Toyota is a highly profitable Japanese automaker renowned for pristine quality, cost reduction and lean production methods. The company has been a model of operational excellence and its success has been acknowledged through The Toyota Way and the Toyota Way Fieldbook where it sums up the principles and behaviors that underlie the Toyota Motor Corporation's managerial approach and production system. However, over the years its overly ambitious growth goals seem to have caused an escalating number of recalls.
“In 2012, the company recalled 7.43 million vehicles worldwide over a faulty power-window switch that could cause fires. Toyota said grease wasn't applied evenly to the switch during production, causing friction and sometimes smoke and fire. Affecting more than a dozen models produced from 2005 through 2010”. But, what happened to Toyota, a company who was synonymous to quality and how were 7.43 million vehicles affected? The lack of quality control processes is to blame for this recall.
In globalized mass production automakers install the same parts on multiple models but in different countries. Therefore, if one part is flawed, such as the window switch in our case, the lineups are exposed to big recalls. The fact that not enough grease was applied to the switches was an accident caused by man-made errors and therefore could have been prevented.
Toyota could easily reduce disasters like these through quality management or the zero defect program. Philip Crosby, a major contributor to the quality movement is responsible for this program, which emphasizes on “doing things right the first time”. But what is quality? And how do we manage it?
Quality is survival and it is managed through continuous improvement (kaizen). An important part of this process and the foundation of Toyotas philosophy is the concept of “lean production”, which means identifying and eliminating waste in all work activities. “According to Toyota there are seven major types of waste: Overproduction, waiting, transportation or conveyance, over processing or incorrect processing, excess inventory, unnecessary movement, defects and unused employee creativity”.
After this particular recall it is obvious that there were two non-value adding activities, which Toyota did not apply when manufacturing its vehicles. These are defects and Incorrect processing since during production grease was not applied evenly on the window switches resulting in defective parts. However, how is it possible that the company known for this philosophy needs to undergo an improvement process to recover its quality image? And how will Toyota achieve this?
The automaker needs to start by understanding the root cause of the problems and put in place true countermeasures. It will have to revise portions of the 4 P’s and total quality management principles.
One of them is having the philosophy as the foundation. The company has to base its decision on a long-term philosophy (improve quality) at the expense of short-term financial goals (vehicle sales). This way it will recover, gain tremendous amount of loyal customers and increase in growth. Also, Toyota needs to level out the workload, build a culture of stopping to fix problems and standardize tasks so that defects are exposed and can be fixed immediately and not corrected after the car is recalled.
In terms of the principles, the ones to be reworked are leadership and continual improvement. There is an obvious lack of senior management in the company. After Toyota recalled million of vehicles the CEO held a press conference and instead of apologizing for the quality problems he said: “Believe me, Toyota’s car is safe. But we will try to make our product better”.
Leadership also means understanding your workers and their processes and emphasize on participative management. According to Deming, one does not simple supervise but provide support and resources so that each staff can reach his full potential. If Toyota had focused on this, the effort of applying more grease on the window switch would have not been a problem.
On the other hand, continual improvement is about emphasizing on training and education so each job can be done better; improve productivity, effectiveness and safety. To support Toyota’s growth it had to add many new employees and new suppliers and therefore it has not able to scale up and provide adequate training. Therefore, if the workers were new and not properly trained it is should not be a surprise that they might have underestimated the amount of grease to be applied.
Quality is also what singles you out of the mass mediocrity and allows you to cope with the 4 C’s: Customer, Competition, Costs and Crisis. The customer is who defines the quality of the product. Therefore one should concentrate all energy and resources in satisfying the customer. The problem here was that the customers of Toyota’s products wanted safety, but these needs we not met. As I mentioned above, the CEO was not appropriately sensitive to consumer complaints which something seeks improvement as well.
Competition is increasing daily in number and size. To be able to surpass competition one needs a continuous improvement program. Due to massive recalls Toyota experienced a set back but if they start producing quality vehicles again they customers will want to buy. Many companies worldwide increase prices to offset costs increases, which is according to the book “management without thinking”. Instead, it would be much smart to focus on improving quality and productivity since consequently you will cut down on costs dramatically and double your profit.
Lastly, to be able to withstand any crisis Toyota needs a strong quality culture, meaning continuously improving its processes and people. In this particular company, the senior management is to blame since it is their job to implement such ideas. As Joseph Juran believes, majority of quality problems are the fault of poor management and not poor workmanship.
In conclusion, Toyota is a great company that has stumbled. Now, to be able to get back up on its feet it needs to revise its philosophy, lean production methods, the 4 P’s, the total quality management principles and the 4 C’s. This way the company will revive its quality image.
Other Sources: http://www.cbc.ca/news/world/story/2012/11/14/toyota-recall.html http://www.nbcnews.com/business/toyota-hold-worlds-biggest-car-recall-16-years-1C6374378 http://www.buffalonews.com/apps/pbcs.dll/article?AID=/20121010/WORLD/121019909/1005 Main page http://www.msnbc.msn.com/id/33077383/ns/business-autos/t/toyota-recalls-million-vehicles/#.UMKOAO1GqRA http://www.cbc.ca/news/business/story/2012/10/10/toyota-recall-faulty-power-window.html http://autos.aol.com/article/Toyota-sticky-pedal-recall/ http://www.businessweek.com/bwdaily/dnflash/content/jan2010/db20100128_907800.htm http://businesstheory.com/troubles-in-toyota-city-2/
-------------------------------------------- [ 1 ]. Stating the Journey of Waste Reduction handout [ 2 ]. http://businesstheory.com/troubles-in-toyota-city-2/ [ 3 ]. Faces and Facets of Quality handout