No one can guess the future loss of business from a dissatisfied customer. The cost to replace a defective item on the production line is fairly easy to estimate, but the cost of a defective item that goes out to a customer defies measure.
—Dr. W. Edwards Deming
In the previous topic, you saw how Toyota used lean manufacturing to make higher-quality cars at a lower price. But lean is only part of the story of how the Japanese automobile manufacturers broke into the American automobile market. As Toyota revolutionized the way cars and trucks were produced, American companies realized that they were losing market share at an alarming rate. As you may remember from the last chapter, Toyota did something unexpected and unintuitive; they allowed their American counterparts to visit Toyota plants to see how they operated. Why were they so confident? Because a large part of the lean process involves using the Total Quality Management (TQM) approach and tools that other companies couldn’t easily replicate. American executive teams from Ford and General Motors took careful notes, but it was what they didn’t see that was the key to success.
What didn’t they see? The adaption of TQM was not simply a new set of measures or putting controls onto machines and operators. Instead, it was a fundamental change in how a company performed the manufacturing process. The keyword: process. TQM is a philosophy—and a set of tools—for how to manage a process from beginning to end to meet a goal. TQM revolutionized the way companies approached building a car or truck. In the Toyota example, it changed the way the manufacturing process operated from before parts arrived at the assembly plant all the way through to the dealerships’ customer interactions to produce value for the car or truck buyer. That value comes in several forms but can be simplified to lower cost for higher-quality product.
And it wasn’t just the Japanese automobile industry. Japanese companies across various business sectors were applying TQM to their processes, intending to improve product quality. For example, in our last topic there was a reference to the Zenith Corporation. The Zenith quote, “Quality goes in before the name goes on,” illustrates the transformation of the entire Japanese manufacturing industry starting shortly after World War II. The impact of these changes was an explosion of higher-quality and lower-cost Japanese products in Western economies starting in the early 1970s.
To provide some context, it’s important to know that most of Japan’s industry was destroyed during World War II. Yet in the following 25 years, the country somehow went from having a shattered economy to having the second-largest economy in the world. Even today, we see that impact reflected in the number of Japanese cars sold each year in the United States. In fact, in 2021, Toyota became the largest single automobile seller in the U.S., surpassing General Motors for the first time.
Does TQM still work in modern business? Can we apply it in other countries or settings? Yes, we see this approach everywhere; however, copying anything, much less something as intricate as TQM, is never straightforward. Time, competition, markets, and world events impact business changes, which makes it difficult to directly copy the Japanese model. But, companies worldwide have adopted—and adapted—the quality improvement pioneered in Japan. In addition, further revisions and modifications to TQM have created the next generation of Six Sigma tools and processes.
This topic will look at some of TQM and Six Sigma’s historical developments. First, you will learn some of the impacts of failing to incorporate quality into a company’s processes. Next, you will see the quality gurus who started the quality era. Finally, you will look at Quality Functional Deployment (QFD) and how it can be used to evaluate your customers’ needs and desires to help set quality goals for your organization.