The world’s largest carmaker, Toyota Motor Corporation, is the subject of this case study regarding quality management. The Japanese company had earned a reputation for producing dependable vehicles and trucks over the years. Customers considered Toyota goods to be of the highest caliber, and competitors all over the world copied its manufacturing processes. Toyota’s commitment to producing high-caliber vehicles was ingrained across every aspect of its manufacturing process, from product research to manufacture. Each manufacturing process at Toyota was designed with quality in mind, and workers from every division made sure that damaged products did not move on to the next step. The Toyota production system (TPS), which employed ideas like genchi genbutsu, just-in-time (JIT), Kaizen, Kanban, and Jidoka to achieve a high degree of production efficiency, was at the heart of the company’s success. Toyota worked hard to provide quality products to the highest standards possible because it understood that quality was one of the most crucial variables determining consumer happiness. Toyota established quality assurance processes spanning numerous departments, including development, buying, and production, to guarantee that the final product had no flaws. Toyota adopted the “Toyota Way”a set of management principlesand shared them with all of its international manufacturing facilities in order to address quality assurance issues brought on by the fast globalization of the manufacturing industry. Toyota became one of the most reputable brands in the worldwide automobile business as a result of its manufacturing efficiency. However, several observers believed that Toyota had fallen prey to its own success. Toyota dramatically increased the size of its manufacturing facilities in the middle of the 2000s in an effort to expand internationally and become the leading automaker in the world. Toyota apparently compromised on its manufacturing practices as a result of its rapid growth, which had an impact on the quality of its products. Customers started to experience issues with Toyota automobiles’ safety. Later, a slew of recalls happened, endangering the business’s well-deserved reputation for quality. Analysts believed that Toyota’s continued recalls had hurt the company’s reputation and brand image and prevented its return to profitability. They said that in an effort to gain market share, Toyota had compromised its renowned quality and disregarded its own management principles and customers. Early in 2010, Toyota established a group under the leadership of corporate president Akio Toyoda to investigate the reasons behind the recalls and enhance quality. To ensure that customers received high-quality products, the committee was tasked with inspecting each step of the Toyota production system.
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Why is Toyota experiencing issues with quality?
Toyota’s quality issues seem to stem from two main factors. The first is a result of management’s aspirations for quick expansion. The second is a result of the company’s products becoming more and more complex.
Do Toyotas still hold up well?
Are you thinking about purchasing a used Toyota? Then, you may be curious as to how long it will last.
Toyota received a score of 74, placing it second among 26 automobile brands in terms of dependability, according to the reputable nonprofit Consumer Reports. With a score of 83, Mazda dethroned Toyota as the top brand for the 2021 model year.
With a score of 71, Lexus, a luxury division of Toyota, came in third. Lincoln, Ford’s high-end brand, came in last place with a score of 8.
The Auto Dependability Surveys of Consumer Reports’ members provide the company with its reliability data. 329,009 vehicles were surveyed by the nonprofit, which included models from 2000 through 2020. The average expected reliability score for the brand’s model lineup is the basis for Consumer Reports’ brand-level rankings.
On a scale of 0 to 100, the anticipated reliability score is determined, with the average rating lying between 41 and 60 points. There must be enough survey data for two or more models in order to rank a brand.
In 2021, will Toyota still be dependable?
Consumer Reports gave four vehicles a 3 out of 5 rating for reliability in 2021. The vehicles include the stylish 2021 Corolla Hatchback and the sporty 2021 Toyota Supra. The score for the 2021 Toyota Avalon was also 3 out of 5.
The Long-Term Growth Strategy
The full scope of Toyota’s goals was revealed by Katsuaki Watanabe, president of Toyota, in 2006. The business strategy uses both global and local automobile models, placing equal emphasis on seizing opportunities and minimizing or absorbing risks. Toyota will provide a complete line of suitable vehicles in every market across the world, including international models like the Lexus, Camry, and Corolla as well as regional models like the Crown (Asia) and Tundra (North America).
However, because local demand can fluctuate, this might occasionally lead to inflexibility un terms of capacity use. We have created a worldwide link production system to improve efficiency. We can easily switch between producing different models at our operations in Japan thanks to their cutting-edge technologies. We have therefore connected a few plants in Japan to those outside. Our facility in England will sustain steady output when, for example, demand spikes in Europe, while the link plant in Japan creates the extra units required. We benefit from this system in a number of ways, including the ability to react quickly to changes in demand, high capacity utilization at all plants, and the ability to reduce capital expenditure by utilizing resources already in Japan to balance demand in other markets. Our “whole line, all regions strategy” effectively uses our plants in Japan as buffers.
Your testing ground for new goods and manufacturing techniques is the vehicle market in Japan, where you own a 40% market share. In North America and Europe, where you hold a 12% and 6% market share, respectively, you intend to increase penetration to reach scale and profitability. How does Toyota see BRICBrazil, Russia, India, and Chinain the future? Do they also serve as markets or are they only sources of raw materials? Have you not arrived there quite late?
For us, the markets in Brazil, Russia, India, and China are completely new. They will someday be significant markets for Toyota. We must decide what kinds of manufacturing facilities to erect and what kinds of goods to market as those economies develop. We’ll launch regional and worldwide models and expand our production facilities there. We are not too late, in my opinion. These nations are growth markets and will keep expanding. Despite their promise, we don’t want to approach them with excessive aggression. Yoshimi Inaba, our previous executive vice president, indicated that if demand doesn’t increase as expected, we don’t want to build up enormous capacities and lower prices like some of our competitors do. The demand for Toyota’s vehicles will increase as people in BRIC look for better vehicles, as roads are created, and as energy efficiency becomes more crucial. Instead of entering the market right away, we would be better off waiting and letting the market come to us. Toyota is a quality product with a fair price, which in developing areas may be a premium pricing; it can never be considered a cheap brand. However, when people see how valuable our products are, they will say to themselves, “The next time, I must buy something betterlike a Toyota. We don’t have to be someone’s first automobile, but we do want to be the second car the family purchases. We should enter those markets gradually and carefully, making sure we monitor their growth while avoiding moving too quickly.
Do you hesitate to approach new markets more forcefully out of concern that Toyota could have to sacrifice quality? These markets call for inexpensive vehicles, which represent trade-offs between price and quality that Toyota might not wish to make. Is quality turning out to be growth’s enemy?
To view the emerging markets as a single entity is incorrect. China and Brazil are diverse from one another, as are India and China. The Corolla does well in Brazil, while the Lexus does exceptionally well in Russia. I occasionally question whether it’s appropriate for such a pricey automobile to be selling so well in Russia. In any case, it would be incorrect to infer that these marketplaces favor inferior goods. However, they do share the desire for affordable cars among many of their customers. I assembled a group to work on a project associated with that as soon as I was elected president. But I advised our engineers to instead concentrate on creating technologies and manufacturing procedures that would make it possible for Toyota to produce all of our vehicles more cheaply rather than just low-cost cars. If we accomplish that, we will be able to build cars for the BRIC nations while also using those same techniques to lower the price of cars for other nations. By approaching the issue in that way, we will also be able to adhere to our quality standards without having to worry about whether we will have to lower them for emerging markets. We have already begun to create those technologies. While some of our competitors may be focused on developing affordable cars for developing economies, Toyota will develop cars that are the best of all possible worlds.
Toyota is obviously attempting to expand how it has always expanded: steadily. However, the forces of the global market are pushing you, forcing you to stay up by moving more quickly. Are such factors powerful enough to potentially destroy Toyota? How are the guiding principles of the business changing?
The Toyota Way has been and will continue to be the benchmark for all Toyota employees worldwide. The Toyota Way, as opposed to our guiding principles, defines Toyota’s mission and values. It resembles the air we breathe to me. Respect for people and continual improvement are the two major tenets of the Toyota Way. To work with others, you must show them respect. We refer our consumers, supplier partners, and staff as “people.” One of the company’s main pillars is putting the customer first. We don’t only refer to the final consumer; on an assembly line, your customer could be the person at the desk after you. Teamwork results from that. If you follow that philosophy, you’ll also continually evaluate your actions to ensure that you’re carrying them out flawlessly and without upsetting the client. That develops your capacity for problem-solving, and if you pay close attention to details, it will result in kaizen: continual improvement. The Toyota Way starts with a dissatisfaction with the status quo; you must continually ask yourself, “Why are we doing this? These ideas are not limited to Japan; they can be used anywhere. How long does it take to train someone to adopt the Toyota mindset?