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W. Edwards Deming and Japanese Auto Domination

In recent forecasts, Toyota Motor Corporation has taken the crown as the world’s largest auto manufacturer. Toyota’s meteoric rise has not been without setbacks, however, as the company was forced to recall nearly one million automobiles in 2006, a significant lapse of quality control. The Toyota reputation is one built…

An Official Heavyweight Arrives on Scene
In recent forecasts, Toyota Motor Corporation has taken the crown as the world’s largest auto manufacturer. Toyota’s meteoric rise has not been without setbacks, however, as the company was forced to recall nearly one million automobiles in 2006, a significant lapse of quality control. The Toyota reputation is one built on quality and durability1. These recent aberrations suggest that if the firm that has an uncanny ability to produce bulletproof transmissions wishes to retain its startling growth rate, it will have to return to basics.

In December 2006 Toyota Motor Corporation announced plans to sell 9.34 million automobiles worldwide in 2007, a projection that would make Toyota the world’s largest auto manufacturer. This news, while not unanticipated, brought home the reality of continuing troubles for GM and Ford. Recent internal Ford Motor Company documents also suggest that Toyota will sell more cars than Ford in the United States next year, a sign of significant momentum1.

Stateside Dominance?

The United States is Toyota’s largest market, with 2.68 million projected vehicle sales stateside in 2007. The United States is also the largest automobile sales market in the world, and an essential territory, with huge growth potential for Toyota’s market share. In the battle for American dollars, Toyota has wasted little time moving the battle to GM and Ford’s home turf. A large percentage of Toyota autos sold in the United States are built in Kentucky, and a new Toyota full size truck plant just opened in Texas, in the heart of what was once a region where the only real question was, “Chevy or Ford?”1

Can a Japanese auto manufacturer successfully build cars in the heart of the Midwest, and at the same time address embarrassing quality control problems? Toyota would be well served to examine its roots, and look to an unlikely source for guidance: a man from Iowa.

W. Edwards Deming and Statistical Control

The basics of Japanese Auto Manufacturing start in an unlikely place: Iowa. A native of Iowa, educated at Yale, W. Edwards Deming introduced statistical process control to Japanese firms some 60 years ago2. His teachings helped revolutionize Japanese industry at a time when American firms were engaged in top-down corporate structures that had little use for Mr. Deming’s new ideas. It would not be until 1981 that Ford would seek Deming’s advice to start its quality initiative3.

Deming’s 14 Points revolutionized Japanese management in the post World War II period, when Japanese firms were struggling and anxious for fresh ideas2. Now that relative success has been achieved, Toyota would do well to examine Deming’s Seven Deadly Diseases in order to ensure continued growth.

The first of these deadly diseases is a lack of constancy of purpose, something that Toyota has avoided. Toyota has long focused on quality and value. Rather than trying to create the perfect car for each person, Toyota produces autos that are dependable and affordable. It is an adherence to this principle that has made the Camry the best selling car in America.

W. Edwards Deming also emphasized the dangers of relying solely on technology to solve problems, an idea that has become a cornerstone principle at Toyota. The Toyota Production System (TPS) is the most advanced in the business, succeeding where many others have failed. Yet, this innovation does not overshadow an emphasis on effective management. Technology is viewed merely as an underpinning of the larger machinery of the firm3.

Another of the deadly diseases specified by Deming is an emphasis on short-term profits. Toyota has most clearly avoided this pitfall by focusing research and development efforts on hybrid and alternative fuel vehicles. This has paid significant dividends for the firm, in the form of the Prius and Camry hybrid models, both of which are wildly popular3. The innovative Hybrid Synergy Drive featured in Toyota’s hybrid models is a practical and efficient technology, while American firms have had trouble bringing a functional system to market. Toyota has helped to ensure rocketing sales, outpacing GM and Ford in the lucrative hybrid market.

Deming’s model emphasized stability above all, a quality that Toyota has in spades. In an industry confronted with rising fuel costs and a demand for alternative transportation, Toyota must use its mobility and free thinking to produce products that will capture the imagination and dollars of the public. The easiest way for Toyota to move forward is to look backwards, to place an emphasis on quality control, and to invest in meaningful technologies with an eye towards long-term growth.

Source: www.asiaecon.org |



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