Tuesday, February 18, 2014
Lean Manufacturing and Total Quality Management
Marred by controversies of deadly flaws in its vehicles, recall of about 295000 vehicles and the decision to pull the plug on its Australian operations; Toyota Motor Co., Ltd. still remains the gold standard in terms of automotive excellence. Looking back in history we understand that while the rest of the world fought with the concept of Quality being greater effort and restrictive regulations, the Japanese company choose to incorporate the philosophy of 'customer first’ and 'quality first'.
Lean manufacturing, usually just known as lean or Toyotism and total quality management (TQM) is synonym to the Japanese company. And while both the approaches revolve around the customer expectations, they are two very different concepts;
Lean involves creating a product/service of ‘value’ by eliminating waste or ‘muda’. The credit to Toyota’s “lean manufacturing”, owes itself to the work of Statisticians and Quality Manager, Edward Deming.
TQM on the other hand, is based on continuous improvement of processes, products, services and the culture of the company. The key elements of this approach being total employee involvement, continual improvement, and customer focus. Toyota was one of the first to implement Quality Control in the 1940’s and 1950’s.
Having understood these practices, it is not very difficult to appreciate its role in supply chain management. It is also these practices that allowed Toyota to revolutionise the automotive supply-chain management. Toyota chooses to appoint primary suppliers and work with them intimately in contrast to the rest of the automobile companies who were either using in house source or the lowest bidder.
This strategy allowed Toyota to adopt the lean supply chain management approach with lesser effort and more focus. As compare to the other companies, Toyota had less than 25% suppliers, only about 27% production of their components were in house and 90% supplier contracts were renewed. This gave a sense of mutual benefit to both Toyota and the suppliers, processes were standardized and there was frequent contact and total involvement between the two parties. This resulted in forecasting to be more accurate and the flexibility to respond to customer requirement more swiftly. Toyota’s continued increase in the market share lies in it’s just in time quality products as compare to the traditional approach of mass production.
The lean and TQM approach has enabled the supply chain in Toyota to become more efficient and effective in sustaining continuous improvement.
Alireza Anvari, Yusof Ismail and Seyed Mohammad Hossein Hojjati , 2011, A Study on Total Quality Management and Lean Manufacturing: Through Lean Thinking Approach;
Ananth Iyer , 2011, Supply Chain Ideas based on Toyota’s Approach
H.M. Wee and Simon Wu, 2009, Lean Supply Chain: Learning from the Toyota Production System