Toyota Production System Standards Lowered?

Toyota

Are the standards of the much-lauded Toyota Production System (TPS) being lowered? TPS was created in the 1950s to boost Japan’s economy post World War II. In 1945 Japanese General Tomoyuki Yamashita said that he thought that Japan had lost the war because it lacked technology. So, when Dr. Edwards Deming, a U.S. statistician and industrial engineer, was recruited to Japan in 1947 by the Supreme High Command for the Allied Powers, the Japanese invited him to give a series of lectures. Dr. Deming developed Total Quality Management (TQM) from his technical expertise and his experience in the U.S. and Japan.

Based on TQM, TPS was created by Taiichi Ohno in the 1950s. TPS teaches a customer focus, emphasis on adding value through employee contributions that are developed through two-way trust and respect, and elimination of inefficiency and waste in the production process. In the 1970s and 1980s TPS was the system that Ford Motor Company emulated to improve their production and their bottom line. Recently, however, Toyota lay shame-faced, having paid $1 billion in fines from a four-year U.S. federal criminal investigation for covering up recalls in 2009 and 2010. They needed to improve their image and move on. However, in yesterday’s news, Toyota is again having to recall 6.4 million vehicles due to safety issues.

Toyota

The system that Ohno created 60 years ago was the precursor for lean manufacturing and just-in-time inventory management. Ohno’s ideas were essential to the critical changes within the auto industry and manufacturing in the 1980s. The Toyota Production System was focused on the highest standards in attention to detail and economizing. Has this message been lost through the passage of time? With several million car recalls, Toyota has sunk to a new low.

According to a business report analysis by Puneet Pal Singh of the BBC yesterday, recalls are common, as evidenced by those of U.S. car manufacturers, even in the past few weeks. He says that this is something that customers come to see as important for consumer safety. He continued that recalls would be accepted by the public because this is how manufacturers fix problems for their consumers.

The TPS system, however, runs counter to this. Total Quality Management works towards reducing defects first in the design phase, second with its suppliers, then in the production stage, and only as a last resort, after it’s reached the customer. Toyota has fallen out of step with its own Toyota Production System. In recent years, attention within the manufacturer has been on cost-cutting, rapid expansion, market share, and productivity gains over quality which had been deeply rooted in Toyota’s culture. The company is stepping away from the long-term continuous improvement and zero defects values that made it such a powerful world model in the 1970s and 1980s.

The change at Toyota began in 1995 when the chairman of the car manufacturer, Shoichiro Toyoda, asked Hiroshi Okuda to take over after the president, his younger brother Tatsuro Toyoda, suffered a stroke. Okuda positioned himself to take charge in a hard hitting manner to help the automaker get back its competitive edge. Traditions were put aside, with gains made in company size and the number of overseas plants and manufacturing facilities in Asia as well as North America and Europe. From 1995 to the end of 2009, Toyota doubled in size.

Toyota continued to promote itself as making a high quality car, and for having reduced manufacturing costs while achieving that. This was seen as a competitive advantage. However, it went full steam ahead without stopping to look back. The result in the U.S. in addition to the recalls and fines is over 100 class action suits and more than 30 individual legal cases filed against Toyota. The Japanese manufacturer will have to revisit its traditions to overcome the lowering of standards from the renowned Toyota Production System.

By Fern Remedi-Brown
@FernRemediBrown

Sources:
BBC News Business
Guardian Liberty Voice
Total Quality Management: The Contribution of Quality Theorists, March 1994, Boston University School of Management
Guardian Liberty Voice
Quality Control Systems, OM4, South-Western Cengage Learning, 2013, Ch. 16, p. 354.
Businessweek

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