Wednesday, 10 August 2011

Where Toyota went wrong

Toyota Motor Corporation, once a name synonymous with quality cars, suffered serious setbacks with a huge number of recalls of its cars.  In November 2009, the company recalled 4.2 million vehicles followed by another 2.3 million recalls in January 2010 in the United States of America. The reason behind these recalls were that accelerator pedals were getting lodged under the floor mats of the cars, causing sudden speeding of cars. Subsequently, on February 1, 2010, Toyota suspended the sales of eight popular models and discontinued production at six of its North American car assembly plants.

It was believed that Toyota had compromised with quality to give in to rapid globalization and to aggressively pursue its motive of becoming the No. 1 car – maker in the world in terms of sales volume ahead of Ford and General Motors. In Japan, word-of-mouth could effectively spread about Toyota’s managerial and manufacturing methods by experienced Japanese supervisors of Toyota explaining and overseeing the same in Japanese plants. However, with over two-thirds of Toyota’s workforce being outside Japan by 2007, such effective and close supervision diminished taking a toll on quality. Factory workers outside Japan were not adequately trained in the Toyota Production System which had become legendary for its focus on quality.

Customer focus was lost with a view of rapid expansion. To facilitate cost-cutting, Toyota had used a number of common parts across various models. Outsourcing of parts to local manufacturers near Toyota plants also caused quality of parts to diminish. Suppliers were asked to focus on cost reduction, and were not watched closely. Adequate checks and feedback to suppliers about their performance was lacking. With heightened customer expectations, Toyota was not able to keep pace internally with the external changes. Other than self-acceleration of vehicles, there were issues of sludge build-up which caused engine damage, steering problems and defects in ball joints. Even recalls were delayed with Toyota putting the blame on human error in cases where Toyota car owners claimed vehicle defects. This also concealed the internal problems at Toyota for a while.
The way ahead for Toyota lies in monitoring quality closely, overhauling its design, manufacturing and engineering operations. Only reliable suppliers should be dealt with. Toyota should now focus on regaining trust among customers and fulfil a promise of demonstrating unmatched commitment to its customers.


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