Pannasastra University of Cambodia

Pannasastra University of Cambodia

A TQM Case on ToyotaI. Executive summary Toyota Motor Corporation is a well-known worldwide automaker company. It is one of the worlds leading automobile manufacturers, with fabulous of quality and the management system. Since Toyota Motor is famous of manufacturing quality cars with low price, it leads the worlds car market. It was established as an independent company in 1937, which headquartered in Japan. Toyotas annual profit hit the peaked in 2003, which was larger than the combined earnings of GM, Chrysler, and Ford. As a result, Toyota would become the largest automaker in the world.Toyotas vital success was the Toyota Production System and 14 principles of the Toyota Way, starting from the long-term thinking to short-term management that based on some techniques and human motivations, which made use of concepts like, Just-in-Time, Kaizen, one-piece flow, Jidoka, and heijunka to reach a high level of efficiency in production.Toyota recognized quality as one of the significant factors disturbing customer satisfaction and strove to achieve excellence in manufacturing quality products. Therefore, Toyota became one of the most trusted brands in the global automobile industry.But some analysts felt that Toyota had become a victim of its own success. In the mid-2000s Toyota expanded its production facilities rapidly in a bid to grow globally and to achieve its goal of becoming the number one auto maker in the world. Toyota's rapid growth affected its product quality with the company reportedly compromising on its manufacturing techniques. Customers began to face safety related problems in Toyota vehicles. Later a series of recalls followed which put the company's hard-earned reputation for quality at risk. Analysts opined that constant recalls had damaged the reputation and brand image of Toyota and hindered its return to profitability. In a quest for market share, Toyota had sacrificed its legendary quality and ignored its own management principles and customers, they said. To verify the cause of recalls and improve quality, Toyota set up a committee headed by its president Akio Toyoda in early 2010. The committee was to inspect every process in the Toyota Production System to ensure delivery of quality products to customers.II. Problem StatementHow does Toyota address the issue with the aim of developing quality and reputation? Toyota has long been considered as the top of Japanese innovation, manufacturing quality and industrial pioneer. Its vehicles are well known for economy, reliability and fuel efficiency which is based on the Toyota Production System (TPS). Its lean manufacturing techniques and culture of continuous improvement were the envy of the business world. However, it is absolutely astonishing that Toyota has been embroiled in such a serious quality issues with its vehicles. Just within 2009 and 2010, 12 million cars worldwide have to be taken back for modification under the potential problems with floor mat, acceleration pedals, and braking, all of which were related to unintended acceleration problems.With the above problems in mind, this study aims to elaborate on the Toyota crisis in order to understand why Toyota faces this crisis and how they deal with the crisis. This can be achieved through a detailed overview on what have happen in Toyota related to the crisis on a general level, as the recalls had been released globally.III. Causes of the problemThere are several main reasons of the crisis that can be identified within this case study of Toyota Motor Company. Below you will see the paragraph of the different problems that can be found through our Toyota Motor case study.Management strategies issues Since Toyota became the thirds of the world largest automaker, its concentration was on growth and spreading its operations globally, TPS started to weaken. In order to reduce costs, Toyota introduced a program called Construction of Cost Competitiveness for the 21st Century, which intended to reduce the costs across the company's operations by 30% and also expand overseas production. Then a more aggressive version of the program was introduced to reduce production costs and time to market. Thus, Toyota can no longer maintain sufficient support and quality control, especially as it obsesses with cost-cutting which provided by foreign suppliers around the world. One of the pervious study claimed that the reason for the quality problems is in the failed supplied supplier management because Toyota failed to ensure the suppliers products were free from design flaws and quality problems. But look back on Toyotas long history ever since the mid-1960s, Toyota began to shift more process steps to suppliers to keep up with the rapid expansion of auto industry. This time, what Toyota had done appeared to be adhering to and copying what they used to do. But the supplier performance is closely correlated with the desires expressed by the OEMs. And based on the past study, suppliers for Toyota have been observed to be providing greater improvements in the product quality year after year than have other OEMs and Toyota is putting more priorities on quality versus cost. This suggests that when the preference of Toyota will affects the supplier performance to deliver innovation, cost and quality. When the American gas pedal component supplier produced defect gas pedals, it reflects Toyotas more focus on cost saving rather quality on the supplier. So the fundamental cause of the many quality issues is the managements focus on growth at the cost of product quality and safety which had been top priority in the history of Toyota.Employee and Mechanical issueToyota practice was not capable to achieve TQM approach, as the employees were not well-trained, which leaded to the poor performance and low productivity. The inexperienced employees were selected to close a blank slate in work habits and attitude as Toyota could get. Additionally, since the team members were unlikely to have a previous manufacturing experience, the majority of them have never been affiliated with a union. As a result, it will bring the harmful effort for the team and company. For instance, some even more specific events and facts in Toyota prove this view is plausible. In the past one 10 years, the US market share of Toyota increase in dramatically and according Toyota had hired more people, and when the number of employees raised quickly relatively theres fewer leaders to pass along their commitment to continuous improvement to the new workers which is a disciplined commitment to continuous improvement and high quality. Also, it is said by some old employees that new employees are trained at a fast pace to keep up with expansion. To make a conclusion, the human resource processes should be reviewed to see whether there are defects in term of whether the safety, quality and performance in employees job treated as important targets rather than focusing on the gas pedals.There was lack of communication between operating and top management team. As soon as the emergencies occurred, the passing information process was wasting too much time, and the executive team could not provide an immediate decision making, since the postponement of poor communication between leaders and workforces, to handle problems. Therefore, this circumstance may make dangerous consequence to Toyota. IV. Decision CriteriaProblemsSolutionsDecisions

Management strategies issuesToyota should have enlisted the very best marketing talent they could find to address the issues while their engineers and outside experts investigated the causes. Until definitive causes were found, their marketing team should have publicized the investigation showing that the company was listening to the complaints and in complete control of the situation. As it was, they actedout of control- brought out fix solutions to the affected vehicles; took advantage of mass media, as well as various online tools to communicate with stakeholders; organized special management teams to monitor quality issues; strived to make sure stakeholders that they are going back to its core values looking at the processes, quality, and customers, and so on.Toyota also highly made use of their established social responsibility which highlight that it has sought harmony between people, society, and the global environment, as well as the sustainable development of society, through their manufacturing. Referring to their crisis communication strategies, a combination of apology, reducing the offensiveness, and corrective strategy was implemented, for the purpose of changing perceptions of stakeholders in crisis, reducing negative affect generated by the crisis, and protecting their reputation.

Employee and Mechanical issueEmployee empowerment is a philosophy associated with real benefits for Toyota. Its underlying principle of giving employees the freedom, flexibility, and power to make decisions and solve problems leaves an employee feeling energized, capable, and determined to make the Toyota successful. As a result of these management practices, quality of work increases, employee satisfaction increases, collaboration increases, employee productivity rises, and Toyota costs decrease. All of these benefits enable Toyota to achieve a competitive advantage and to bolster its bottom line. - To properly and firmly implement TSP, 14 principles of the Toyota Way and TQM approach.Toyota believes that every employee should take ownership in the company by identifying quality defects and ways to improve efficiency. This philosophy has established the company as a quality champion to most automobile buyers. Toyotas dedication to employee empowerment and quality has allowed the company to become the worlds third largest automobile manufacturer.- Employees need to be cross-trained and apply perfectly TQM approach.

V. Alternative Solutions and AnalysisProblemsAnalysisSolutions

Floor mat entrapment and pedal problemContrary to public statements that TOYOTA made in late 2009 saying it had addressed the root cause of unintended acceleration through a limited safety recall addressing floor mat entrapment, TOYOTA had actually conducted internal tests revealing that certain of its unrecalled vehicles bore design features rendering them just as susceptible to floor mat entrapment as some of the recalled vehicles. And only weeks before these statements were made, individuals within TOYOTA had taken steps to hide from its regulator another type of unintended acceleration in its vehicles, separate and apart from floor mat entrapment: the sticky pedal problem.- A precision-cut steel reinforcement bar will be installed into the accelerator pedal assembly, thereby eliminating the excess friction that has caused pedals to stick in rare instances.- replace the proper floor mat with the correct shape of the drivers side foot-well.

Anti-lock Braking System (ABS)Braking performance may be reduced, resulting in increased braking distance (compared to performance before ABS activation) when vehicles switch at low speed to hydraulic braking-only to activate ABS, which is used to stabilize handling on slippery surfaces, such as snowy and icy roads.Correct ABS software program to prevent a reduction in braking performance.

Fuel System Issue- The fuel delivery pipe system in some cars, which is allegedly faulty. The problems could result in a leak and increase the risk of a car catching fire.- Faulty fuel suction plates, which also carries the risk of leaking fuel with the potential for the car to catch fire.Use many different fuel pressure regulators for replacement.

VI. Recommended solutionAs well as I have studied and read about the TQM case on Toyota and several other research papers, I can deeply examine and identify the problems and the roots case of the Toyota crisis such as cost cutting, management support, timetable, and feasibility of the implementation; therefore, in order to build up or regain the image, trust, reputation, especially customer, Toyota should restore the business by practice the following ideas and perceptions.

Toyota Motor Corporation's problem is first and foremost a leadership crisis. It needs a credible leader with a strong, cohesive plan. Competitors Ford and GM to regain the market shares that have lost. Rather than blame floor mats and panicky drivers, as Toyota did when complaints first arose, it should have acknowledged that its vaunted quality system failed. Toyota should seize the opportunity to make radical changes to renew the company and restore consumers' trust. Faced with multiple reports of accidents from sticking accelerators, Toyota blamed the problems on stuck floor mats and panicky drivers. Instead, Toyota should acknowledge that its vaunted quality system failed. CEO Toyoda should take personal responsibility by saying that he pushed too hard for growth and neglected quality. By admitting his errors, he gives every Toyota employees permission to acknowledge mistakes and to get on with correcting them, instead of denying reality. Toyoda cannot expect to solve problems of this magnitude himself. Instead, he needs a crisis team reporting directly to him, working 24/7 to get problems fixedpermanently. He also needs outside counsel, as he appears to be listening only to insiders who are defensive about criticism. He should add the world's top quality experts to his fix-it team and listen carefully to their advice. When Toyota's problems first surfaced, the company blamed a symptomloose floor matsand exonerated the accelerators. Instead, management should have required its best engineers to get to the root cause of this problem and every other quality problem being reported. This is basic engineering and quality discipline.

These problems won't just fade away. In fact, they are likely to get worse before getting better. Just as the seeds were sown over the past ten years by placing growth ahead of customer concerns and quality, digging deep into problems will likely uncover more quality concerns that will take years to resolve. Toyota must invest heavily in corrective actions while its sales shrink and profits implode, requiring major cash resources until its reputation can be restored.

For all the pain Toyota is experiencing, this crisis provides a unique opportunity to make fundamental changes required to restore Toyota quality. The crisis is melting away the denial and resistance that existed in recent years. Employees are ready for new direction, and they are willing to make radical changes to renew the company. With Toyoda's leadership, Toyota automobiles can be restored to the world's highest quality.

VII. Action Plan

As we have studied about the Toyota crisis, we know that Toyota is current in bad circumstance, which caused by a few critical factors discussed above. Therefore, Toyota have to follow the following action plan, in order to restore the customers and regain the reputation, image, and trust.

Action itemsSpecific implementation items, targets and others

Development and production activities for the realization of a low-carbon society

Development and Design

Promote the development of technologies for next-generation vehicles- Develop interior parts that reduce heat loss. Promote the development of weight-saving (lighter-weight) products for improving fuel efficiency. - Develop low-density materials and parts that are lightweight, thin and have high rigidity. - Develop lighter-weight structures (Establish weight-saving target values for all project units for new vehicle models after 2012).

Production and LogisticsReduce CO2 emissions in production activities- Promote the development of production technologies with the aim of achieving a 30% reduction in CO2 emissions of newly- Promote CO2 emission reduction activities by making daily improvements (undertake activities that pursue increases in productivity and that also encompass business offices). - Utilize renewable energy giving consideration to the characteristics of each country and region.

Environmental managementManagementStrengthen and promote consolidated environmental management

- Promote activities for reducing environmental impact that are suited to each country and region by enhancing the activities of regional Environmental Committees. - Promote continuous improvements by building and enhancing the operation of environmental management systems. - Strengthen the Toyota Boshoku groups compliance with environmental laws and promote activities to prevent environmental risk.

Promote environmental conservation activities in cooperation with business partners- Request that suppliers build and operate environmental management systems and abide by the laws. - Promote resource conservation at suppliers through VA proposals that include reviewing production methods.

Promote sustainable plant activities- Create plants that coexist with communities and nature. - Formulate and implement a roadmap for reducing CO2 emissions that is suited to actual circumstances in each region.

Enhance activities for communication with stakeholders through active disclosure of environmental information- Enhance environmental information in the Toyota Boshoku Report. - Further enhance the provision of environmental information (exhibitions, website, etc.). - Promote activities for communication with local communities (plant observation tours, area conferences, environmental volunteer activities, environmental learning and events for children).

References:Feng, Y. (2010). Toyota Crisis: Management Ignorance. Halmstad University Web Site. Retrieved from http://www.diva-portal.org/smash/get/diva2:349746/fulltext02How Toyota's Crisis Management Failures Added to the Billion-Dollar Settlement. (2012, December 28). Business Insider Web Site. Retrieved from http://www.businessinsider.com/toyota-paying-billions-because-of-marketing-failures-2012-12#ixzz3U6C8XgV6How Toyota's Crisis Management Failures Added To The Billion-Dollar Settlement. (n.d). Business Insider Web Site. Retrieved from http://www.businessinsider.com/toyota-paying-billions-because-of-marketing-failures-2012-12Tragedy at Toyota: How Not to Lead in Crisis. (2010, February 22). Working Knowledge PDF. Retrieved from http://hbswk.hbs.edu/item/6381.htmlThe Benefits of Empowering Employees. (n.d). Saylor Web Site. Retrieved from http://www.saylor.org/site/wp-content/uploads/2013/02/BUS208-5.2-The-Benefits-of-Empowering-Employees-FINAL.pdf2015 Toyota Boshoku Environmental Action Plan. (2011, March). Toyota Boshoku Web Site. Retrieved from http://www.toyota-boshoku.com/global/about/csr/plan/pdf/plan2015_english.pdf

A TQM CASE ON TOYOTAPage 13