A Comparison of General Motors and Toyota
The automotive field is very competitive with contenders coming from all over the world. Volkswagen, Renault, Ford; the list goes on, and for the many that have made it even more have faded into history.On June 1st, 2009, the American automotive powerhouse, General Motors, filed for chapter 11 reorganization after years of losses, closing a dozen facilities, and cutting more than 20,000 jobs. These financial losses lead to the company eventually losing the global sales title to a Japanese company that in the 50s was on the verge of going out of business itself, Toyota.
Founded in 1908 as a consolidation of several other car companies, such as Buick, Oldsmobile, Cadillac, and numerous others; GM hit the market hard, absorbing the competition and leading the way in technological advances. By 1929 General Motors had overtaken Ford to become the leading American passenger-car manufacturer, having recently added overseas operations, acquiring Vauxhall, Opel, and Holden. “By 1941 it was making 44 percent of all the cars in the United States and had become one of the largest industrial corporations in the world.” (Britannica, 2018)
Meanwhile, in 1923, an earthquake in Japan sparked an interest in the then textile merchant, Sakichi Toyoda, which ten years later lead to the development of the automotive division of the Toyoda Automatic Loom Works. To help with the relief efforts, “the Tokyo Municipal Electric Bureau ordered 800 truck chassis from U.S. manufacturer Ford Motor Company. The completed chassis reached Yokohama Port in January 1924 and were immediately fitted with rough canvas top bodies for operation as municipal buses.” (TOYOTA MOTOR, 2018) By 1932 the Toyoda Automatic Loom Works had completed two prototype vehicles, entering the world of automotive manufacturing.
Jump ahead 30 years, both General Motors and Toyota had been steadily expanding their facilities. Toyota was working toward being able to produce 10,000 vehicles a month, while General Motors, and all of its holdings were producing well over ten times that amount.
Toyota and the Toyota Production System
Late in 1959, Toyota began the introduction of TQC, or Total Quality Control, with a goal to improve business management through full employee participation. With the implementation of the program, Toyota hoped to heighten awareness of quality and cost, and improve management systems for each function, enhance planning and ensure smooth production start-up for new products, and develop close cooperation with their suppliers. As a result of its introduction, by 1961 Toyota had seen the initial quality of new passenger car models improved with each subsequent production start. (TOYOTA MOTOR, 2018)
Total Quality Control “begins with a cycle of design, production, sales and market research which is to be followed by another cycle that begins with redesign based on the experience obtained from the previous cycle. In this way, quality improves continuously.” (Process Improvement Japan, 2010) The thought is the manufacturer becomes more attentive to the customers needs, the manufacturer must actively seek out their customers opinions and anticipate future needs to establish their own standards.
This reoccurring cycle is also referred to as the Deming Cycle, or P-D-C-A; plan–do–check–act and is a model for continuous improvement. In Toyotas case, they were up against stagnant sales in the mid to late 1950s due to quality issues in the last few model years. They recognized the need for change as it was reflected in low productivity, low quality, and low sales numbers. “Due to the implementation of TQC activities, the quality of Toyota’s products improved. Toyota’s awareness about the importance of safety and product quality, as well as their corporate social responsibility, was further strengthened when a vehicle recall system was instituted in the U.S. in January 1968.” (TOYOTA MOTOR, 2018) Culmination of the programs implementation, in 1970 Toyota was the first company to receive the Japan Quality Medal, the prize that is only awarded to companies that have improved through the continuous implementation of Total Quality Management. This program, and others like it that have been added into the Toyota Production System have helped Toyota to climb the ladder over the last 75 years to become one of the top selling automotive brands in the world.
General Motors and the Global Manufacturing System
Switching focus to General Motors, from the 1950s up through the 1970s, they were at the head of their class, producing some of the most iconic cars to ever have hit the streets. Bel Air, Eldorado, GTO, and Corvette just to name a few, many of which were the brainchild of legendary designer and business executive Harley Earl.
After building itself up through the decades, just a few poor decisions triggered the decline of the automotive giant. In 2000 General Motors bought a 20 percent share of Fiat Auto with $2.4 billion in stock, and then just five years later spent $2 billion to buy its way out of the deal. To try and cover some of their losses, General motors phased out Oldsmobile in 2004 and a few years later Pontiac, Saturn and then Hummer. Numerous of dealerships closed and the employees within were fired, until finally in 2009, bankruptcy and eventual government bailout.
Today, General Motors is trying to solve its problems, and solidify its bottom line, by slowly disengaging from the world to tighten up production and focus on quality. It is shutting down manufacturing at Holden in Australia, and in Europe, Opel and Vauxhall will be sold; all of which have been a part of General Motors since 1930. In 2014, General Motors issued a yearly total to 60 recalls affecting almost 30 million vehicles, with this “GM has outpaced the industry and has nearly singlehandedly surpassed the 2004 record of 30.8 million recalls across the whole industry. “These recalls signify how we’ve enhanced our approach to safety,” said Jeff Boyer, the newly appointed vice president of Global Vehicle Safety, in a statement.” (Duffer, 2014)
In the early 1980s, General Motors took an interest in the initiatives that it was seeing implemented over seas, particularly elements of the Toyota Production System that had been adopted by several Japanese auto manufacturers. In fact, “In 1994, GM and Toyota formed a joint venture called the New United Motor Manufacturing Inc. (NUMMI) to pioneer implementation of lean methods at an automotive manufacturing plant in the U.S. Compared to a conventional GM plant, NUMMI was able to cut assembly hours per car from 31 to 19 and assembly defects per 100 cars from 135 to 45.” Based off their findings, General Motors now has one of the most wide-spread lean manufacturing initiatives in the U.S.” (General Motors, 2016)
However, rather than focusing solely on quality issues within the company, General motors has also begun to branch their lean initiative out into their supply chain, beginning with the thought that GM directly bears the costs of supplier waste, inefficiency, delays, and defects. To help in reducing overall costs and improving material qualities, GM has assigned a group of engineers to work more closely with its suppliers. By working with suppliers on environmental improvement, GM has been able to promote the use of returnable shipping containers, communicate their guidelines for designing for recyclability, and communicate success stories to the supplier community as examples of what can be done.
Control vs Lean Six Sigma
When looking at Toyota and General Motors there are two schools of thought, Toyota and Total Quality Control, and General Motors and Lean Six Sigma. Total Quality Control centers on quality and takes a customer-focused approach. While Lean Six Sigma focuses upon speed, metrics, and reducing variation.
Total Quality Control focuses on the long-term quality improvement and encompasses:
• Having a consistent, constant, and stated purpose behind
• Reducing dependence upon inspections
• Getting rid of fear and hierarchy in the company
• Ensuring everyone in the company has undergone training and
that they are working toward quality improvement
• Ensuring that education is an
The principles of Lean Six Sigma include:
• Customer-satisfaction-based initiatives for quality
• Specific metrics that drive decision making
• Seeks to reduce variation that affects quality
• Separates non-value work from value work – considering
non-value work to be waste
• Focuses upon speed
The goal with Six Sigma is to share ownership of quality improvement to the entire organization, spreading accountability and empowering the staff to correct issues as that present themselves while those who run TQC are more experienced in the quality field. There is formal training involved in Six Sigma; projects are managed by “black belts” that have a proven track record in quality gains. The black belts are members of the company that have jobs and departments outside of Six sigma. They will work full time on Six Sigma projects until the desired goal is achieved, and then return to their departments once complete. With TQC, there is a quality control department that is staffed with career professionals who specialize on quality improvements. Cutting costs is usually the goal with Six Sigma and tends to work best when there are specific financial goals the company is trying to achieve. Total Quality Control, however, tends to focus on less tangible and harder to define goals such as customer satisfaction and long-term strategic excellence. (Ozyasar, 2017)
Lean Six Sigma is a plan of action to drive revenue increase, cost reduction and process improvements in all parts of the organization. It helps management to create a vision to provide defect free, positive environment to the organization. Statistical Analysis is used to identify root-causes of the problem and the methodology calculates the process performance. Organizations can keep a stringent goal and through the implementation of Lean Six Sigma, those goals become more achievable.
Total Quality Control is only as strong as the sum of its parts, though. TQM generally works on the understanding that quality management is the responsibility of everyone involved in the creation and consumption of the goods and services of the organization – this includes the managers, shop floor workers, factory workers, distributors, and of course the customers themselves. It is only by the co-operation of all the parties involved that custom expectations can be exceeded.
As research began on comparing General Motors and Toyota, the belief was that the system of a declining automotive manufacturer would differ greatly from that of a manufacturer at the apex of its development. Not only was it found that the quality and financial health of each company are not far off from each other, but also that the systems they each use are not separate either.
I have found that Total Quality Control and Lean Six Sigma in the case of Toyota and General Motors, are being utilized in different ways by companies in different stages of their development, Toyota implemented TQC early to capture the needs of the consumer and streamline processes to grow the brand. The use of Lean Six Sigma within General Motors was intended to cut dead weight and get the company back to a state in which it can be profitable again. As Toyota holds steady in the market and General Motors finds its way back to health, this finding shows that any system when implemented correctly has their place and can provide great results upon execution.