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Operations Management and Research

What Really Happened to Toyota?

By Robert E. Cole

June 22, 2011

Given the spate of recalls and quality problems, managers wonder whether Toyota’s difficulties throw its legendary manufacturing model into question.

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Toyota’s quality problems in the United States were signaled with a recall in late 2009 for problems with floor mats, but they didn’t end there.  Since then, more than 20 million cars have been recalled.

Image courtesy of Flickr user kenjonbro.

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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. The recall was triggered by the report of a fiery crash in California, where the accelerator of a Lexus sedan got stuck, resulting in the driver’s death.

Additional reports of unintended acceleration from sticky gas pedals prompted the National Highway Traffic Safety Administration to pressure Toyota to recall additional vehicles and models.

To car buyers and students of manufacturing excellence, Toyota was no ordinary company. It was in a class by itself, long known, even revered, for its sterling quality. For manufacturing executives who have strived for decades to emulate Toyota, the mere suggestion that it had quality issues was a serious matter, to say the least. 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 public view can be at odds with the objective measures. In the case of Toyota, there were definitely indications that the quality level of its products had fallen off in recent years. What’s more, the changes had occurred during a period of time when many of Toyota’s competitors, including Ford, Chevrolet and Hyundai, were producing better and better cars. 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 manufacturing systems?

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This article was printed from MIT Sloan Management Review online: http://sloanreview.mit.edu/the-magazine/2011-summer/52417/what-really-happened-to-toyota/

6 comments on “What Really Happened to Toyota?”

  1. 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.

  2. 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

  3. 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

  4. 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.

  5. 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?

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