Section 1. Response to Recall Problems
Item 4. Creation of the Toyota Quality Control Award
As mentioned previously, Toyota was awarded the Deming Prize in 1965. The next year, Toyota established a Purchasing Administration Division to promote TQC activities involving all of its operations-including those of suppliers-and commenced to communicate the knowledge and experience it gained through winning the Deming Prize to its affiliates and suppliers. The 11-member QC Committee1 performed a central role in implementing QC measures at affiliates, producing steady results through its goal of having each company win a Deming Prize.
In September 1969 Toyota created the Toyota Quality Control Award based on a suggestion from Executive Vice President Shuji Ono, with the aim of having TQC activities take root even among Toyota suppliers.
Its name stemming from a creative twist in the reading of TQC (Total Quality Control) to Toyota Quality Control, the award was created with an aim to further promote quality control among all Toyota-related entities by adopting and expanding on the spirit of TQC in Toyota fashion.
An award for excellence was conferred on member companies of Kyohokai and Seihokai (later merged with Eihokai)2, excluding certain publicly listed companies, that had shown exemplary results in the area of business management improvement. Also, an award for outstanding achievement was conferred on companies that showed promise toward achieving exemplary results in the area of business management improvement.
Initially, the outstanding achievement award assessed companies in three categories-corporate policy, quality assurance, and productivity improvement-while the award for excellence assessed companies on their progress in implementing these and one more category: long-term business policy. In 1971, two more categories were added to both awards: cost control and technology development (only for specialized manufacturers).
The first company to undergo evaluation was Kojima Press Industry Co., Ltd. in June 1970. Executive Vice President Shoichi Saito chaired the panel of judges. From July began evaluations of Futaba Industrial Co., MTP Kasei Co., Ltd. and Pacific Industrial Co., Ltd., all of which received the award for excellence that year. All of the companies that went through this evaluation process made substantial improvements not only in quality control but also in business management in general.
The introduction of this award program was a major motivation for Toyota suppliers, as the recall problem had intensified their interest in quality assurance and as anticipation of future capital liberalization heightened their desire to streamline management.
Years later, in September 1977, Toyota convened a meeting of representatives from the 12 companies that so far had won the Toyota Quality Control Award. At the meeting, held at the Toyota Kuragaike Commemorative Hall, Executive Vice President Shoichiro Toyoda addressed the representatives as follows, explaining that the TQC Award had done much to strengthen the Toyota Group.
Efforts to improve company health for the Toyota Quality Control Award have, I believe, been instrumental in strengthening the Toyota Group. They have not only led to substantial progress in areas ranging anywhere from quality assurance and cost control to productivity improvement and technology development, but they have also, by uniting the group under the same banner, produced intangible results, including greater harmony between management and all our employees. It appears that many companies are making practical improvements to their business health based on the inspiration they have received from companies that have already won the award.