Given the spate of recalls and quality problems, managers wonder whether Toyota’s difficulties throw its legendary manufacturing model into question.
Consumers were surprised in October 2009 by the first of a series of highly publicized recalls of Toyota vehicles in the United States. Citing a potential problem in which poorly placed or incorrect floor mats under the driver’s seat could lead to uncontrolled acceleration in a range of models, Toyota announced that it was recalling 3.8 million U.S. vehicles.
For manufacturing executives who have strived for decades to emulate Toyota, the mere suggestion that it had quality issues was a serious matter. All over the world, executives paused to wonder if they had been chasing after the wrong manufacturing model. Despite Toyota’s long record of building reliable, low-defect vehicles, public perceptions about quality are often greatly influenced by reports in the media and their overall timing, the author argues. The key question was the source of Toyota’s problems: To what extent did they originate with the product designs and assembly, and to what extent could they be pegged to the company’s supply and manufacturing systems?
The author discusses two root causes for Toyota’s quality problems. The first is an outgrowth of management’s ambitions for rapid growth. Management’s goal was to increase Toyota’s global market share from 7.3% in 1995 to 10% over the next decade, then to 15% by 2010. The second is the result of the increasing complexity of the company’s products. A typical auto sold in the United States or Europe has more than 60 electronic control units and more than 10 million lines of computer code – a fourfold increase over what was common a decade ago.
However, the author notes that any thorough analysis would also need to acknowledge the role of the company’s centralized management structure. The result: Top management in Japan was less sensitive to the expectations of regulators, culture and politics in overseas markets, and consequently they were slower to respond to local problems.
6 Comments On: What Really Happened to Toyota?
What a well-written, concise and insightful review and commentary on a business case that will, no doubt, be studied for years to come. You have articulated so many issues to which other organizations need to attend. It seems that a fundamental lesson in all this is that straying from the fundamentals of what has made a company great can be hazardous to its health. There is a saying that “love is blind” in human relationships. Perhaps it can also be said that “growth is blind” when it comes to organizations. Thanks so much for this analysis.
Fine piece of writing. Balanced, clear, nuanced. A standard for how to write an article on a complex phenomenon.
Thank you.
toyota has overconfidence about its quality. for many years, toyota experiences major market leader, it makes capacity expand and quality control weaken. multisupplier arround the world is hard to control
Toyota’s biggest mistake was a simple one; failing to direct their auto salesmen to instruct owners how to turn off the car while moving.
While this seems obvious (twist the key counter-clockwise), many of their models don’t have a key. They use a Smart Key system with a “Power” pushbutton. When stopped, simply press the Power button and the car shuts off. Many modern cars use similar systems.
But to shut off the car while moving, depress and HOLD the Power button for 3 seconds. The car shuts off and gently coasts to a stop.
If every Toyota owner knew this, there would never have been any such thing as a “runaway car” with brakes burning (or whatever actually happened — we never got a clear answer on what the truth was).
Martin Dressler
The general public doesn’t seem to understand the regular frequency with which many manufacturers vehicles are recalled, however the speed of Toyota’s response to the problems are where the auto manufacturer needs to take responsibility.
Also it is interesting to know that in the countries where there were competitive domestic rivals, in the U.S for example, the reports of Toyota’s problems and the seriousness of their situation were almost sensationalized.
What is especially amazing to me is the obvious impact of media power here. It is clear that Toyota has had far more media attention than any other vehicle recall and the have suffered the most. Is anyone else worried about the amount of power that media plays in our society?