Approaches to Quality Management Appropriate to Commercial Operations
Product Quality and Service Quality
Product quality and service quality are two distinct theoretical issues in terms of commercial operations and commercial operations management. Service quality is measured by internal structures as well as by consumer perception of quality of service; a service cannot be considered to be a quality service if the consumer or customer feels that the service is inappropriate or of low quality (Jahanshani et al., 2014). Consumers or customers often expect high-level service in today’s economy because of the number of choices available to them: for companies like Toyota, the competition is even more fierce because of Toyota’s status as an import car company. Toyota is expected not only to provide a car to the consumer, but also to provide excellent service on top of the vehicle, especially because most people will keep a car for a number of years (Jahanshani et al., 2014). The more significant the investment, the more important service quality becomes to the consumer (Seth, Deshmukh & Vrat, 2005). Product quality, on the other hand, is what companies like Toyota fundamentally build their reputation upon: Toyota’s reputation as a quality automobile company has allowed it to maintain a competitive advantage against some of the other import car companies in the same price bracket. Maximizing product quality and minimizing cost is one area in which the company has been able to excel; service quality has also always been highly regarded for Toyota.
The Development of Quality Management
Developing appropriate quality management and control helps a company like Toyota maintain competitive advantage in a saturated market. There are four parts to quality management: the first piece is planning, the second quality control, the third quality assurance, and the fourth quality improvement (Rose, 2005). Quality assurance processes are processes put in place specifically to ensure that a system maintains a high level of quality; under quality assurance systems, confidence can be had that any product or output on the part of the organisation will meet a certain standard of quality (Rose, 2005). However, quality inspection is the process of spot-checking—or systematically checking through observation—to make certain that the processes put in place through the quality assurance system is effective (Rose, 2005). These two processes go hand in hand; quality assurance is designed to make inspection a redundant process. This is particularly important in the automotive industry, where failures in product quality can be devastating.
Toyota is transparent about their total quality management procedures, so determining how quality management is handled in the organisation is a simple task (Toyota Global, 2016). Toyota has implemented a process called the Creative Idea Suggestion System, which is designed to support conscientious manufacturing and continued improvement in the organisation. Toyota Global (2016) states, “As a result, the basic concepts of TQM and problem solving as well as kaizen (continuous improvement) through creative innovation spread throughout the company and took root, contributing to higher product quality and work quality at all levels and ranks and improving the vitality of individuals and organizations Training and promotion activities reinforced with the aim of developing human resources with high reliability and safety skills in technical fields” (Toyota Global, 2016). Toyota should focus on communication, continual improvement, employee involvement in decision-making and innovation, and strategic and systematic approaches to system change and improvement (Rose, 2005). Because technology is constantly advancing and changing, companies in technology heavy industries—like Toyota—must focus on flexible quality control structures to ensure that they maintain their competitive ability over time. Toyota in particular has focused on continual improvement and innovation through employee knowledge maximisation, which has allowed for greater flexibility and expansion.
Comparison of Approaches
Although Toyota is a Japanese company, and Japanese companies are somewhat notorious for their heavy hierarchical reliance, the implementation of the Creative Idea Suggestion System has built an almost western-style employee valued system in the traditional Japanese company. This integrated system allows employees to be aware of and part of the company’s overarching goals, but it also allows for the maintenance of the traditional, comfortable structures that the company’s employees would be used to from a cultural perspective (Toyota Global, 2016).
Toyota continues to win awards within Japan for its total quality management strategies, and the company seems to be straying from the strict hierarchical structures that are sometimes associated with Japanese businesses. This has served the company well, as a strict adherence might stifle creativity and innovation, putting the company behind competitors in terms of product development. However, strict hierarchies—where they do exist—have allowed the company to establish high levels of product quality through quality control and quality assurance partnerships within the production processes of the organisation (Rose, 2005; Toyota Global, 2016).
Benefits of Quality Management in a Business and Service Context
Customer Satisfaction and the Corporation
Customer satisfaction is integral to the overall success of a corporation. Customers are the backbone of a corporation: without the customer support that many of the most massive conglomerates enjoy, the corporation would be unable to compete with any of the other companies that are also trying to fill their specific niche (Rose, 2005). Maintaining high levels of customer support can be done in a number of different ways, and Toyota has managed to encourage customer loyalty and support through high quality production as well as good service quality (Toyota Global, 2016).
Customers have many options in today’s market, so it is important for service providers and corporations like Toyota to really “woo” the customer by offering perks in addition to an excellent product—one of the most common add-ons in automobiles today, for instance, is the integration of Bluetooth and LTE technologies (Toyota Global, 2016). Neither of these technologies have an impact on the performance of the automobile, but like colour, they provide an appealing incentive for the buyer who is looking for something that is appealing beyond the basic model.
Adding Value and Benefits Derived
Automobiles are becoming more complex by the year, and this is changing the way corporations like Toyota add value to their products. Depending on the target market, companies like Toyota might add value in a number of different ways. Certain target markets might be targeted for performance: these automobiles are designed to provide owners with a performance-driven experience. Increased power and external design play an important role in individual perception of an automobile. However, performance markets are only a small subset of the available markets for a corporation like Toyota.
For the average family, value might be added via the addition of navigation and computer integration with mobile devices (Jahanshani et al., 2014). The Prius series is an excellent example of an automobile targeted towards individuals interested in consuming less fuel—although this model is less popular in Europe, it has an extremely high level of popularity in the United States (Toyota Global, 2016). Toyota has to ensure that they have cornered a number of markets by offering a number of different methods for adding value to their automobile.
Information availability has undoubtedly changed the way that customers interact with brands. In today’s world, a social media gaffe can cost a business significantly, and it can follow the business forever; customers have long memories and many options. If a customer is incensed by an organisation, that customer need only take to social media and their perception of the ills that were done to them by the organisation will become public forever (Peng et al., 2014). However, the inverse is also true: social media can be used to build loyalty in the customer base, and being transparent can encourage customers to engage with the brand.
Quality Controls and Service to the Customer
Measurement of Quality
Toyota is well known in the automotive industry for having an excellent track record on management and quality control. Known as “the Toyota Way,” it is a set of principles that are designed to govern exactly how the organization reacts to production issues and human management systems. The principles, laid out by the company openly, include fourteen basic tenets (Toyota Global, 2016). The tenets describe a long-term philosophy and a focus on continuous flow—the continuous flow, the organisation suggests, will bring any problems associated with production easily to the surface so that the organisation can address the problems before they are compounded. The company also focuses on the people of the company, offering them numerous ways to expand and build their careers through the organisation. This allows Toyota to keep its employees happy and retain institutional knowledge within the organisation, without losing key employees to competitors. The corporation seems to be intently focused on organisational learning; organisational learning allows the organisation as a whole to improve, along with the individual members of the corporation (Toyota Global, 2016). The recent introduction of the Prius is a good example of the institutional development of the company: the Prius has revolutionized the eco-friendly car market by building an eco-friendly car that is both appealing to the average consumer and accessible to the average consumer in terms of price.
Identifying a User and a Non-User Survey Relevant to Corporation’s Quality
Toyota, like many automobile companies, often surveys users after they have purchased a vehicle. This allows the company to establish a better understanding of how the organisation can better serve its customers: it also allows the organisation to get a more thorough understanding of how its customers will react to different changes and new products. Existing customers may not need a vehicle for a long time, but surveying them and their needs can be a very effective way to establish what their needs might be in the future and determine how a customer can be made into a loyal customer (Rose, 2005; Jahanshani et al., 2014). Non-user surveys might be engaged digitally, so that Toyota can ask about perceptions of the brand and reasons why an individual might have chosen another brand of car—all these individuals who own automobiles were potential customers, so determining why a decision was made can provide excellent insight (Rose, 2005; Jahanshani et al., 2014).
Techniques for Consultation
Techniques for consultation within an organisation must be considered carefully in the context of the organisational culture. Many employees, especially employees who are working on assembly lines and in the lower echelons of the organization will be more comfortable sharing feelings or opinions anonymously. Surveys and anonymous suggestions can be a way of bypassing fear of speaking up. However, if the organisational culture is open and free, then consultation techniques that include telephone hotlines, community or public meetings, and open community events might be extremely effective for developing an understanding of the needs, wants, and opinions of assembly line staff. Communication and consultation can be difficult for lower-level staff members, so consultation should be done anonymously if there is any potential for abuse or misuse of employee suggestions. This will give employees more confidence in the process as well.
The Importance of Customer Complaints
Paradoxically, customer complaints can be one of the most effective ways to build customer loyalty (Homburg & Fürst, 2005). When a customer complains, he or she is interested in being heard by the company; in today’s world, if the company is not willing to hear the complaints of the customer, there will be thousands—if not millions—of people on the Internet who are willing to hear that complaint (Homburg & Fürst, 2005). As a result, companies who are the most effective in their customer complaints procedures are companies that are willing to take time to listen to the customer and develop a solution in tandem with the needs of the customer. Of course, not every customer has a legitimate complaint; unhappy customers are not unheard of in any industry, and the automotive industry is no exception to this rule (Homburg & Fürst, 2005). A corporation must have a way to deal with legitimate complaints, without allowing those complaints to get lost in the red tape so often associated with large companies (Homburg & Fürst, 2005). Complaints about quality are particularly important, as customer perception of quality is so important to the overall success of the organisation and customer loyalty as a whole (Homburg & Fürst, 2005; Peng et al., 2014).
Principles of Quality Management to Improve Performance of an Organisation
The Process of Quality Self-Assessment in Toyota
Toyota has established itself as a company that utilises benchmarking as the mode of self-assessment within the organisation (Toyota Global, 2016). The company constantly compares its strategy to its competitors’ strategies, and is determined to change things if anything within the organisation does not meet muster. This benchmarking process is a way for Toyota to ensure that it remains ahead of the curve in terms of business processes and structures; it also allows the company to delve deeper into new processes that might lead to innovative breakthroughs later (Zairi, 1992). Self-assessment is a constant process of comparison and re-comparison, with the ultimate goal of establishing the best business processes and the most effective innovative processes (Toyota Global, 2016).
The Importance of Horizontal and Vertical Communication
Business communication requires the use of both horizontal and vertical communication. Horizontal communication—that is, communication between two people holding the same amount of power or the same position within the organisation—is not often fraught with difficulty, although there can be interpersonal struggles. The real struggle for many businesses is the problem of vertical communication, or communication between two individuals (or more) of different power levels within the organisation (Zairi, 1992). Keeping vertical channels open can be difficult, because sometimes employees struggle to voice their true feelings to management. However, a transparent and open record keeping system allows for greater ease of communication. Employees who feel that they will be treated fairly are more likely to communicate their feelings up the hierarchy of the institutional pecking order (Cornelissen, 2014).
Stages for Staff Consultation in Quality Management
Communication can and should be open and honest between different levels in the organisation. Of course, submissions from stakeholders are important, but the everyday experience of the staff within the organisation is equally important to the overall success of the organisation. Public meetings, community events, and other open forums should be the first step when undergoing any institutional changes or developing any new policies regarding quality management. Toyota often engages in these kinds of vertical communication structures, which allows employees a forum to express their ideas openly. If they choose not to in this forum, there are always quieter, more private options for the different levels of staff—these are seen as open and fair ways to communicate with supervisors, so employees are willing to engage (Cornelissen, 2014).
Application of Continuous Improvement and Recommendations
Customer desire is always changing, especially as technology evolves. For instance, the integration of LTE technology into vehicles is a relatively new addition; perhaps soon LTE technology will be standard in the same way a radio is standard. However, if a corporation does not listen to its consumers about the importance of certain additions and desires, then that company may find that it is no longer able to satisfy its clients or customers (Jahanshani et al., 2014). The Internet has made research much easier, and it is very easy for customers to find another company that is able or willing to fulfill their needs if their company of choice is unable to do so (Jahanshani et al., 2014). The competition for consumer loyalty is a much different game than it was even a decade ago, and globalisation and mass integration of information via the Internet has been one of the driving factors behind this change (Jahanshani et al., 2014).
As companies interact with their consumers and customers, they are better able to quickly adapt to the needs that these individuals are expressing; as an automobile company, Toyota must understand that consumers are interested in an automobile that will be an effective mid-term investment, which means it must be able to suit their needs technologically. To improve the quality of products, the company must continue to pursue innovative processes within its talent pool. The automotive industry is one that continues to evolve very quickly, and there is still much more to understand about eco-friendly travel and transportation that does not rely heavily on fossil fuels; further development in this realm should be considered, as it is likely to be the new frontier of automotive development.
Cornelissen, J. (2014). Corporate communication: A guide to theory and practice. Sage.
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Appendix A: Sample Customer Survey