Total Quality Management implementation at Toyota Manufacturing

Total Quality Management

For purposes of this paper, manufacturing, service and government implementations are profiled to show the full extent of TQMs' contributions to these three key areas.

Manufacturing

Toyota's initial efforts in quality management began in the 1960s when the company started using the Total Quality Control (TQC) program for managing its suppliers, manufacturing, and vehicle delivery processes. After years of continually improving quality techniques that comprised the TQC approach to manufacturing, Toyota won the Deming Prize in 1965 followed by the Japan Quality Control Awards in 1970. Toyota's Quality Management Departments had envisioned a roadmap of how TQC would eventually become Total Quality Management (TQM), a more all-encompassing approach to addressing the inclusion of customers' needs into the production and quality assurance process. TQM was also seen as a necessary step within Toyota to allow for greater agility to uncertain and often unpredictable customer requirements. Figure 1 shows Toyota's interpretation of TQM. The company has defined TQM to include innovation through improvement, self-discipline and optimization through team work and the support of an egalitarian-based work culture, and finally a focus on a strong customer-oriented attitude. Toyota's cultural values have significantly influenced their approach to implementing TQM, specifically the cultural value of putting the customer needs first, and the customers' perceptions of quality as critical. Given the cultural norms and values of Toyota there is also a strong commitment to continually increase product quality, service quality, product design and manufacturing form, fit and function of their cars and trucks to align with the current expectations of customers.

For Toyota, TQM is all about earning and retaining the trust of their customers.

Figure 1: Toyota's interpretation of TQM

Toyota Corporations' commitment to TQM pervades their American subsidiaries' approach to managing customer feedback and insights regarding future product direction as well. Toyota's American subsidiary is known to have the largest market research staff of any domestic or foreign manufacturers, have the most rigorous use of JD Powers' Customer Satisfaction Index (CSI) and Sales Satisfaction Index (SSI) scores as a leverage point when working with their channels. Toyota's corporate offices and the American subsidiaries also have integrated the many accounting, finance, production scheduling, service and sales system together so that customers can get a single and complete review of vehicles on order and the current status of their present Toyota vehicles in terms of financing, maintenance and service.

All of this integration and sharing of information is predicated on the trust employees have in each other, and also in the systems they are working with. For Toyota specifically and for manufacturing in general, the ability to deliver transformational leadership and the resulting level of performance to a continually increasing level of customer requirements and expectations shows why this auto manufacturers is considered one of the best in its industry at implementing TQM. Hashmi (2007), in his definition of TQM also heavily relies on the integrative aspects of multiple systems and processes, and this is certainly illustrated in the examples of Toyota's many product successes using this approach to aligning product development and production to customers' needs.

Government

The use of TQM is rapidly expanding throughout the entire U.S. Government, with the Internal Revenue Service (IRS) adopting TQM strategies to overcome the many inefficient and wasteful processes the government agency has today. It is estimated three of the four tax preparer questions go unanswered, and that there are literally millions of dollars in inaccurate tax refunds mailed every year. According to the Journal of Accountancy (1994) the IRS is focused on modernizing tax document input and processing, minimizing paper processing, making taxpayer information readily available to IRDS employees, reducing recordkeeping and tax administration costs, and increasing the security and privacy of sensitive taxpayer information.

The highly process-centric nature of the IRS, the implications of managing over $1 trillion in financial assets, has put the IRS' performance under a microscope based on several lapses in performance and a failed system implementation during the mid 1980s.

The IRS' internally-based focus had to be reversed and focused on the taxpayer as customer. Through the use of TQM, the agency has been able to move away from a myopic perception of tax policy definition and collection, to take into account how the many variations in taxpayer conditions would impact their ability to serve them. The change in processes within the IRS forced the agency to be more customer-centric in many more of their tasks, and as a result, there has been a significant decline in unanswered questions and better management of the auditing process. The role of IRS agents and the ability to analyze and interpret tax returns has become much more streamlined and focused on performance over simply compliance. The IRS's lessons learned include the ability to identify with the needs and expectations of their customers, and in doing so, justify the investment in TQM using fact-based decision processes. The IRS as an agency has a wealth of information; the use of the information to better serve taxpayers has been made possible using TQM as the foundation for change.