Discovering Toyota Way through Islamic Value Perspective
Ratana Jabir[1], Zizah Che Senik[2]
After the Look East Policy implementation in 1980, the automotive industry in Malaysia has been growing positively, and Toyota presence as one of the core players in driving the industry towards global standard. However, the implementation level of Toyota Way was limited to certain organizational level, thus the practice has been constrained by various reasons. One significant obstacle was understanding the values beyond this system. Therefore, this paper investigates the Toyota Way managerial practices, comparing on the Toyota Way principle to the Islamic value perspective related to the employee personal belief system. The study intends to find out the implications of this approach towards employees’ behaviour in practicing lean practices and the Key Performance Indicators (KPIs) achievement of this approach. Using a qualitative methodology, through snowball sampling method, 32 interviewees participated in this study. Apart from the interview, series of motivation sessions were conducted for six months with employees from seven companies in three different types of activities (manufacturer, vendor and third party logistic company). The study found that there are strong similarities of Toyota Way principles with Islamic values. Various quality achievements, such as product defect claim, vandalism issue, and turn-over rate have decreased, indicating tremendous improvement of the employee loyalty towards company and the participation rate in the company activities. In conclusion, the formation of quality employee in organization was achievable through clarification and connection of management system principles and personal values. In return this morale formation could shape the community and industry culture for the long-term achievement.
Keywords: Toyota Way, Islamic Value, Behaviour, Lean Practice
Field of Research: Management
1. Introduction
Automotive industry in Malaysia has become more competitive through collaborations with top global players such as Mitsubishi Motors, Daihatsu Motors, and Toyota Motors Corporation. Through National Automotive Policy (2005, 2009), the government has outlined the objective to turn Malaysia as the ASEAN hub for passenger cars producer by 2010, and this has been successfully achieved. However, in 2011, the national total production volume faced a slow pace movement despite the assistance from the government policies related to the automotive industries. The Organisation Internationale des Constructeurs d'Automobiles (OICA, 2013) reported that the overall strong performance of the Thai automobile sector and a recent diversification into passenger vehicles shows that Thailand has outperformed Malaysia as the Southeast Asia's premier location for passenger car manufacturing.
The report (OICA, 2013) showed that in 2006, Malaysia’s 75 percent output was structured by passenger car segment with total volume of 377,952 units. On the other hand, Thailand’s output for the same segment was 298,819 units which reflected only 25 percent of its total output. However, the report showed that in five years’ time, the total volume of passenger car segment increased to over 1 million units for Thailand, with only 8 percent increased comparing to Malaysia output which the volume increased up to 17 percent, but, the total units produced yet to challenge the Thailand’s output. In 2013, total output for passenger car segment for Thailand had putting Malaysia further behind. The total volume for the passenger car segment increased approximately 50 percent. It is also understand that Indonesia showed tremendous increase in production volume as well. Understand that from the above; Thailand has more potential to be the passenger car hub in ASEAN by considering in terms of production volume.
In previous studies Fujita (1997; and Wad and Govindaraju (2011) stated that Malaysian vehicle sales and production has increased markedly. Yearly vehicle sales rose from below 54,000 in 1987 to 605,156 vehicles in 2010, while production rose from 104,000 to 567,715 vehicles. However, according to Ministry of International Trade and Industry (MITI, 2013) the production volume was more to cater the domestic market demand rather than for the international market demand. MITI (2013) raised the concern that Malaysia has to attract the international market demand in order to keep competitive with Thailand in particular and grow the industry with the objective as an export base manufacturer that could tremendously increase the production volume and triumph back as the ASEAN passenger car hub. The focus now is that how could the present of major automotive players in local market particularly the Japanese automakers could assist local industry into becoming international players?
The Malaysia automotive market is dominated by the Japanese automakers such as Toyota, Honda, Nissan and Mitsubishi (Henriksson, 2012; MAA, 2013) result from the Look East Policy (LEP) launched in 1981. The first objective of this policy was to encourage learning from Eastern values particularly the Japan’s work ethics. Another significant one was raising the position of Bumiputera, and encourages them to participate in heavy industries regarding capital, employment and management (Fujita, 1997). In accordance to the launched of LEP, Jomo (1984, 2004) emphasized that the participation of Bumiputera was significant in the automotive industry as national agenda which was one of the core New Economic Policy (NEP) national agendas in the objective to uplift the Bumiputera’s standard of living.
Malaysia Automotive Association (2014) indicates the market position of the top ten passenger car makers, which showed five of six automakers, are Japanese or controlled by Japanese firms. Malaysia Automotive Association (2014) reported that Toyota groups’ products dominated nearly half of the market share in passenger car segment which reached 44.5 per cents which included Perodua that is controlled through Daihatsu and Toyota equity in the organizational structure. The cumulative market share of Toyota group has overtaken Proton's position as Malaysia’s incumbent automaker since 2006, thus the market share indicates Japanese automakers had strong position in local passenger car market (MAA, 2013). Malaysian Automotive Association (2011) reported that the Japanese automakers particularly Toyota had strong position and influence towards shaping Malaysia automotive landscape. In addition, Malaysia Automotive Institute (MAI) implemented Supplier Competitive Level (SCL) training program that applied Lean Production System (LPS) which derived from Toyota Production System (TPS) as the main reference and module. The SCL training program offers local suppliers to increase their competitive level towards international standard which is SCL5 in the objective for the local supplier being a competitive and meet the global supply chain standard (MAI, 2013).
However, most of the programs initiated by the government and the industries focusing to the technical and skills perspective and there were lack of studies in human potential development perspective comparatively. In fact, this area is still an understudied phenomenon which relates TPS principles to an appropriate approach on providing countermeasure to upgrading the poor human capital factors (Rasiah, 2011) and relates it to quality achievement. Since this subject is still an understudied phenomenon, together with lacking of empirical evidence, a case study approach (Yin, 2003) based on in-depth semi-structured interviews and observation studies with 32 participants from seven Toyota group of companies was implemented.
The purpose of this paper is to understand the similarities of Toyota Way principles and Islamic values. The analysis was developed into module and applied through an alternative motivation approach that offered to the participating companies. The ultimate goal is to investigate the effects of this approach from human capital perspective on quality achievement of man as the main indicator and quality achievement of product and processes as the subsequent indicators. Thus, the objectives are: 1) to evaluate the understanding level of Toyota Way among Toyota workers, 2) to explain how Toyota Way relates to working environment, and 3) to analyze the impact on quality achievement upon alternative motivation approach.
2. Literature Review
The presence of Toyota Motor Corporation has influenced the Malaysia automotive industry for three reasons: 1) high acceptance level of Toyota products in local passenger car market segment that reached nearly half of the local market share (MAA, 2014); 2) the high numbers of vendors practicing Toyota Way as there were approximately 138 vendors registered as active vendors through Perodua Vendor Association in Malaysia (Jabir, 2009); 3) the implementation of Lean Production System (LPS) training program in Malaysia Automotive Institute (MAI) which derived from Toyota Production System (TPS) as the main reference and module in the Supplier Competitive Level (SCL) training program (MAI, 2013). Understanding that the Japanese automakers particularly Toyota have been playing an important role in the process of formation and development of Malaysia automotive industry, several research (Sadoi, 1998, Rasiah, 2011, Wad Govindaraju, 2011, Henriksson, 2012 ) in regard to the Malaysian automotive industry have been conducted. Sadoi (1998) earlier found that the automotive industry in Malaysia is facing difficulties in achieving the requirement of skilled workers, affecting the development of this industry.
One of the main issues contributed the above phenomenon was related to the workers behaviour in the industry regarded as ‘lukewarm attitude’, defined as the situation whereby workers do not have a thoughtful manner in the desire of learning towards various skills which required being a high skilled worker (Sadoi, 1998; 2003). This finding was supported by another study by Jabir (2010) stated that the workers also had ‘reset mind setting’, defined as a situation whereby worker will interchangeably his/her perception on understanding and thinking each time when working situation and their personal life environment exchange. The ‘lukewarm attitude’ and ‘reset mind setting’ are related to the thinking style and this problem referred as ‘captive mind’ syndrome, referring to a situation where an uncritical and imitative mind dominated by an external source whose thinking is deflected from an independent perspective (Al-Attas, 1974). The captive mind characteristics include the inability to be creative and raise original problems, the inability to devise original analytical methods, and alienation from the main issues of indigenous society (Al-Attas, 1972).
Companies practicing Toyota Way in their management system has high potential to influence the formation of high skill requirements based on their principles and concepts which accelerate thinking process within their value chain (Ohno, 1988; Liker, 2004). Thinking revolution indeed requires knowledge and firm understanding of it course to educate and nurture worker into skilled as well the creativity in product manufacturing. Therefore, it is crucial to review the industry from the human capital perspective and analyse their perception towards this industry that dominated by Japanese automakers which particular attention to Toyota.
Jabir (2009, 2010, 2011) observed the initial method in introducing the Toyota Way concept to the local workers who viewed it as unfamiliar foreign concept which they have to learn, implement, and adapt in their work. The issue was that any particular management concept or system must have an appropriate introduction phase as many researchers believed that the main problem lies on the misunderstanding of the real concept and purpose of Toyota Way (Balle, 2005; Schonberger, 2007). This type of misunderstanding could lead to major issues such as piecemeal adoption of Toyota Way tools and techniques (James, 2006), misapplication of Toyota Way tools (Pavnaskar et al., 2003; Herron and Braiden, 2007), and lack of development of Toyota Way culture that support the Toyota Way development (Jorgensen et al., 2007; Liker and Hoseus, 2008).
Previous studies suggested that if a company ignored the Toyota Way strategy, it may not be able to face current global competition for higher quality, faster delivery and lower costs (Womack et al., 1990; Flott, 2002; Srinivasaraghavan and Allada, 2006). Adopting Toyota Way principles could produce high firm performance (Oliver et al., 1996), and may form successful roadmap to world class manufacturing (Papadopoulou and Ozbayrak, 2005). Nevertheless, the system can be risky and stressful if management and workforces are not highly capable and lack of trust in the system (Williams, 2007). This suggests without highly capable and motivated people rigorously solving problems, the lean system will fail.
Anand and Kodali (2009) claimed that many lean manufacturing initiatives have failed due to the lack of managers and employees’ understanding of management concepts. Therefore, Yu and Kuan (2009) emphasized that a comprehensive framework for a lean manufacturing that integrates the practices in different areas are required for practitioners to have a clear understanding of the requirements in implementing the lean manufacturing. Operational performance can be enhanced when the employees comprehend the innovative manufacturing systems and technologies, which in turn stimulate staff motivation and develop organizational expertise (Chen and Huang, 2009). Investing in human capitals was one of the key success factors to growing business opportunities in Toyota (Liker and Hoseus, 2008). According to Williams (2007), since the establishment of Toyota, two pillars that remain until today are respect to human capital and continuous improvement, characterizing the Toyota Way, thus becoming distinctive competencies for the company.
Ohno (1988) established Toyota Production System (TPS) with two substantial managerial pillars; just-in-time (JIT) and autonomation (Jidoka). Ohno (1988) defined just-in-time was in a flow process, the right parts needed in assembly reach the assembly line at the time they are needed and only in the amount needed. The second pillar which is autonomation that was created based on the company founder idea on an auto-activated weaving machine which stopped instantly if one of the wrap or weft threads broke that lead to dramatic productivity improvements which also addressed as the human machine intelligence (Miltenburg, 2000).
However, Convis (2001) claimed that Ohno’s theories were misunderstood that many tried to implement the individual elements like JIT or Jidoka instead of the entire approach. Convis (2001) emphasized that TPS is an integrated and interdependent system involving many elements: the tools, the philosophy and management. In his opinion, Ohno’s theory lacks of direction that the key to successful TPS implementation is the total commitment of everyone in the organization to make it work. These findings guided him to develop a TPS triangle model which human development is at the very core of TPS and this concept later on developed into the culture which known as Toyota Way (TW) (Liker, 2004; Toyota Way Academy, 2014).
Comparing Convis and Ohno model shows clearly that TPS is not simply a set of tools and concepts, which can be implemented by command and control. Rather it is a fully integrated management and manufacturing philosophy and approach. Convis (2001) underlined that the human dimension is the single most vital element for success. However, the fact that neither Ohno (1988) in his TPS, nor Shingo (1989) in his following study of TPS are mentioning these aspects, but only concentrated on the techniques, may have led to the misunderstanding that the tools are the most important aspect and not the fundamental manufacturing philosophy. That perhaps made companies around the world only copying these tools and making experiences that the TPS does not work in their environments.