Quality in Customer Focussed Operations - Case Study Example

Quality in Customer Focussed Operations Name: Lecturer: Course: Date: Table of Contents Table of Contents 2 Introduction 3 Case Scenario 3 Operational processes 5 Literature Review 7 Gaps in Toyota’s customer expectations and operational design 10 Recommendations and Conclusion 11 References 13 Introduction In the automobile industry, car manufacturers are increasingly emphasizing on putting quality in place and integrating it with the management system with the view of delivering quality products to end-users. This is specifically because of intense competition in the industry (Osman 2009). Total Quality Management TQM has become gradually more prevalent as a management strategy to ensure customer needs are satisfied through improving product and service quality. As a management philosophy, TQM is crucial for an organisation to survive within a competitive environment. This report examines Toyota Motor Corporation. The company has become the largest car maker due to its unique TQM. However, certain problems with its TQM have also threatened its market leadership. For instance, although Toyota was the leading car maker in 2010, the company’s performance dwindled in the subsequent year as a result losing its market share to General Motors and Volkswagen. This report analyses the company’s scenario. It further recommends steps the company can take to regain its market share. Case Scenario Toyota Motor Corporation is a global leader in automotive manufacture. The company sells its vehicles in more than 170 countries across the globe. The company has designated its customers to be the responsibility of marketing department as well as the entire organizational processes (Toyoda 2013; Hoque et al., 2013). Toyota has however reported the highest number of car recalls signifying a problem with its quality management system. Between 2009 and 2010 for instance, the company recalled over 9 million cars, and between 2010 and 2013, 7.43 million cars. These impacted on the company’s finances further indicating gaps in the company’s QM (Toyoda 2013). Aside from car manufacturing, the company offers financial services through its financial services division. In 2010, the company was ranked first in regards to units of vehicles manufactured. During the year, the company’s global market share was at 11 percent ahead or Volkswagen and General Motors (GM) at third and second in that order. However, the company’s performance has been wanting from the first half of 2011 when it lost its market leadership to GM and Volkswagen (Hoque et al, 2013). Toyota aims at capturing different market segments, such as middle-to-high income consumers as well as high income consumers. Toyota’s recent marketing approach has however targeted women for a range of their models as seen in their TV commercials, such as for Toyota Prius “Harmony.” In promoting Toyota Sienta, the company has used ‘mommy like” advertisements. The objective of the marketing approach was motivated by the fact that women have a decision making ability of about 80 percent. On the other hand, BMW has targeted company executives even as some series such as 7-series have been targeted at the youth, who are tech-savvy (Hoque et al, 2013). Order qualifiers comprise the product features that qualify it to be considered for purchase by customers. The company’s order qualifiers are competitive pricing, diversity and quality. Toyota develops a range of models to satisfy customer needs. The themes of the cars have also been on safety and reliability, which appeal to women. For instance, Toyota models include Hilux, Camry, Innova, Avanza, Lexus and Fortuner (Hoque et al, 2013). Order winner refers to the product features that wins the company orders or influences customer purchasing decisions. Toyota’s order winners include persistent innovation and standardised quality. Car buyers who go for Toyota models are often satisfied with the innovative external and internal features, as the company has often concentrated on research and innovation (Toyoda 2013). Operational processes Operation processes depict the core functions of a company, which entail production from start to completion of product offering. Operation processes has three phases, mainly inputs which comprise capital, human resources and raw materials; transformation which comprises using technology and machinery; output which comprises final product and service. Toyota used lean manufacturing philosophy in its operational process (Anon 2014). When it comes to input, the processes include incorporating a range of tools and techniques into the operational processes to maximise human resources, time, productivity and assets, while at the same time increasing the level of quality products. Toyota ensures that each employee involved in the manufacturing process of the cars takes part in total quality control. Hence, the company capitalises on standardised work models involving visual control to assists in spotting problems or unusual situations that happen in the manufacturing process (Toyoda 2013). Since the human resource ensures the company’s operations are a success, Toyota offers its staff opportunities and incentives to enable them to focus their skills and expertise in customer satisfaction. The company takes care of its employees’ various training needs to achieve customer satisfaction. In this case, each employee is considered as critical for quality. This also means that each employee is involved maximally in the quality control process (Anon 2014). In regards to transformation, the company ensures effective transformation of inputs into outputs. At Toyota, production of cars takes place during the whole transformation process. The activities of operations comprise making components so as to assemble the cars all across the product line. This includes transforming raw materials or the manufactured components into finished products that are intended for final customer consumption. There is generally restricted client contact in the manufacturing process (Toyoda 2013). In this case, clients only get to make an appearance during the delivery of the finished vehicles or at the beginning of the operations when the car is of new design. Once a vehicle is manufactured, thorough scrutiny of the key elements and functions of the vehicle are examined to confirm the stability and quality of the production process. This means that the vehicles Toyota sells to customers have to meet certain standards. Additionally, the company gives warranty periods for each vehicle sold (Jiang 2009). When it comes to output, Toyota emphasises on customer satisfaction. Indeed, this can be argued by the fact that the car industry is increasingly competitive and if car buyers were not buying Toyota cars, then Toyota cold have stopped car production as the business would not be sustainable. To ensure that Toyota customers are satisfied, the company emphasis on extensive investing in research and development, customer needs, customer satisfaction, collection of customer feedbacks, producing divergent models for different market segments and ensuring quality assurance (Anon 2014). Literature Review Quality carries significant implications to producers and customers. Many organizations continue to realize that their lifeline is basically the production of high quality product offering (Osman 2009). Based on this background, Osman (2009) points out that many organizations must emphasize on putting quality in place and integrating it with the management system specifically with regards to delivering an end product or services to end-users of the product offering especially because of intense competition. In a study of total quality management (TQM) of car manufacturers in Malaysia’s automobile industry, Osman (2009) found that TQM has become gradually more prevalent as a management strategy to ensure customer needs are satisfied through improving product and service quality. The findings were consistent with that of Mojtahedzadeh and Veeri Chettiar (2011) who in a survey of determinants of TQM in automobile industry in Iran found that quality management is indeed a critical factor in ensuring organizational performance. In this case, if companies fail to consider quality, customers will become dissatisfied. Conversely, the significance of the approach becomes lost as rivals become more competitive. This means that taking into account the need to satisfy customer needs makes the issue of quality a priority (Mojtahedzadeh and Veeri Chettiar, 2011). As a management philosophy, TQM is crucial for an organisation to survive within a competitive environment. Some scholars have identified it as the basis for competitive advantage, innovation and organisational culture. Consequently, when a business serves products of inferior quality to customers, then customers will become dissatisfied (Szewieczek, Roszak & Helizanowicz 2008). According to Mojtahedzadeh and Veeri Chettiar (2011), TQM should mean meeting as well as exceeding expectations of the customers through engaging each one in the organization to ensure service quality. Such a process is consistent with a model applied by Toyota in its car manufacturing plants worldwide (Anvari, Ismail & Hojjati 2011). In a study of TQM and Lean Manufacturing using a Lean Thinking approach, Anvari, Ismail and Hojjati (2011) found that basing on Lean strategies, TQM as an approach can be a critical tool for supporting and creating synergy for encouraging competitiveness. Toyota adopted a Lean Manufacturing process that arose from Toyota Production System (TPS). Lean Manufacturing is a variant of TQM. Lean Manufacturing process refers to a production practice that takes account of the expenditure of resources for other goals aside from creating value to end-users to be inefficient (Anvari, Ismail & Hojjati 2011). Based on the model of Lean Thinking, a company adapts the way of eliminating waste while at the same time seeking to continuously improve. A range of tools and techniques can be applied simultaneously. Anvari, Ismail and Hojjati (2011) suggest resources that indicate the evolution of Lean Thinking, which are focused on cost, quality and delivery. Lean Thinking is supported by a range of improvement tools such as total quality control, TQM, agile manufacturing and Six Sigma (Bozdogan 2010). These have made Toyota’s marketing to be a coordinated activity that involves the participation of different functions, including human resources, finance and operations. There is a general consensus between theorists that TQM is a tool for managing organizations to develop its general effectiveness in order to compete globally (Anvari, Ismail & Hojjati 2011; Mojtahedzadeh and Veeri Chettiar 2011; Osman 2009). Mojtahedzadeh and Veeri Chettiar (2011) further pointed out that the extent to which TQM is used has increased significantly over the last one decade, with many researchers investigating the critical success factors to implementing it. Based on literature survey of TQM empirical studies in Malaysia and Iran, TQM can help in problem-solving as well as in improving the training of the workforce. The studies also found a link between supplier quality and quality culture management (Jiang 2009; Anvari, Ismail & Hojjati 2011; Mojtahedzadeh and Veeri Chettiar 2011; Osman 2009). Mojtahedzadeh and Veeri Chettiar (2011) suggested that quality culture a significant aspect of culture which can be attained if TQM is implemented effectively. At this stage, the significant factors include measurement, leadership, quality culture, improvement tools, human resource management, processes and systems and training. The researcher pointed out that quality culture and leadership are the most significant factors for total quality management in the car industry. In this case, companies must motivate and lead employees to adopt quality culture Mojtahedzadeh and Veeri Chettiar (2011). This is reflected in an observation made by Melchar and Bosco (2010) that leadership is a key feature for the success of a production firm because of the significance of learning cooperation, training as well as customer relations. This means that the more the competitive nature of the industry, the more the need to commit efforts to leadership and quality culture (Melchar & Bosco 2010; Mojtahedzadeh and Veeri Chettiar 2011). Gaps in Toyota’s customer expectations and operational design Toyota experienced doubled worldwide car sales between 1988 and 2010. For instance, the car sales doubled from 4 million in 1985 to reach 8.9 million in 2008. The company however experienced large-scale car recalls. Between 2009 and 2010 for instance, the company recalled over 9 million cars, and between 2010 and 2013, 7.43 million cars. These have affected the company’s finances further indicating gaps in the company’s QM (Toyoda 2013). In order to support the tremendous growth, the company has to hire new innovative employees and to seek new suppliers. Toyota Production System (TPS) that Toyota uses as a Quality Management tool has however had severally shortfalls based on this background. For instance, TPS is a meticulous system that is based on empirical method and which calls for intensive training between the trainers and students. It however appears that Toyota has failed to scale up adequate training to adequately cater for the needs of its wide employee and supplier base. The company has hence failed to replicate its QM approach (Wong 2011). Additionally, a key principle of TPS that the company uses is that it must listen to the voice of the customers and offer functions and features in the product offering that satisfy customer needs. However, due to the large recall of cars, it is clear that Toyota customers want safety, which the car has failed to meet. Toyota has also faced criticisms for producing unreliable cars and being insensitive to customer complaints (Wong 2011). Toyota Corporation’s organisational structure has also been criticised for having a secretive culture, which is inconsistent with effective QM. For instance, the company’s plants have at some instances failed to communicate significant customer complaints and improvements in design to the head office. For instance, a large number of document communication shortfalls have been noted between Japanese management team and their counterparts in the United States regarding innovations and improved designs – in braking system and fuel-efficient cars (Bernstein 2010). Recommendations and Conclusion Toyota should conduct frequent employee satisfaction surveys across its global staff to address the employee needs and to put in place measures to improve their satisfaction and training. Satisfied workforce will be highly motivated to produce high quality products (EUA 2008). This could be ensured by encouraging the workforce to take part in survey, before publishing the survey in company bulletin to inform them of the planned course of action (Anwari Ismail & Hojjati 2011). Toyota should also constantly improve its manufacturing process. The Quality Management System that the company adopts should be targeted at purposefully improving the current processes and the organisational performance. This will result in continuous improvement of quality to satisfy customer needs. For instance, focusing on research and development and frequently updating employees across the company’s global plants can be helpful (Mojtahedzadeh & Arumugam 2011). Further, for the Quality Management plan to work effectively, the quality objectives have to be able to support the company’s organisational goals in addition to the objectives. The document containing the plan should also create a framework for performing QM activities (EUA 2008). Additionally, the company’s quality objectives should comprise producing cars that surpass customer expectations and motivating employees to take responsibility for the quality of the vehicles they produce (Szewieczek & Roszak 2008). It should also promote continual vehicle improvement during the production process as a result ensuring improved quality, cost-effectiveness and appropriateness of the vehicles. The scope of Toyota’s QM should also be expanded to contain all operations across the company’s plants worldwide, rather than featuring on Japan and the United States. For instance it should also include improving performance of subcontractors (EUA 2008). However, the company may face challenges such as resistant from employees who resist change, and who view the new quality management approaches as intended to expose their weaknesses. 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