Section 1. Construction of Motomachi Plant and Introduction of TQC
Item 7. Toyota Awarded the Deming Prize
To put the company's organization-wide TQC initiatives up for assessment by the world, in May 1965 Toyota Motor Co., Ltd. entered as a candidate for the Deming Application Prize.
Following the introduction of TQC, the attitude that quality could be improved by thorough inspection initially remained. However, as the TQC philosophy and methods took root within the organization, this shifted to a focus on "building quality into the process", and each department began to cooperate toward a clear goal. The concrete results of these initiatives became evident during the smooth production start-up of the third-generation Corona (RT40).
In June 1965, Toyota Motor Co., Ltd. submitted a report detailing its quality control process to the Deming Prize Committee. After passing the initial screening, the committee began a detailed field investigation, visiting the Tokyo Branch Office, the Motomachi Plant, the Honsha Plant, and the company headquarters (in that order) from August.
At the Deming Prize Committee meeting in October, the committee voted to present the 1965 Deming Application Prize to Toyota Motor Co., Ltd., and an award ceremony was held in November at the Imperial Hotel in Tokyo. With 1965 marking the 15th anniversary of the Deming Prize, the ceremony was an auspicious event, attended by Professor W. Edwards Deming (who traveled from America) as well as many noted figures from business and academic circles.
Then-Managing Director Shoichiro Toyoda-who, as deputy head of QC Promotion Headquarters had worked exclusively on TQC initiatives from the planning and discussion stages through to implementation-made the following remarks:
To summarize the results of our quality-control promotion actions, the first effect was that our product quality improved. This was due to the awareness of the importance of 'building quality into each process' that permeated every corner of the company following the introduction of TQC. ...
The second effect was that our share of the Japanese passenger car market increased, and that our total exports grew. Thanks to this, in May 1966 we were finally able to achieve our goal of monthly production of 50,000 vehicles, and monthly exports of 10,000 vehicles.
The third effect was that we achieved our cost reduction targets. This was the result of a company-wide awareness of cost factors as well as quality issues, and I believe that focusing TQC on the twin goals of quality and cost was extremely effective in achieving these results.
And looking at the effects from a different perspective, the initiative also dramatically improved our corporate makeup. One example of this is that managers learned management methods, and another is that human relations across the company improved. TQC provided a framework for everyone from suppliers to Toyota Motor Sales (Co., Ltd.) to cooperate toward a common goal, and by clarifying who was responsible for which duties and who held what authority, people were able to hold frank discussions. As a result, processes were standardized as quality assurance rules and cost control rules, establishing a set management system.
Receiving the Deming Application Prize strengthened Toyota Motor Co., Ltd.'s resolve to push ahead with further TQC initiatives, and based on the points cited by the Deming Prize judges the company set the following policies:
- 1.To promote all-around quality control, including at affiliated companies such as suppliers and dealerships.
- 2.To establish simple and effective management systems without being preoccupied by form, paying particular attention to ensuring checks and actions, and rotating the management cycle rapidly.
- 3.To enhance overall planning and, from a long-term perspective, achieve swift and precise decision making and execution through coordination among management structures.
Under this policy, in February 1966 an eight-company QC Liaison Committee2 was established among Toyota-related companies, creating a framework for deliberating specific measures to involve all Toyota-related entities in quality assurance actions. Toyota Motor Co., Ltd. continued to persist with TQC initiatives at every opportunity, such as reshaping company-wide audits into annual business inspections.