Total Quality Management in Toyota: TMS Explained

Introduction to Toyota's Management System

The Toyota production system — otherwise known as the Toyota Management System (TMS) — gives its adopters the ability to double their production in half the time, at half the expense, with half the problems and a fraction of the inventory. TMS is far more than a simple production system. It is a three-innovation combination model comprising policy deployment (hoshin kanri), total quality management (TQM), and just-in-time production. Toyota did not invent these three innovations independently, but their combination delivered a powerful competitive advantage following the oil crisis of 1973–74. Forty years later, the Japanese automaker became the leading manufacturer in the United States while its competitors continued to struggle to achieve the same results — an outcome made possible by the TQM systems Toyota adopted.

By emphasizing a "quality first" and "customer first" corporate philosophy from the time of its establishment, Toyota won the Deming Application Prize in 1965 and the Japan Quality Control Award in 1970, both following the establishment of Statistical Quality Control in 1949. The company has practiced Total Quality Management on the foundation of a solid customer-first principle and total employee participation. Additionally, since the launch of the Creative Idea Suggestion System in 1951, employee suggestions have grown steadily, and the system has established stable responses to changes in manufacturing (monozukuri), contributing considerably to the company's development. As a result, the core concepts of problem solving, TQM, and continuous improvement through creative innovation became central to the company, driving higher production quality levels after their adoption (Hino, 2006).

Toyota developed the Just-in-Time (JIT) philosophy after the Second World War, drawing primarily on Henry Ford's continuous manufacturing flow model, which Ford introduced in 1914. Ford's production system was focused on large-scale mass production. Toyota adapted the system and placed particular emphasis on eliminating waste. Because the postwar Japanese market demanded small, fragmented production runs, Toyota converted long production lines into U-shaped cells, cross-trained workers to operate multiple machines, and reduced changeover times. This slashed wasted time and minimized work-in-process inventory.

Just-in-Time Production

Toyota also developed the widely known Kanban signal card system to complement its just-in-time cells. The Kanban system linked production cells that were not physically co-located or integrated, and it was also used to integrate supplier and customer functions that had similar production needs (Bose, 2011).

Toyota merged various quality checks directly into its production cells and operations, drawing inspiration from the ingenuity of its managers and from Six Sigma methods introduced to Japan by the United States government after the war. This approach made problem discovery and correction faster and more reliable. The key quality-at-the-source mechanisms include:

Successive checks: These checks require all individuals contributing to a process to evaluate the quality of (a) work previously performed by others, and (b) tools, materials, or equipment used in the process.

Quality at the Source

Self-checks: These checks require all persons contributing to a process to evaluate the quality of their own work.

Mistake proofing (Poka Yoke): This principle is critical for significant steps and conditions in processes where human inspection may be impractical or difficult. It enables process owners to design procedures and devices that display problems immediately and resolve them to management's satisfaction (Keen, 2007).

Conclusion

The effect of Toyota's response to the economic downturn in Asia and the collapse of Japan's Bubble Era left the industry divided between companies like Honda and Toyota and the rest of the field. This division has been reflected in the stock price performance of auto producers and their average financial performance throughout the 1990s. The significance of this division lies in its implications for the industry's future evolution. All financially unstable companies were forced to restructure their strategies, close plants, and reduce production. The broader consolidation that followed helped Japan gradually reduce excess production capacity of approximately three to four million units. The weaker firms did not benefit from this process — they were absorbed by larger global automotive groupings. Between 1999 and 2000, European and American manufacturing groups including Volkswagen, Renault, Daimler-Chrysler, Ford, and GM acquired the remaining independent firms, giving these affiliates significant influence over Japan's future automotive strategies.