NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES

SCHOOL OF BUSINESS MANAGEMENT

OPERATIONS AND SUPPLY CHAIN MANAGEMENT

GROUP PROJECT

TOTAL QUALITY MANAGEMENT AT TOYOTA

SUBMITTED TO: DR. AKSHAY KHANZODE

SUBMITTED BY:
DIV F, GROUP 5
GAURAV BAJAJ, F005
MEGHANA CHITIBOMMA, F015
VIKRANT SHANGLOO, F025
HARISH R, F035
ABHUDAY AGGARWAL, F045
ABHINAV SINGH RATHAUR, F055

TABLE OF CONTENTS
ABSTRACT
OVERVIEW
HISTORY OF THE COMPANY
MAIN PRINCIPLES OF TOYODA, THE FOUNDER
GUIDING PRINCIPLES AT TOYOTA
QUALITY IMPROVEMENT IN TOYOTA
FOUNDATION OF THE QUALITY
JUST IN TIME
JIDOKA
HEIJUNKA AND STANDARDIZED PROCESS
PROBLEMS FACED DURING TQM IMPLEMENTATION AT TOYOTA
OPERATING MACHINES AND WORKERS
PROVISION OF BEST QUALITY
TECHNIQUES USED
BEST PRACTISES RELATED TO TQM AT TOYOTA
CONCLUSION

2
 ABSTRACT
Total Quality Management has shown the potential to significantly impact employee and
organizational development. Companies have established and preserved norms to ensure
long-term success for both customers/clients and themselves by having employees focus on
quality management and continuous improvement. Lesser product defects, more satisfied
customers, lower costs, and well-defined cultural values are some of the benefits of TQM.
Toyota is one such example of TQM. Post-adoption of TQM and Kaizen, the automobile
giant saw the higher product and work quality across levels of the organization. We aim to
understand how Toyota implemented the TQM and the various processes undertaken to
achieve the goal through this project. We analyzed the challenges faced by Toyota while
implementing the TQM and evaluated the result of TQM adoption.
Our main emphasis has been to understand how Toyota emerged as one of the biggest
automobile giants by implementing TQM. We have analyzed concepts like - Just in Time,
Jidoka, Heijunka implemented by Toyota, the challenges the company faced, the result of
the implementation, and the best practices related to TQM.
The trends and processes at Toyota make it one of the most successful automobile
ventures. TQM at Toyota is represented by the Toyota Production System, henceforth
referred to as TPS. It is the production system that encompasses people and productivity
measures are undertaken. TQM and being open to customer suggestions are some of the
major factors that have it the giant it is today in a highly completive market.

3
 TQM AT TOYOTA MOTORS
OVERVIEW
Toyota is a well-known Japanese automobile company throughout the world. It makes autos,
engines, car electronics, and car AC compressors, as well as financing other industries, and was
formed on August 27, 1933.

Toyota offers three different types of automobiles: hybrids, internal combustion engines, and totally
electric vehicles. The corporation sells its automobiles in 190 countries, with the primary markets
being Japan, North America, Europe, and Asia.

HISTORY OF THE COMPANY

The company began as a part of Toyoda Automatic Loom Works in 1933, under the direction of
Kiichiro Toyoda, the founder's son. Kiichiro had travelled extensively throughout the United States
and Europe in 1929, conducting significant research on gasoline-powered engines and automobile
development. In 1934, the division produced its first A-Type engine, which was utilised in a May
1935 A1 passenger automobile and an August 1935 G1 truck. The Model AA passenger automobile
was first produced in 1936. The early Toyoda Company vehicles were similar to the Chevrolet and
Dodge Power Wagon.

During WWII, the firm sold automobiles to the Japanese Army. Because there was such a large
supply required for the war, the trucks were manufactured in a very basic shape, with only one
headlight in the centre. However, following World War II, the country faced economic difficulties,
and the corporation was on the edge of bankruptcy.

To get around this stumbling point, the management borrowed money from multiple institutions
and cut staff. The corporation was obliged to announce salary cuts and layoffs in 1950, resulting in a
two-month union strike. The strike was ended by an agreement that included layoffs and wage
cutbacks, but also required the company's president at the time to leave. Toyoda Automatic Loom
Company CEO TaizoIshada took control after Kiichiro Toyoda resigned.

Because the US military ordered over 50,000 cars during the Korean War, the company was able to
resuscitate, and Ishada was given full credit for his investments and tactics. Due to the firm's
success, a separate sales company, Toyoda Motor Sales Company, was established in 1950 and
lasted until 1982. The Crown was the first Japanese car to be exported to the United States and
Brazil in 1957, thanks to the Toyopet Dealer Chain, which was created in 1956. American and
Brazilian divisions were formed in 1957. In 1960, Toyota began to expand. In 1963, it made its way to
Thailand and ultimately to Australia.

Australia was Toyota's most important export market from 1963 to 1965. Toyota had become a
household name by 1970, with one million vehicles sold worldwide. Fuel prices were high in mid-
2008, and the US economy was weak, resulting in a drop in Toyota sales. In 2010, Toyota had to halt
the sale of eight automobiles due to difficulties with the accelerators becoming stuck. In December
2012, the company secured a $1 billion settlement to resolve a complaint involving the acceleration
of some difficulties.

4
MAIN PRINCIPLES OF TOYODA, THE FOUNDER
 Always keep your promises, as well as your commitment to the company and the greater
good.
 Always be creative and studious, attempting to stay ahead of the curve.
 To avoid frivolity, always be practical.
 Always strive to establish a welcoming and supportive work atmosphere.
 Always be aware of spiritual matters and remember to be appreciative.

GUIDING PRINCIPLES AT TOYOTA

 To become a great global citizen who respects and upholds all nations' laws and languages,
and engages in ethical business activities.
 Respect and honour the cultures and traditions of all nations, as well as contribute to their
economic and social development.
 Commitment to the industry of providing clean and healthy goods and services, as well as
helping or improving the lives of customers through a variety of activities.
 Use innovation to develop new technology in order to deliver the greatest quality goods to
consumers and meet their needs.
 Foster a corporate culture that encourages individual creativity while also emphasising the
value of teamwork. By fostering mutual trust and respect between labour and management.
 Strive for growth through innovative management.
 Collaborate with business partners for long-term stability and mutual gain.

QUALITY IMPROVEMENT IN TOYOTA

Toyota was the first company to apply Total Quality Management (TQM) and Kaizen, which
embodied the philosophy of continuous improvement, in early 1961. Toyota has its own quality
control system, which it refers to as the Toyota Production System (TPS). In 1951, Toyota launched
the Creative Idea Suggestion System to assist and motivate employees to contribute effectively and
efficiently to the company's growth. Toyota implemented Statistical Quality Control in 1949. The
organisation took environmental initiatives as well as community-based programmes. These
concepts are at the heart of the Total Production System, and they've led to higher product and job
standards, as well as expansion in all areas of the business, from personnel to facilities.

 The first concept of Lean manufacturing is quality management through one-by-one

production.
• The second essential notion of manufacturing is the one-by-one integration of quality into
the process.
• The third fundamental principle is standardisation; Toyota standardises all processes,
including the development of safety regulations.

5
FOUNDATION OF THE QUALITY –
JUST IN TIME (JIT)
"Exactly-in-time" means "just what is necessary, when it is required, and in the amount required." To
efficiently build a large number of autos, which may consist of over 30,000 pieces, a thorough
production strategy that includes parts procurement is required. Waste, contradictions, and
unrealistic circumstances may be removed by supplying "what is required, when it is required, and in
the amount required" according to this production plan, resulting in higher productivity.

JIT is the most effective and widely utilised TPS tool. Allowing material to travel through fast
channels allows the right component to be in the right place at the right time.

Figure 1. Just In Time

JIDOKA
When an irregularity occurs, jidoka indicates the system must come to a safe stop, according to
Toyota. As a result, jidoka requires hand-building and developing structures until they are both
effective and secure. Each new line component is rigorously designed by hand to stringent
specifications, then its operations are subsequently simplified through incremental kaizen
(continuous improvement). The value added by human operators on the line eventually fades away,
allowing any operator to get the same outcome. Only then is the jidoka mechanism implemented
into actual production lines.

Jidoka is a less well-known and more difficult method. This is about the intelligent computer, which
can be shut down at any time if a worker discovers or reports a problem, thereby shutting down
production. To signify a problem and seek assistance, Toyota employs andon or lights, as well as

6
music/sound. Workers have the ability to pull the Andon at any time, alerting the team leader to any
issues.

Figure 2. Jidoka Process

HEIJUNKA AND STANDARDIZED PROCESS

It refers to the levelling procedure. The main goal is to create a streamlined order system and to
balance the workload. Levelling the shape and quantity of outputs over a period of time helps
manufacturers to successfully satisfy consumer needs while avoiding batching, resulting in fewer
inventories, capital costs, labour, and production lead time across the supply chain.

Figure 4. Heijunka

7
Production meets demand with Heijunka –

That is the essence of heijunka: pulling production in tight and cozy with demand. Flexibility is
improved, units can all sell (perhaps not immediately, but eventually), and production would be able
to satisfy peak demand times if all product types are produced (and processed as needed)
throughout the year.

Figure 3. Toyota Production System

PROBLEMS FACED DURING TQM IMPLEMENTATION AT

TOYOTA
I. OPERATING MACHINES AND WORKERS
The company's automotive business has an issue with machine wear caused by product
flaws. When a running engine broke down, the standard American procedure was
followed, and only an engineer was summoned to repair it. Parts were further damaged
as a result, and the operation division's production suffered as a result. Finally, when
moving from one machine to the next, the task encountered a perplexing circumstance,
which was classified as systemic defects that required a remedy or plan.

CHALLENGE

The main issue was implementing and applying TQM in a given area. The major problem
was how TQM practice can be implemented in plants in Toyota. Since there were
problems with the design of the products and how to treat employees, it became clear
that it was a challenge to work together in management and operations to achieve
maximum success concerning the provision of products and services for the client. Both
issues relate to the confusion of the employees to make them work on one machine to
another and call an engineer to resolve the problem before using the machine. Initially,
the management of the company stopped moving staff as far as possible and appointed
employees to take responsibility for the individual machines in order to shut down the
further practice of wearing the machine before calling for maintenance. This strategy

8
 allowed the provision of training and development, as well as communication and TQM
principles, to be applied within the operating unit. In this step, Toyota was able to apply
TQM to the Human Resources Department (HR) which encouraged management to
expand its use of TQM to other issues associated with the implementation of the Toyota
strategy.

ACHIEVEMENT

It was known that Toyota was ready to become the world's finest car manufacturer and
dominated the import market in 1980. Toyota has enjoyed great success in the
manufacturing sector mainly as a result of the integration of TQM in its human resources
and operations management.

II. PROVISION OF BEST QUALITY

Based on the corporate philosophy of "Customer First" and "Quality First," the Toyota
Production System has provided the principles that have allowed the company to
practice it in their day-to-day activities for several years. They used to follow the same
practice, and they weren't looking for a change. Their philosophy was adopted and
followed by a number of companies around the world.

CHALLENGE

The main problem with TPS was the desired results that the company wanted to achieve
through its manufacturing and manufacturing departments because they want to make
their customers happy with their products and services.

The results are as follows:

• To provide customers with the best quality services.

• Provide equal treatment to workers through Job satisfaction, Fair treatment, Job
security, Flexibility.

As a result, the company would be able to respond to the market and gain profit by
reducing costs. They need to change their working methods in order to make more
profit.

ACHIEVEMENT

III. The company was able to accomplish the predicted outcomes thanks to the
implementation of TPS, which was based on Kaizen's formation or continuous
improvement. Toyota personnel were given the authority to follow standardized rules
that reflected the company's goal, vision, objectives, and culture in both employee
interactions and process development. TPS and kaizen have aided the organization in
making its consumers happy with its offerings.
IV. TECHNIQUES USED
TPS and Kaizen have been used as methods for the implementation of Total Quality
Management in the operational management of the company. Since Kaizen is the core
of TPS, training and communication development as well as customer-focused
management responsibility, which clearly defines the principles and approaches of TQM,
have become necessary.

CHALLENGE

9
 The main obstacle in using the strategies stated above was figuring out how to apply
TQM to Toyota's systematic problems.

Labor training, for example, is expensive, and some sectors of the operational
department may be underproductive. Furthermore, the TPS had a number of expected
outcomes that could not have been the result of TQM deployment. Another point worth
noting is how staff were affected by the American practise of waiting until the
equipment broke down before summoning an engineer to fix it.

These were the difficulties in implementing approaches to improve productivity through

TQM.

ACHIEVEMENT

By implementing the techniques, Toyota needed to be successful in achieving job

satisfaction and taking responsibility within the machines that they used to work in the
manufacturing division. The present conditions of the company still reflect the use of
TPS and Kaizen.

BEST PRACTISES RELATED TO TQM AT TOYOTA

TMC's attainment of BE is evidenced by the Japanese company's performance in the automobile
industry. The Toyota Production System (TPS) is Toyota's major source of excellence, and the
system's roots may be traced in the five Toyoda Precepts, which encompass Sakichi's life and
philosophy. The first precept emphasizes TMC's role in society as a contributor to its growth and
well-being, based on the principle of "profiting the country." The second precept encourages
continuous improvement and invention.

The third precept encapsulates the qualities of the Mikawa people (home of TMC headquarters):
loyalty, integrity, and simplicity. The fourth precept asserts that employees are members of the
Toyota family, and so the company's internal atmosphere should be pleasant to them. The final
precept demands that business and morality be reconciled.

The TPS is based on the complete removal of Muda, which is defined as "any human activity that
consumes resources but does not create value." TMC strives to provide the greatest quality at the
lowest cost and with the quickest lead time in order to eliminate all sorts of waste. The JIT and the
TPS are the two pillars of the TPS. JIT refers to "the right pieces needed to be assembled reaching
the assembly line at the moment they are needed and only in the amount needed" in the flow
process. Although it appeared to be a simple concept, it proved challenging to apply in the
manufacturing process because it required the complete elimination of all inventory. Autonomy
refers to machines' ability to prevent faults (such as defective products) on their own.

Figure 5. TPS

10
The TPS framework encompasses technology (equipment, machinery) and meta-technology (know-
how, techniques, methods) found on the two interconnected sides of the TMC, the soft side (e.g.
human resource management, dealer management, corporate culture, etc.) and the hard side (e.g.,
logistics management, research, and development, etc.).

TPS is founded on Toyota's corporate philosophy, which highlights the unique priority placed on
quality, the system's nodal point that led to the establishment of TQM at TMC. The TPS has quality in
both the visible and invisible elements. The visible component includes procedures (for example,
quality circles), tools (for example, statistical quality control), and concepts (for example, the "zero
defect" philosophy), while the invisible half includes management thinking and kata (routines). In a
sophisticated system known as TPS, which has several connected elements, these two portions
interlock and complement each other (e.g., lifelong learning and continuous improvement). TPS, in
turn, led to TMC's accomplishment of the BE.

This is why TPS is "the most visible product of Toyota's quest for excellence" and is committed to
quality and ongoing corporate concern.

Research has shown that some of the best TMC practices related to TQM are as follows –

1. Focus on customer

Toyota expresses the customer's concern by putting the 'customer first' policy into effect
through the input it receives. As a result, the Japanese corporation has set up customer support
centers throughout the world to listen to the 'voice of the consumer' and respond to its needs.
TMC also recognizes the importance of better knowing, serving, teaching, and empathizing with
consumers in order to 'catch' them and form long-term relationships with them by incorporating
their feedback into the development of better cars. Toyota, for example, has modified its Voxy
Noah models to accommodate those with a handicap.

The customer is the true judge of the Toyota cars on the market, the one who appreciates
whether or not they have value and, in this regard, the Camry model in the midsize car class and
the Sienna model in the minivan class was considered by consumers to be the best cars in 2016.

11
 Figure 6

2. Strong Leadership

TMC's achievement of BE is also a natural result of its leaders' tremendous contributions over
time, particularly in the area of TQM. K. Watanabe, former President of Toyota Motor
Corporation, stated that Toyota's products and services must be the greatest in the world and
that being number one in the global automobile industry means being number one in terms of
quality. As a result, he contended that by continuously enhancing the company's quality, the
company's revenues would increase. The majority of Toyota's presidents and managers have
been and continue to be visionary leaders who have set and achieved lofty goals, maintained a
sense of purpose while keeping historical context in mind, served as mentors and role models
for employees, and contributed to the development of organizational culture.

They also believed in the power of humility and showed a high level of regard for their
subordinates, gaining their trust through the use of nemawashi (a process based on consensus
for discussing problems and identifying potential solutions together with all affected people).
Toyota's executives accepted responsibility for the errors when they decided to recall millions of
defective vehicles from the road and publicly apologised to their customers. TMC evaluates the
effectiveness of its executives based on their performance in four areas: safety, quality,
productivity, and costs.

3. Continuous Improvement (Kaizen)

Kaizen, as one of the TPS components, considers that everyone—both managers and employees
—must be involved in producing small-scale improvements at his workplace on a regular basis
(Imai, 1986). Different kaizen methodologies exist, such as those based on the PDCA cycle, the

12
Standardization-Do-Check-Act (SDCA) cycle, or the Quality, Cost, and Delivery (QCD) cycle, but
they all aim for the same goal: the complete removal of Muda, the TPS's basis (Liker, 2004). The
completion of two phases is required to reach this goal. All types of Muda are identified in the
first stage: waste from overproduction, waste from waiting, waste in transportation, waste from
processing itself, waste from stock on hand (inventory), waste from movement, and waste from
defective products.

The complete removal of all varieties of muda detected follows this stage. Employees
accomplish this by employing a technique known as "five reasons" to progressively uncover and
eliminate the root of the problem. A new question, "Why?" follows each answer to the query
"Why?" (Why is there an oil slick around the machine, for example?) Because they're running
out of oil. Why is it running out of oil? Because the oil pump isn't working. Why is it breaking
down, and so on.) TMC also uses a technique in which the labelled card is returned to the
previous workplace/activity to identify which parts are needed for Kanban hoshiki (the
next/following workplace/activity), eliminating inventory waste.

As a result, continuous improvement in Toyota is based on process and results, systematic

thinking, and non-blaming.

4. Focus on the workforce

Kaizen, as one of the TPS components, considers that everyone—both managers and employees
—must be involved in producing small-scale improvements at his workplace on a regular basis
(Imai, 1986). Different kaizen strategies exist, such as those based on the PDCA cycle, the
Standardization Do-Check-Act (SDCA) cycle, or the Quality, Cost, and Delivery (QCD) cycle, but
they all strive at the same thing: the complete removal of Muda, the TPS's basis (Liker, 2004).
The completion of two phases is required to reach this goal. All types of Muda are identified in
the first stage: waste from overproduction, waste from waiting, waste in transportation, waste
from processing itself, waste from stock on hand (inventory), waste from movement, and waste
from defective products.

The complete removal of all varieties of Muda detected follows this stage. Employees
accomplish this by employing a technique known as "five reasons" to progressively uncover and
eliminate the root of the problem. A new question, "Why?" follows each answer to the query
"Why?" (Why is there an oil slick around the machine, for example?) Because they're running
out of oil. Why is it running out of oil? Because the oil pump isn't working. Why is it breaking
down, and so on.) TMC also uses a technique in which the labelled card is returned to the
previous workplace/activity to indicate which parts are needed for Kanban hoshiki (the
next/following workplace/activity), eliminating inventory waste.

As a result, continuous improvement in Toyota is based on process and results, systematic

thinking and non-blaming.

5. Lifelong learning

TMC has never stopped recognizing, adapting, and implementing the best processes and
techniques of manufacturing by constantly analyzing competitors and learning since the pre-war
time. Sakichi and Kiichiro Toyoda traveled to Europe and the United States to learn about and
study the most sophisticated technical and industrial achievements of the period. Without a
doubt, Ford, the American business, was Toyota's "mentor" in the automotive industry. TMC set

13
 clear goals and examined its best practices using benchmarking to become a global leader in the
postwar period.

Today, Toyota is an example of a knowledge-based organisation that has always valued learning
and training (e.g., ninjutsu-learning managerial skills through training), both in the workplace
(e.g., mentoring, job rotation) and outside the workplace (e.g., ninjutsu-learning managerial
skills through training) (e.g., conferences, case studies). Toyota offers five types of workplace
vocational training programmes: training programmes, foremen programmes, improvement-
based programmes, each (management programmes), and skills-based programmes. In their
function as teachers and mentors for Toyota employees, these programmes are led by
outstanding trainers from various corporate departments.

6. The factual approach to decision making

Toyota employees, particularly decision-makers, must use genchi genbutsu once the core cause
of the problem has been recognised. Genjitsu is the foundation of a solid decision-making
process (facts). This is why the TPS was created with sangen-shugi in mind (the "three
actualities": the actual object, the actual site, and the facts). As a result, the best practises
analysed above completely show TMC's continued concern for TQM and love for BE. These
approaches clearly demonstrate Toyota's commercial success, which has grown organically from
a tiny loom manufacturer in rural areas to the world's largest automotive firm. This assumption
is supported by two key reasons.

First, TMC's best practice on TQM is derived from the TPS. Second, these practices are entirely
within the BE attributes.

CONCLUSION
Toyota is a successful automobile company because of TQM's trends, procedures, and practises.
Toyota has refined their process over time. The Toyota Production System is the embodiment of
Toyota TQM. It is the production system that includes people and the productivity measures that are
implemented. Toyota has become the company's chief executive officer by implementing the Kaizen
technique. For improvement efforts, the door to the kaizen process is always open. At the end of the
day, the fundamental goal for all Toyota quality and service ideas to be revitalised is customer
pleasure. Toyota is constantly receptive to consumer feedback, which helps it compete in a wide
range of markets and labour pools.

14