Quality And System Management At Toyota Marketing Essay

Toyota established with principle of manufacturing and weaving advanced in 199 looms. Toyota has started automobile business by selling the patents of textile machineries. First car manufactured by Toyota in 1936 and established Toyota Motor Corporation by next year. Today, Toyota is truly global market leader in the automobile business and have six manufacturing facilities across the globe and employed more that approximately 320,000 people worldwide as well as it is the world’s largest automobile maker by sales. In 2009, Toyota has made significance loss and later in 2010 they recall many cars due to defects in the products. It was recognised that there is urgent need to improve the quality management system to improve the quality of products and improve the functional of operations to achieve the objective of Toyota. First Porter’s five forces used to analysed the external environment and set the measurement of performance objectives. Further the quality audit and new quality improvement system is recommended to improve the quality of the products and develop a defect free products. Recommendations also suggested improving business process and overall quality management system of organization as well as check the feasibility of the recommendations within organization. Finally, plan do check and action plan suggested to evaluation and corrective actions. In conclusion, systematic implementation of continuous improvement process will help to improve the quality, business process and operations management system at Toyota.

Introduction:

Toyota Motor Corporation is a International company and has headquarters in Japan. In 1937, the company was established as spinoff as Family business. Lexus and Scion brands are operated by Toyota and has majority shareholding with Daihatsu and Hino Motors. Toyota has also shareholdings in Fuji Heavy Industries, Isuzu Motors, Yamaha Motors, and Mitsubishi Aircraft Corporation. In 2009, it was reported that Toyota has record a loss of net loss of US$4.2 billion annually. Toyota has recalled around 1.8 million cars across the Europe and about 220,000 from UK Due to some problems in defective accelerator pedals. Toyota has recalled the Prius model for reprogramming of its ABS system. Due to this, Toyota has made great loss financial as well as goodwill of Toyota organization (Toyota, 2006).

In the present assignment the quality and system management evaluated for Toyota Motor Corporation. Further the recommendation suggested for improvement of the operations and business process as well as quality systems of Toyota.

Operations Management and its importance in an Organization.

The concept of the operations management is defined as “the systematic direction and control of the processes that transform inputs into finished goods and services” (Slack, 1997). In most of the organizations, the function of operations are mainly depends on the physical assets and performance of the employees. Every organization has operation function and is integrated part of organization because organizations have their own products or services in the particular business (Bickens and Elliott, 1997).

Operations managers are responsible for the various function associated with producing the products or delivering the services. The activities covered by operations managers are dealing with facility, equipment required for the processing, associate labour, raw material requirements, energy need for operation and what type of information feed to operation system (Slack, 1997). Further operations managers are responsible for deciding the how the best product or services produced using effecting operation management system. Operations managers are also responsible for maintaining TQM, planning for capacity, management of materials as well as purchasing of raw materials and scheduling all the activities.

The most important responsibility of operations management is effectively working and coordination with the other parts of the organization. In the modern management practice, there are no boundaries that restrict the working processes of internal division of the organisation. It is primarily responsibility of operations management that they make sure the need of operation is understood clearly (Krajewski and Ritzman, 1999).

In recent years, the role of operations management is increased drastically due to increasing in global competition significantly, increase education level, reduced the product life cycles, quality consciousness of consumers, shorter r the life of services as well as development in advanced technology have created pressure on the functions of operation to develop better productivity and emphasis on the providing the up to mark products and services.

In this era, the market become globalized and organizations have realised the functions of operation are very important and used to develop core competence and make strong their position in the market globally. In effective operations management, the managers play crucial role at strategic and tactic level to full fill the customer’s need satisfactory and stand up their organization in the competitive market again the potential competitors.

Strategic objectives of Toyota

Since last several years, Toyota has been achieved the highest success in the automotive industry and continuously progress without any hurdle faces by other company. The Mission of the Toyota Motor Corporation is to “develop and provide innovative, safe and outstanding high quality products and services that meet a wide variety of customers’ demands to enrich the lives of people around the world” (TMC, 2006). To fulfill mission of the organization, goals and objectives designed on the basis of previous records of the company in term of sales and finance. The goals of corporate are 1) “to steadily increase corporate value as a top management priority”, 2) “continue to introduce and produce products that fully cater to customer needs”, and 3) “to become an even more competitive global company” (TMC, 2006).

Further the strategic goals designed to achieve the overall corporate goal and are as follow:

Increase market share worldwide,

Decreases in the cost/prices,

Improve the quality of products.

To achieve the corporate goals consistently, TMC has decided various objectives. The objectives are as follow: “a unique management system-focused on prompt decision-making and speeding up operations” “a system that emphasizes problem-solving and preventative measures-done by immediately flagging problems and sharing them with the appropriate individuals/departments” (TMC, 2006).

To achieve strategic goals, strategic objective are planned and are as follows:

Capacity of the production will increase,

Develop new innovative products,

Improve Just In Time (JIT) system thus improve the logistic system,

Improve the Kanban System so reduced production process time,

Reduced the complain index by controlling system of defects

To improve the quality production by focusing the quality circles

Improve the quality and skills of employee through Kaizen

Porter’s Five forces as Strategic analysis tool

The strategic goals and objectives are decided on the basis of the environment factors that affects automobile industries. There are number of important factors that affects at supply and demands as well as costs of the products (Johnson and Scholes, 1993). Porter’s 5 Forces is one of the useful strategic tool to analyze the environment of the business in term of completion intensity which affect the profitability of industries (Porter, 1980).

The automobile industry in UK is very competitive with easy entry for foreign competitors and increasing the competition with global players such as Tata and Honda. Porter’s five forces are as follow (Porter, 1980):

Threat of New Entrants – it is not easy to enter in the automobile sector as it required huge production system and initial established cost is very high. There is possibility to enter in the country by established foreign company as joint venture or by strategic partnership. So there is threat of new entrants.

Supplier’s power: In automobile industries the suppliers are very special as the need of specific parts and only few suppliers so company have to depend on the suppliers and suppliers have power to provide the goods on their own terms and conditions. On other hand, if automaker decide to change the suppliers, there is great lost for suppliers.

Power of Buyers – There is great impact of the buyer and power of buyers turn the business. There are many customers that are brand loyal and very impress with several foreign brands and this has direct affects on the sell of the product and ultimately on the business.

Availability of Substitutes – If substitutes products were easily available for customers, ther is chance to switch over the customer towards the competitor’s products. Cost of the product and its operative expenses play crucial role. Further price of petrol also one of the reasons not buys the products.

Competitive Rivalry – There are many players in the market with similar products and minor difference as well as fiercely competition is major factors. If organization would have to stand in the market, they have develop innovative products and launch in the market.

It is observed that the UK automobile industry at the stage which facing problem of globalization as the competitors provides better products and satisfied the customer’s wide range of needs. Thus, detail analysis of these forces gives directions to the organisation to develop suitable strategies to be successful in their market (Thurlby, 1998).

Performance operations objectives of Toyota

TMC is always concerned about the customers need and requirement as well as try to satisfy the customers by providing the product at reasonable price within possible short time. The company has set up the five performance objectives as follow:

Quality: Toyota is famous for producing the quality vehicles since long time and customers are highly satisfied. TMC has developed a car that make less noise and emits less than 40 emission control system. Advanced technology uses to improve the safety of the passengers (Bremmer et al, 1997).

Speed: Speed is considered as produce the stuff as soon as possible so reduce the time between order and product availability. Thus customers get things without delay. TMC has focused on operations and developed a system in such way that reduced the complexity of production by using simple machines. They have rearranged the process flow and increased] speed of the production. By doing so the production of per worker is also increased (Slack et al, 2007).

Dependability: Produce the things within time so customers will receive as per the given promises. TMC has developed JIT production system and team work with multi skilled worker for fast production and deliver the product according the promise made, TMC has implemented kanban control system (Slack et al, 2007).

Flexibility: In response to dynamic environment, any organization should have changed the products or services according the market demand and this flexibility of the organization (Peters, 1998). TMC has adopted flexibility in the manufacturing plant and Launch the varieties of products. TMC produced the products in small batches with wide range of varieties with maintaining the productivity quality without any extra cost. This is achieved only through by focusing on flexibility (Slack et al, 2007).

Cost: Good quality of product with low price attracts the customers and this most important factor. TMC maintain low cost by focusing the operations by reduced the logistics by established more plants, defect free production, automatic process plan help to reduce the cost (Slack et al, 2007).

Resources, systems and tools used in Toyoto to support its Business Process

The resources considered as the input required fulfilling the operations. The resources are two types: 1. Facilities covers the machineries, buildings, processing plant and technology, 2. Staffs as human resources required to plan and manage the operation functions (Slack, 1997). System is defined procedure of work to produce product to services under the particular conditions. The resources used at Toyota are transformed e.g. Raw materials, some expensive parts, New information for products, customers requirements and transforming resources e.g various plants of production, in house production some parts of products as well as human resources that used to make possible operations. Most of the business trying to updates their business processing and adopt new initiative to remains in the competitive market. Toyota has adopted the Lean manufacturing system is well known for reducing the cost of product by eliminating the waste. The logic behind the lean manufacturing system is reducing the waste, empowerment of employee and reduction of cost (Modern, 1998).

To achieved the lean manufacturing, various tools such as Just in time, cellular manufacturing, single minutes exchange of dies, total productive maintenance etc are used at Toyota. Just In Time is most important tool to achieve lean manufacturing system and help to reduce the waste such as poor scheduling of delivered parts, defects as well as work in process material by producing the products in the right place at the right time (Modern, 1993). Just in Time is very useful tool in the development of internal process that can easily adopt the sudden change in the environment. Further, Just in time is help to Toyota in managing external activities associated purchasing and distribution as well. Thus the transforming resources make possible to develop better lean system by applying new tools and techniques for better performance (Toyota Supplier Support Center, 1998).

Quality audit and review systems at Toyota.

Quality audit defined as “a systematic and independent examination to determine whether quality activities and related results comply with planned arrangements and whether these arrangements are implemented effectively and are suitable to achieve objectives” (Patel and Patel, 2009). Quality audit is carried out by qualified auditors and is the systematic review of a quality system. It is crucial part of quality management system of any organization and ISO quality system is one of most used one. Toyota has ISO 9001 certification (1994 version) and QS 9000 certification. In 2003, Toyota got ISO 9001 (2008) certification & and TS 16949 certification for automobiles (Toyota, 2004).

Even though there is strict monitoring system, there many product defects and recall the product from the market. Toyoya has history to recall the products such as Camry sedans, new Prius and other hybrid cars due to some steering fixing and braking problems (Crawley and Kim, 2009). To reduce the manufacturing defects and ultimately reduce the cost of products, Management should have to follow CMMI (Capability Maturity Model Integration) model as audit system for new product development.

Recommended model to improve quality system at Toyota

Toyota is pressurised to produced quality of products with high speed and low cost. On other hand products are becoming more complex in nature. Today, it is not possible to develop all the part required for the products are developed at same locations. There are multi lateral coordination and always need to improvement in process. CMMI quality audit system help to Toyota improving its overall quality of organization (Horst et al (2005). Fig 1 shows stages involved in CMMI. Audit system follows the CMMI will help to Toyota in development of quality services of organization.

Fig 1: Stages of CMMI model

Source: Horst et al (2005)

Fig 2 shows the step for implementing and adopting new quality audit system. In the figure, it is explain the stage wise development and implementation process. Organisation has to follow the step to improve the process of production and ultimately quality of the products.

Fig 2 Implementation of new quality audit system

Source: Horst et al (2005)

It was found that there is some problem in the maintaining quality of the product and may be this due to loopful in the process of auditing. CMMI model audit system is recommended because there are several time Toyota has recall their products from the market and there is huge loss in revenues. So need to implement the process that make defect free products and help to produce right product first time. CMMI process more focus on the process development and thus help to improve the quality of the products.

Quality culture at Toyota and continuous improvement process of culture.

Corporate culture is explained in many ways. Culture us defined as” the way we do things about here”. The culture is determined on the base of behavior, thinking and believe of the employee. Quality culture define as “the degree of awareness, commitment, collective attitude and behavior of the organization with respect to quality” (Schein, 1996). In Toyota, customer is always first, problems considered as opportunity, believed that what is measured is managed, Training save the money, always tried to achieved best. It is believed that focus on the customer requirement and quality is responsibility of every employee In Toyota’s culture. Managers are not a boss but they are facilitators for making process easy. At Toyota, there is freedom to everyone from top executive to shop floor worker to experiment and implement their thought and creative idea to learn from it. For example, when Toyota has set the lines for assemble, they selected intelligent worked and gave freedom to solve their problems and grow in their job (Toyota Motor Corporation, 1997).

Toyota is famous for its corporate culture and other organisation follow the culture of Toyota. But need to continuous improvement in the culture is important for success of any organisation. By implementing Kaizen, culture can improve as the Kaizen help to improve system and process of the organisation. It joint effort of all employee towards the improvement of organisation’s total quality management. Under this system, the creative idea invited from the employees and implement to its viability. This help to get real practical idea from the people who are working close to system. To develop new culture strategy, it is necessary to monitor customer complaints, results of audits and nonconforming, data analysis, records of quality management system, process and product management as well as lesson from past experience. This will help to design the strategy for developing and implementing new quality culture at Toyota (Meier and Liker, 2006).

Monitor systems and work activities of Toyota and opportunities avail to improve business process.

TMC has developed all its business process in such way that the resulted in superior quality, fast throughput and exceptional production. By collective efforts of experience, TMC has developed its own business process known as Toyota Production System (TPS). The TPS developed on the base of main two tools ‘just in time’ and ‘jidoka’. Just-in-time is helped to manage the production system as well as network of supply chain to fulfil the demand of customers. This is system is monitor by various activities such as heijunka- make flow of item smooth, kanban- labelling and coordination for more part requirement, nagare-fulfill requirement of parts during production smoothly (Spear and Bowen, 2007).

Jidoka is considered as ‘humanizing the interface between operator and machine’. This covered various activities live production control or visual control of process for better quality. Most of the operations at Toyota are very adoptable and flexible. But there are always changes in technology and need to improve the process for higher level of performance to fulfil the overall corporate goals and objectives (Pirzada, 2006).

The business process developed by Toyota is world class but there is always chance to improve it. It was notice that many times Totaya has recall their defective product from the market. The quality of the product is main problem to achieve the strategic goal. Recall the products increase the total cost which one of the objectives. There is need to improve the product development process and this is achieved by implementing CMMI process. There is also need to increase customer satisfaction index with help of JIT.

Recommendation for improvement to achieve the organization’s objectives and goals

Total Quality management will help to achieve the overall goals and objectives of corporate. To achieve the strategic goal, quality improvement is very important and need to change in the culture. It is recommended to have commitment from the management for continuous improvement. Motivation of employees and team work is highly desired at work place. Effective and open communication as well as motivation of employees is highly recommended. Further, it is necessary tot provides the training and development of employee to skilled them. Thus this will help to improve the overall quality of Toyota.

Recommendations:

It is recommended to expand the production capacity and develop new innovative product with better feature according to demand of customers.

There is need to logistic system to supply the product on right time as per the given promises.

There is need to improve the production processing so produce less numbers as per customers requirements and reduced the inventory.

There are many complaints and many recall the products from the market. It is highly recommended to improve the quality of products and produce defect free products.

By implementing Toyota organization, improve its quality of culture and business process. If the quality is better, help to increase the customer needs. By improving the logistic system, covers more geographic location. Improved system helps to reduced in waste and ultimately overall cost.

Evaluation of the impact of the proposed recommendations within Toyota

It was noticed that Toyota are always leading in the technological development and its production system followed by others. But still there are several area in which Toyota has needed to improve the business process to achieve the objectives. Here the recommendations are regarding the quality and operations functions.

If Toyota expand the facility of their production plant, they can produce more and variety of products. Further, it has developed innovative products with environmental friendly. Thus, volume of product is increased and cost of product decrease.

If they improve in the logistic system by applying Kanban, the speed of transferring product will increase and benefited to satisfied the need of customers and customers are able to get products within given time.

Improving the production system will help to achieve the performance objective of dependability. Thus, help to achieve the objectives by improving the production system.

Good quality and defect free products increase customer satisfaction index and reduce the cost of due less process of recall and replacement. Thus reduce the cost of total operations.

It was highly feasible to implement the recommendations and TMC can achieve their performance objectives very well. After that TMC become number one with high level of customer satisfaction index. It also helps to develop in world’s best supply chain management. This is also help to maintain high production quality, within time delivery, highest speed, get advantages of dependability. By expanding the production capacity in other countries will help to get cheap resources that make easy to develop product at lower cost with high quality.

Appropriate plan for implementation and evaluate the possible changes after successful completion of the plan.

Once improvement plan has been implemented, it is very important to monitor the plan for its effectiveness and conform the plan is run according to set objectives. So it is necessary to develop an suitable plan for implementation and evaluate the changes. If changes are not effective, it is necessary to changes. The Deming Cycle is one of the best tools to implement continuous improvements and evaluate the business process (Curry and Kadasah (2002). According to Feigenbaum (I999), plan do check and act cycle make possible to track the process, visualize the system as well as also can act on actual process.

Plan: This is the phase in which feasible plan made according the requirement of continuous improvement in the process. In this phase, the suggested recommendations set as target. Further details about the time period and objectives clearly decided.

Do: Once plan is finalized, its time to implementation and execution of the plan. Senior management is responsible for implementation of the plan.

Check: In this phase the cross verification of the execution, tracking and checking carried out. Process is monitored and audit is carried out time to time to check the progress. After systematic review, correction action carried out and change in the implementation plan if required.

Act: If during systematic review and audit any issue identify, corrective action taken that help to achieve the set objectives and improve the business process as well as maintain high quality system.

This plan will help to Toyota in improving the total quality and management system by focusing in improvement of product quality, Just In Time, Kanban system, Kaizen and other related tools help to achieve the objectives of the Toyota and fulfil the requirement of customers.

Conclusions

Toyota is famous for its operations and quality management system worldwide. Toyota is pioneer in the development of effective production from the collective experience and experienced from other actors as well. The Toyota Production System (TPS) become famous globally and adopted by others to improve their system. There was important of operation management and quality system in the organization for sustaining in the business. Even though the quality and production system of Toyota followed by many organizations, there is some gap in the business process system and Toyota reported financial loss as well as defects in production system. There is continuous improvement required in the business process and operation management. Porte’s five forces used to analyzed the environment and designed strategic objective to reduced the operation cost, improve business process and quality system. Toyota has revised the operations performance objectives and improve the production system by improving JIT and Jidoka. Further Kanban system will help to improve the logistic system. Quality audit and culture will help to improve the system at Toyota. CMMI model will help to improve the production system and produce defect free products. Systematic review and implementation of improved system definitely help to improve the operation management and customer satisfaction index. Thus, Toyota can improve their quality of products and process and satisfied the need of customers. Systematic implementation of quality management and various tools help to achieve the corporate goal.