QUALITY MANAGEMENT FOR ORGANISATIONAL EXCELLENCE

CASE STUDY OF TQM IMPLEMENTED IN TOYOTA AUSTRALIA

Table of Contents

AIMS AND OBJECTIVES.................................................................................................................2

INTRODUCTION..............................................................................................................................2
TOTAL QUALITY MANAGEMENT (TQM).....................................................................................2
IMPORTANCE OF TOTAL QUALITY MANAGEMENT..................................................................5
REFERENCES................................................................................................................................18
LIST OF FIGURES

Figure (1): Summary of the definition of TQM.....................................................................................3

Figure (2): The Quality Cycle [2]........................................................................................................3

AIMS AND OBJECTIVES

The objective of this report is to study, analyze and present the findings and techniques from a
case study on the implementation of a quality management system in an automobile organization
called Toyota, Australia. This report also aims to concentrate on one framework of TQM which
can be applied to the organization to improve its performance in various aspects like strategic
goals, better customer satisfaction and market competitiveness.

INTRODUCTION

In today’s world, there is a global competition among organizations and success of any
organization mainly depends on the quality of the products or services that they deliver to their
customers. Implementing Total Quality Management (TQM) in organizations can guarantee a
long term success to the organization.
In automobile industries, Total Quality Management (TQM) implementation becomes necessary
to deliver highest value to the customers at very low cost while at the same time maintaining the
economic stability and sustained profit of the organization. In this report, the implementation of
Total Quality Management (TQM) in an automobile industry called Toyota is studied. This
automobile organization is based in Australia and all the details of the implementation are taken
from a case study done by…… [1].
This report is basically divided into three main parts. Firstly, it includes the literature review of
Total Quality Management, its philosophy and implementation and Secondly, the details about
the implementation of TQM done in Toyota Australia that is described in the chosen case study
[1] and Finally, the analysis on one chosen framework of TQM which can be applied to the
organization to improve its performance in different aspects so as to achieve almost all the goals
needed for it to be successful.

TOTAL QUALITY MANAGEMENT (TQM)

Total Quality Management of an organization is transforming its management approach to

guarantee a long-term success mainly through customer focus. It requires responsibility and
careful attention of an entire organization to produce a quality product/service to the customer.
Total Quality management is cross-functional in nature. It is a process that involves the entire
organization who should manage and control the quality of the product or service that it offers.
Quality management also focuses on competitive advantage, consumer focus and continuous
improvement and not just on the production.
 Figure (1): Summary of the definition of TQM

TQM mainly focuses on eliminating wastage and advancing continuously by setting up a

systematic management process to all the steps and methods carried out by the organization. The
major aim is based on the customers so that they receive the best quality in a lower price and also
at the same time, keeping in mind that the profit and stability of the organization is not
negatively affected.
While it is necessary that every organization is supposed to implement its own customized
process of quality management that better suits its needs, there are some important and basic
principles that should be practiced. The foremost and the most important element in quality
management is customer focus and from this basic element arises the need to follow or
implement its other principles.

Through the application of TQM principles, almost all types of automobile industries have
enhanced their quality of products and services by reducing costs and increasing the efficiency of
the processes. It is very important to learn the principles and practices of quality management to
get good results and this will also enable the top management to implement a work environment
that can achieve the best from its employees. The result of the implementation of principle will
be reflected in the satisfaction of the customers by its product.

Since there is a growing global competition in industries specifically in the automobile industry,
quality management is becoming very necessary to the leadership and management. The
principles of quality management act as a guide for the better understanding of the
implementation process of TQM. By following the principles, the organization will first benefit
its customers, its owners, suppliers, employees and as a whole contribute to the wellbeing of the
society.
The basic steps that are to be followed in any organization to produce a quality product to the
customers is shown in the quality cycle represented in figure (2).

Figure (2): The Quality Cycle [2]

 
 

TQM IMPLEMENTATION

For implementation of Total quality management eleven key elements of TQM have to be
implemented. As it’s a system is dynamic some of the elements are interrelated. Activities that
are carried in one element can be suitable for other also. 
Leadership: 

 Commitment by Top management :  is a important requirement for TQM implementation.

Without management commitment there is high chance of failure of TQM implementation.
Commitment by Top management to be demonstrated by actions. Top management to give
priority to quality more than a cost, product schedule etc. 
 
Participation by Top management :  Total Quality management involves decision making &
something new will be created every time. If there is  an  authoritarian management
than employee’s act only which is off management’s interest. Top management participation is
very crucial as it will help in having  quality consciousness all over the oraganisation. 
 
Learning by top management : Managers will have to undergo continuos learning so that they
will improve their managerial abilities. Without knowing what TQM is they cannot commit &
participate in TQM. They also need to know successful and unsuccefull experience in
implementing TQM 
Empowerment of Top management:  Management should encourage employees to take greater
involvement in quality management and its improvement activities. Some of the examples are
giving importance for the suggestion given by employees, taking responsibility of the employees.
Top management to have more enthusiasm more than that of employees and to have believe
and faith in them.  
Top management's Role model  : Top management should have to lead by example. They have
to handle matters impartially and lay down example for its employees. 
Pursuit to Long term business success : Instead of short term profits , Top management should
proceed along a path of long term business success. Quality of the product or service gets
deteriorated in pursuit of short term profits, sales etc. Understanding of the fact that that
improvement takes time. 
 
 
 
 
 
Management by Data and Facts : job of management is to make decisions , good decisions
cannot be made without suitable information about past, present and future information about
organizing, planning and controlling activities. For example if a firm wants to improve its
product quality if should decide what actions that has to be taken, general symptom's and cause
need to identified of the defects. To know about causes this requires fact finding. 
 
 
Supplier quality mananagement :  
 

Partnership with supplier : it’s a ongoing mutual relationship between selling and buying firms.
Interdependence has increased dramatically . Focus on inventary management and concepts such
as Just in time have increased of having good quality of products and services. Partnership
on supplier to be based of mutual trust and understanding. 
Supplier selection criteria : Selection of the supplier to be based of by investigation
of vsupplier manufacturing facility, reputation of the supplier, product quality. Also total cost
of incomming inspection also to be taken in to account.along with quality and cost close
working relataionship is also important. 
 
Supplier performance evaluation : feedback on the suppliers products or services to be provided
on regular basis . This supplier evaluation only possible if the firm has necessary information of
the suppliers. Supplier rating can also be used inorder to evaluate the performance of the
supplier. 
Supplier's communication : If they are any design changed than suppliers need to have the
information. One of the major obstacle in maintaining the quality of the product is failure in
communication the changes in design or production.inorder to solve the communictaion problem
by setting multiple communication problems. 
 
 Vision and plan statement 

Vision statement: vision statement to be clear and concise. If all employees have to
understand firms value, aspiration and purpose than the vision statement to be communicated to
all its employees. Vision statement should encourage employees to quality improvement. After
development and implementation it should npt be frequently changed as this may cause
confusion and frustration. 
Formulation of vison and plan : Holistic and cross functional approach is required in order to
formulate vision and plan. On of the important aspects is alignment of plan, policies, objectives,
and performance.  
 
 
 
 
 
Evaluation  
 
Evaluation of strategy: Strategy can be called as a process of achieving vision statement. There
are three level s of strategy corporate, business and departmental. . Firms should adjust the
strategy on  basis of strategy evaluation. 
Evaluation of Business performance: The final aim of the Total quality management is to
improve firms overall business performance. Business performance to be
evaluated regularly.Some of the business performance include employee satisfaction, customer
satisfaction, product qulaity, strategic business performance and product quality.  
 
Evaluation of departments performance: Organization's performance is dependent on many
departments. Evaluation of the performance of departments is important as firms can improve
departments performance. And criteria for evaluation of a different department can also
be developed. 
 
Evaluation of Employee performance: Establishment of targets or measures of individual or
teams. Success of the firm is directly dependent on the employee's performance. Individual
targets are established by basis of job requirements, organizational objectives,
teamwork, teambuilding , working attitude etc Evaluation of employee performance can
also used for recognising high performance employees, awards, education training, dismissal 
and recruiting new employees. 
 
Quality Audit :its used to determine if the quality activities are complying with the arrangements,
and if these arrangements are implemented effectively,  it can be conducted by people within or
outside the firm.  
 
Benchmarking : process of understanding or comparing the  practice, performance against the
competitors or similar firms.Its one of the important tool for continuous improvement. This will
increase creativity and satisfaction of the customers.
Improvement of process control :

Process capabilities ; extent of firms production system meeting design specification. There is
chance that process capability may degrade due to wear. The firm should create process
capability index to determine if the process is stable.

Innovation and Equipment maintenance : Maintenance system can be divided into two parts
preventive maintenance and breakdown maintenance. Some of the benefits in conducting
maintenance is enhances safety, low operating cost, long life span etc. In order to have higher
productivity or quality firm need to have innovate in its product equipment regularly.

Invetory management : Effcient inventory management can be established by effective

computerized inventory management. By improving relationship with the suppliers purchase of
material can be optimized and reduced. Strong attempt to be made in order to reduce inventory
which inturn will lead to reduction in capital.

Inspection : Quality is to be built in the process , inspection does not built quality. After
identifying defect in inspection, the information to be sent back to manufacturing stage so that
the process can be rectified.
Product design:

Reliability Engineering : Deficiencies in reliability might result in lost performance,

compromised safety, less cost due to device repair and maintenance. By using reliability
engineering we can found out reliability goals, critical parts review, review of design process and
product tolerance.

Designing of Manufacturability : Simplifying the design so that it can be made more producible.
Deisgn team to posses skills of manufacturing in order to design parts of better productivity.

Quality function deployment: Main criteria in quality function deployment is customer

requirement are meet in final design of product or service. It’s a tool that captures customer
requirements into product characteristics.
Quality system improvement :

Quality manual : it describes quality system and quality policy of an organization. It addresses
each of the requirements of ISO with reference to activities of the Firm.

Quality System procedures : Activities that are required to maintain individual functional units.it
should describe responsibilities, activities and documents that are required to control.

Employee Participation :

Cross functional team : its established to solve problems with many departments or
functions.Different department people work together to solve problems.

Quality circle : Small voluntary group of employees from same department who meet regularly
and discuss way of improving quality and solving problem.
Employees Suggestion :
As employees are working in the same position for and are very familiar with the work. Its very
easy identify the cause of the problem. Hence employees should be encouraged to provide
suggestions.
 
 

Recognition and rewards

Recognition and reward program : recognition and reward program to be consistent with the
organisation. It can alsobe divided into different levels individual , team , department etc.

Education and training :

Education and training plan : Firm needs to identify training of individual. They can divide those
needs into short term and long term . Firm should view training as investment of firm.

Job training : As skills required by different employees is different from each other hence
different trainings are to be provided

Customer Focus
Customer complaint informarmation: In order for the firm to achieve high quality and customer
satisfaction analysis of customer complain information is very important. Customer complaints
need to resolved aggressively and analysis to be done so that same problem are not occurred
again. If customer complaints are not addressed this will lead to negative Image.

Market Investigation : Its very essential in order to understand or anticipate the future
requirement. Market investigation will help to identify the demand of the product and its
expectations or requirements.
 
 
 

 
 
 
 
 
 
 
 
 
A Brief Introduction of the firm. 
 
Toyota Australia is a subsidiary of Toyota Motor Corporation, which is based in Japan. It
markets Toyota products and manages motorsport, advertising and business operations for
Toyota in Australia. It is also responsible for Lexus vehicles in Australia. 
  
 
 
Toyota built cars in Australia for 54 years from 1963 to 2017. Altona plant in Australia opened
in 1994 replacing the plant in Melbourne. It manufactured Camry, Aurion & Avalon. This was
for sale locally and for export to Middle east. 
  
 

 
 
 
 
 
 
 
 
 
 
 
History of Toyota , Toyota Motor Australia production output. 
 
Vehicle name  Production volume  Production period 
Tiara  1,684  1963-1965 
Corona  336,197  1965-1987 
Crown  46,690  1966-1980 
Corolla  601,104  1967-1999 
Camry  2,168,104  1987-2017 
Apollo (Camry derivative model supplied 40,287  1989-1996 
to GM Holden) 
Nova (Corolla derivative model supplied 28,128  1989-1996 
to GM Holden) 
Avalon  44,741  2000-2005 
Aurion  184,180  2006-2017 

Total  3,451,115  1963-2017 

  
 
 
  
 
Toyota Australia holds largest market share for new car sales in Australia from 2003.  

 
 
Toyota Australia’s most selling car is Hilux ute 
  
 
 
 
 
 
QUALITY MANAGEMENT SYSTEM IMPLEMENTATION IN TOYOTA AUSTRALIA. 
 
Initially Australian motor industry was run or managed based on objective which did not provide
any frame work for quality policy in the organisation. 
Toyota first introduced Toyota production system (TPS) in 1981. It’s process which utilizes plant
facilities, labour and material in efficient manner by eliminating waste. In 1989 due to
restructure there was major shift by management how quality was achieved management
by objective was replaced by management by policy. This made possible for introduction of
quality program. Quality policy was derived from corporate mission statement. This quality
policy was very general at the top level and become very specific at the bottom level of
the organisation. Quality assurance department was established in 1989 primary
responsibility f this department implementation and development of quality policy. 
 
 
Elements of Toyota Production system are 
 
 
1. Vision and statement: Toyota Australia continuously contributed to the goal of providing
sustainable development to the society. It was one of the five organizations in Australia to
have received Australian Quality awards for outstanding organisation in quality
improvement. The firm had long term overall business plan 
2. Just in Time.: Just in time is a concept of making right parts at the right amount when
they are needed at every stage of production process. Kanban production control is used in
order to achieve Just in Time manufacturing in this supply & demand are matched. It had
very advance system where in information from pain shop & manufacturing
press was conveyed by sequence card also called Kanban card to all
the fourteen component manufacturing and assembly lines. All the workstation had less than
one days required products or inventory. 
3. Kaizen : Also called continuous improvement. Employees were encouraged to improve
their workplace by bringing new ideas. One of the methods used to achieve this is
Quality circles. Quality circle will have around 8 to 10 employees of the people working in
same area. Membership is voluntary. Members usually meet every day in order to improve or
solve day to day problems. Along with kaizen there is also suggestion schemes to improve
the process by employees. 
 4. Customer Orientation: Information about the customer is gathered from dealer reports,
warranty claim data, visits, customer surveys and details obtain through automotive research
and marketing survey. These data or customer requirements was analyzed to
determine quality policy, customer satisfaction issues, problem
resolution, plant improvement activity, plant quality targets, safety issues and new model
planning issues. The data was also analyzed by the quality assurance department to gain
better understanding and improve the direction of manufacturing competitiveness. Since
Toyota Australia wanted to export the cars there was increasing focus to improve customer
satisfaction of export customers. Toyota Australia plants to match export quality in order to
meet export opportunities. Customer satisfaction was primary focus. One of the
important input considered is cost of customer obtaining and using the product. The
satisfaction of the customer will drive market share which will improve profits. 
 
5. Supplier Relationship: Important element of improving quality is to have supply of good
quality components and products. Toyota had developed quality assessment system to
measure supplier’s quality this evaluated overall supplier’s performance. Suppliers of Toyota
were provided with a Toyota quality system manual which was written in 1990 and was
updated n regular basis. Main objective is to promote greater understanding and mutual
beneficial way in which both Toyota Australia and supplier can work together. This manual
also described basis Toyota motor Australia incorporating both pre-production and current
production systems and Quality system assessment mechanism. 
6. Employee Involvement: Toyota motor Australia encouraged team building,
communication and participation. There were many meeting places around the plant to
discuss quality issues, problems, production issues and solutions. Company progress, policy
implementation and target achievements were discussed with team leaders and managers.
This information was transferred to the workers at team briefing. Team leaders and its
members usually meet for fifteen minutes every week to discuss quality updates, company
performance, housekeeping matters etc. workers were given opportunity run and plan their
own work areas. There was also quality circle along with suggestion scheme. 70 percent of
idea’s ideas that were generated by suggestion scheme were successfully implemented. There
were also monetary awards for the person to whom ideas were generated. In
1991 manufacturing division launched year of quality program this
encouraged employee involvement. All employees were issued passport to quality
booklet which contain information about quality control, details of monthly events, training,
on job quality related activities and training material were also presented to group leaders
regularly. Effectiveness of the campaign was measured by quality awareness, employee
attitude, knowledge of quality, survey of employee attitude is conducted regularly. 
7. Factual approach to decision making: Quality performance is measured using
internal product audit. Internal Audit is carried out using the information the company
receives from surveys like ARMS. This information was used to identify product defects.
After 1988 the allowable defects were reduced year on year by 50%. Warranty claims from
the dealers were also used in order to avoid future defects and cost of it was also recovered
from the suppliers. There were around 2 reviews in a year for which future and planned
activities were analyzed. 
8. Training: There were many modules that were developed for progression of shop floor
employees from team member to group leader. Most of the employees had to complete eight
hours of training in safety, human relationship, Toyota production system.
Training in continuous improvement were also given to group leader and team members.
There were also many English courses conducted in order to improve communication. Each
year around 180 employees attended the same. 
 
CONCLUSION / DISCUSSION 
 
ASSESMENT FOR TQM IMPLEMENTATION IN TOYOTA AUSTRALIA 

This assessment is used to asses TQM implementation in Toyota Australia. The first column has
TQM implementation practices/standards or Philosophy. Next columns has addressed areas
or statements last columns is rating the organisation in the scale of extremely week, weak, strong
and very strong.

Philosophy Tqm Practice Rating

Information about customer complaints Very strong

warranty Very strong
Investigation of Market Weak
Customer Focus 
Information about customer weak
satisfaction survey of customer strong
Service to customer strong
Education and Training Plan Very strong
Team learning Very strong
Awareness of quality Very strong
Education & Training 
quality management training   Very strong
Job Training  strong
Formal education and promotion  strong
Recognition and reward program Very strong
Improvement of working environment Very strong
salary promotion No Data
Recognition and
bonus scheme No Data
Reward
Position promotion No Data
moral award No Data
Penalty No Data
Employee Cross Functional Team strong
Participation
Quality Circle Very strong
Inside functional Team Very strong
Informal communication Very strong
 Employee suggestion Very strong
Improving employee commitment Very strong
Job rotation strong
Quality system Quality manual Very strong
improvement
Procedures for quality system Very strong
Instruction for work Very strong
ISO certification Very strong
Process control Shop Floor control strong
Improvement
Capability of process strong
Innovation in equipment maintenance No Data
Inventory management Very strong
Inspection Very strong
Use of quality Tools Very strong
Evaluation Strategy Evaluation No Data
Evaluation of businees performance Very strong
Department performance evaluation strong
Evaluation of Employee performance strong
Audit for Qulity Very strong
Benchmarking Very strong
Quality cost Very strong
Information system Very strong
Supplier partnership  Weak
Selection criteria of supplier Weak
Supplier quality suppliers Participation Wesk
management/ Supplier
Supplier performance  Weak
relationship
management  evaluation  Weak
Quality audit of supplier Strong
Supplier relationship strong
Leadership Commitment by top management Strong
Top management participation Strong
Learning by top management Strong
Empowerment of top management Strong
 Top management encouragement Strong
Management by facts Strong

 Toyota Australia was consistent in implementing customer first philosophy and

other TQM principles. With reference to the above analysis Total quality management
principles that were implemented in Toyota Australia were strong they had implemented most
of the principles correctly. Comparing with the standard Tqm policies. Investigation of
market was not done accurately as future predictions were done appropriately. Australia’s
best-selling car for last 3 years was Toyota Hilux which was made by Toyota’s Plant
in Thailand. There was a customer shift or global trend towards Light commercial or Sports
Utility vehicles irrespective of that still Toyota Australia produced sedan and they did not
shift to Light commercial or Sports utility vehicles. Market share of Toyota Camry cars was
small in Australia, they had to export the cars to achieve long term sustainability for this they
had to match Japanese quality. In order to meet export quality below are the hurdles that were
faced by Toyota Australia.

     

Major competition for Toyota Australia was from car manufacturers having plant in Thailand

including Toyota. Toyota Australia should have benchmarked their plant with that of Toyota
Plant in Thailand in order to be competitive in terms of cost. 

 
REFERENCES

[1] Amrik S. Sohal, Danny Samson & Liz Ramsay (1994) Toyota Moto Corporation Australia: a
case study, Total Quality Management, 5:6, pp.431-440.
[2]   New Cars Toyota Australia: Prices, Service Centers, Dealers, Test Drives. (2019). New
Cars Toyota Australia: Prices, Service Centers, Dealers, Test Drives. [online] Available at:
https://www.toyota.com.au/ [Accessed 8 Dec. 2019].
[3] CORPORATION., T. (2019). Toyota Ends Production in Australia After 54 Years | Toyota
Motor Corporation Official Global Website. [online] Toyota Motor Corporation Official Global
Website. Available at: https://global.toyota/en/detail/18918277 [Accessed 8 Dec. 2019].