Even in their infancy, Japanese businesses were relentlessly innovative and focused on quality and efficiency. Beginning in the 1950s, Japanese industries adopted a goal of continuous quality improvement, later known as total quality management or TQM. The basic principles are now so common that it’s difficult to appreciate that they were once revolutionary.
During mid-century, quality control was commonly understood as the end point of manufacturing. After something came off the line, a team would check to see if it met quality standards. Hence, quality control was punitive, a negative check on production.
The quality-control guy was the person at the end of the line who made everyone else look bad by flagging a mistake. And since quality control was punitive, workers had an incentive to hide rather than fix mistakes. That adversarial relationship was the enemy of high quality.
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Rethinking the Process
Surprisingly, in the auto industry, the incentive was to ship a flawed car to a dealer and make it a problem for sales instead of the factory. And then the dealer might try to push the problem onto service.
Total quality management (TQM) reversed that thinking entirely. Flagging mistakes was an opportunity to rethink the process. Why wasn’t the factory producing steel plate of a consistent thickness? Why did so many car doors rattle? Managers needed to empower workers to rethink production and be engaged in quality control. Managers needed to think of workers as their partners in quality.
High-quality Japanese Exports
In the 1970s and 1980s, we began to find English-language management books that connected the high quality of Japanese exports—and Japan’s quality control practices—to the harmonious nature of Japanese culture. Somehow, Japan was uniquely amenable to labor-management cooperation. But that weird notion had no basis in fact. The truth was quite the opposite.
Thus, TQM was yet another foreign technology imported into Japan from the United States. It originated with W. Edwards Deming, an American engineer who came to Japan during the US occupation after World War II to help manage a population census.
W. Edwards Deming
W. Edwards Deming gave a few talks about his quality-control theories. Those talks dazzled Japanese engineers and businessmen. Morita Akio, the founder and CEO of Sony, spoke of Deming’s lectures as a transformative experience. The Union of Japanese Scientists and Engineers created a prize in Deming’s honor to mark exceptional achievements in quality control.
The United States eventually created a counterpart to the Deming Prize—the Malcolm Baldrige National Quality Award, named for a former US Commerce Secretary—but only after American businesses had begun re-importing the idea of TQM from Japan.
Supply Chain Management
Japanese industry also pioneered what we now call supply chain management and lean production management. As with TQM, lean supply chains are now common.
Earlier what existed was a conventional mid-20th-century approach to inventory with lean supply chain and lean manufacturing.
Options for Customizing
If one bought a car in the United States in the 1950s, one had thousands of options for customizing the details of the vehicle’s interior and exterior. The options added complexity to manufacturing; they made quality control more difficult and involved huge inventories of different parts.
Japanese automakers chose a different route—three versions: the base model, the more-options model (maybe the LX), and the even more-options model (maybe the EX).
Reduction in Complexity
If one wanted the fancier wipers or better upholstery on the base model, it was not available. One had to purchase the EX. That reduction in consumer options allowed for a massive reduction in complexity. It also increased quality along with much smaller and, therefore, cheaper inventories of specialized parts. Thus making the overall, production simpler, leaner, and faster.
Now, this wasn’t a Japanese discovery. Henry Ford famously said that one could have the Model T in any color so long as it was black. But Japanese industrial engineers were pioneers in realizing one could respond better to consumer demand with fewer options.
Leaner Production System
The leaner production system meant that, hypothetically, if it looked like lots of buyers wanted the better wipers on the base model and might choose another car because of that feature, one could add the wipers to the base model in the next version but still have streamlined production with three basic levels of options.
As is clearly evident from the industry practices, many Japanese businesses were innovative and agile. Thus, they often didn’t need or want active protection from the Japanese government. Instead, they wanted helpful inaction.
Japan’s Anti-trust Laws
Japanese businesses wanted that the government be slow and lax about the country’s anti-trust laws. A great example was the color TV.
In the late 1960s, Japanese electronics manufacturers established a price-fixing scheme for color TVs. They fixed two sets of prices: one set for the domestic market and the other for export. This allowed Japanese manufacturers to sell below-cost in the United States, gaining a beachhead, while selling the product above cost in Japan, thereby making a profit overall.
Thus, what Japanese TV makers wanted was just for the Japanese government to be lazy about anti-trust law. Curiously, the government obliged, until they had to act after the practice was exposed in Japanese media. Nonetheless, this system lasted into the 2000s, until big-box retailers finally made headway in Japan.
Common Questions about Japan’s Industrial Boom and Total Quality Management
During mid-century, quality control was commonly understood as the end point of manufacturing. After something came off the line, a team would check to see if it met quality standards or not.
Total quality management or TQM was yet another foreign technology imported into Japan from the United States. It originated with W. Edwards Deming, an American engineer who came to Japan during the US occupation after World War II.
The Union of Japanese Scientists and Engineers created a prize in W. Edwards Deming’s honor to mark exceptional achievements in quality control.