sigma. The three companies General Electric, Toyota and Intel were identified for this assignment those have implemented these principles.

ISO 9000 is the set of quality standards for organizations maintained by International organization for standards. The main purpose of these standards is to set up quality procedures, documentation, work instruction and maintaining the quality in product and service. This is kind of certification for organization which shows that company has adhere to quality standards (Heizer & Render, 2008, p.198).

TQM concept is utilized around the world by organization to achieve the competitive advantage and to get improved financial results. (Edge man, 2006) Edward Deming provides 14points on how to implement TQM in the organization. In literature it is also used Japanese term Kaizen for the continuous improvement to achieve goals and improvement in business process. (Heizer & Render, 2008, p.198-200)

The various concepts of TQM are explained in the following paragraphs. The first concept of TQM is Six Sigma and it is focused on strategy to bring customer satisfaction. It describes the process, design, product in high capabilities and in more statistical sense. Sigma and its symbol means standard deviation and this particular component is used to minimize the production defect.

Six Sigma Process: Source Dilioa.2009

Six Sigma has five step implementation process abbreviated as DMAIC. It means define, measure, analyse, improves and control the quality process. The diagram shown below illustrates the process of Six Sigma

Six Sigma Management Kit

The next component is Benchmarking and it defines as the standardization of process, service, cost and practices. The benchmarking development process involved determine what needs to benchmark, form a team and identify benchmarking partners, collecting information and analyse if the process is correctly define in terms of benchmarking and lastly, match the process to the level of benchmarking (Heizer & Render, 2008, p.201).

Taguchi concept believes in the fact that quality issues arise because of poor design of product or process. The concept also aimed to improve the quality by utilizing quality robustness, quality loss function and target oriented quality. Robustness means consistency in the production process to meet the consumer demand. Quality loss function is a mathematical relationship illustrated by equation

L = D2C

Where L = Loss to society

D2 = Square of distance from targeted value or quality

C = Cost of deviation at the specification limit

In other words, this function identifies all cost related with poor quality and show how the cost increase as the product quality align with customer needs. The diagram shown below illustrates the distribution of specification of products produced. Target oriented quality is mechanism to bring the product to target quality through continuous improvement in process. (Heizer & Render, 2008, p.203)

The Taguchi Loss Function

The last component of TQM is to have proper knowledge and training of using TQM tools. There are seven TQM tools which are used to manage and control the quality of service like different charting techniques to graphically represent and analyse the problem (Heizer & Render, 2008, p.204)

Quality systems in Toyota, General Electronics and Intel

TOYOTA

Toyota has a long history of success and it is usually termed as the most profitable automaker and provides best auto performance in the industry. In 2007, Toyota sold 9.4 million vehicles globally only about 3,000 fewer than General motors (GM)

To analyse the problems with Toyota, let's contrast the Toyota TQM program named Toyota way with these 14 principles to determine the reasons for the quality issues. Toyota way is guiding principles prepared by the president of Toyota Group Fuji Cho (2003). The principle states that these principles are tools for people and the principles are more centric for people suggestion that actually bring the improvement and quality in production and service.( Fuji Cho, 2003)

14 principles of Toyota Way

Make decision based on long term strategy even in case of short term loss

Right process will produce the right result

Use pull production to produce only what is needed basically lean production strategy

Level out work and eliminate waste

Toyota laid the foundation of building first time right quality so that it does not need any future fix

Standardized task for continuous improvement and employee empowerment

Use visual control so that no problems left unseen

Use reliable and tested technology to serve people and process

Develop leadership quality in employees and add value to organization

People should follow your company philosophy

Respect and help networks of partners and suppliers to improve

Solving the problems from root

Make decision slowly but implement it fast

Learning organization with continuous improvement

First component of continuous improvement is already taken care by Toyota Company. Toyota principle also focuses on eliminating the waste and utilizing lean production system. Toyota philosophy is to produce in amount which is needed. Just in time system eventually helps to cut the costs of quality, improves quality and lastly, better quality ends up with less inventory and better control over system. Toyota did implement the standardization of process but, the internal benchmarking should be more consistent and inclined to remove any barrier in case of different geographical sub division like Toyota has around the world. Toyota has utilized this component of employee empowerment. Toyota has a strategy to involve the employees in every step of transformation. The main focus is given on the process improvement and providing more responsibilities to employees and authority so that they perform better.

GENERAL ELECTRIC

The company has wide range of electric product range in vast sector of appliances, aviation, healthcare, lighting, media and entertainment, electrical distribution, energy, finance, oil &gas, rail, software service and water (General Electric, 2010A).

The general electric philosophy lies in providing defect free product to its customer. For adhering to this kind of quality standards, General Electric is utilizing Six Sigma principles as their core values as shown in the diagram below. (General Electric, 2010B)

The Quality Standards Six Sigma in GE

INTEL

Intel is a market leader in delivering latest silicon chips & other technological products that are at the heart of laptops, desktops, mobile phone, and many other types of machinery making people's lives better day by day. The Intel quality system audits have an ISO 9001 based quality system as a benchmark for the entire Intel's worldwide factory & outsourcing network. Every manufacturing site has a lead auditor who is responsible for the implementation of the Internal Quality System Audit according to the ISO 9001 standard.

TQM at Intel:

The following diagram shows how the company has focused on improving the supplier's quality programs. Intel quality concerns mainly depend on reducing the number of errors and the methodology is more inclined towards the Six Sigma implementation. Intel used SPC which is a TQM tool to inspect, manage and control quality standards while production process.

The graph shown above depicts the standard deviation and error log in production.

Comparison of Quality Principles applied in the example companies

Toyota

General Electric

Intel

TQM Deeming Principle :Toyota has implemented TQM Philosophy the total quality management of the organization from supplier to customer

Six Sigma : GE has utilized series of tool set and strategy to achieve consistency and consumer satisfaction through its business process

TQM, Six Sigma & ISO 9001: Intel believes in continuous improvement of products & services before, during and after the manufacturing of high quality semiconductors

The company has to focus more on the Six Sigma concept for zero product defects. But with series of success and market reputation, in recent years, Toyota has facing serious issues with quality, defects in cars and massive recall of different models around the world. All these issues have put a serious concern for the reliability on Toyota model.

The company has although implemented tightly, Six Sigma by reducing the number of defects. The company has managed effectively to reduce cost, save time and improve customer satisfaction.

Intel has established very high standards in quality standards, design quality process and total quality management to satisfy customer to supplier. Among these three companies IBM has achieved highest quality management by implementing all three TQM, Six Sigma and ISO 9000 quality certification.

Conclusion

In order to improve the service quality and productivity, the effective implementation of the quality concepts and principles explained in this report are very crucial, especially for the manufacturing companies. Among all the example companies in this report, Intel has established the highest quality standards with the utilization of all mechanism of TQM, Six Sigma and ISO 9000. While, Toyota is the one among these three, which is facing major quality issues massive recalls and quality issues have become the serious concern for the company total quality management principle "Toyota Way". Also, there is no communication strategy within the various sub division of the organization. There is no program to remove the barrier and to provide openness in the work environment. There is no education and training program for the employees. The sales have dropped and Company is facing series of law suits and challenges with more recalls. Toyota consumers are not very happy with quality issues in Toyota product. (Kageyama, 2010)

Recommendation

Among all these three companies Toyota needs to revised their quality standard program to achieve higher customer satisfaction and resolve the issue of massive re-call. The Toyota Company has already taken crucial steps to handle this problem by executing these three major steps. First, Toyota has unleashed the program "Toyota way" which consists of its core-value and respect for people principles. Toyota has also announced to provide massive training program around the world in various production facilities. In the last effort Toyota has emphasized on the facilitation of knowledge transfer and learning across its all sub division.

To sum up, for the above mentioned three steps, Toyota company needs to have better control and supervision of this improvement process. Toyota should align its strategic business objectives with the Total quality management principle and it would benefit Toyota to regain the confidence of customer and improve quality standards in its production. The company leaders should emphasise on developing a better work culture and TQM philosophy within the organisation. Toyota has renowned name in auto industry and this research report supports the Toyota actions to correct the quality issues.

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