Toyota: Roadblock Ahead

By Mel Duvall Print this article Print

Behind Toyota's assembly line are sophisticated information systems supporting and enabling the business processes that help the automaker eliminate waste, limit inventory buildup and continually improve production.

Roadblock Ahead

Despite its success, Toyota is not immune to some of the problems that plague other auto manufacturers. Auto recall filings in Japan surged to a record in 2004 and were only slightly lower in 2005. Toyota itself has been stung in recent months by a string of embarrassing recalls and a police investigation in Japan that could have deep repercussions.

A Japanese police investigation in July found that Toyota had continued using a steering mechanism in its Hilux Surf vehicle without testing its safety, even though the vehicle was remodeled, placing extra weight on the vehicle's front wheels. Police believe this led to a series of breakdowns, and is suspected in a head-on crash that injured five people.

The investigation, which led the Japanese transportation ministry to issue a "guidance" order requiring Toyota to report steps it is taking to better monitor defects, comes at a time when the company has issued a record number of recalls. In July alone, it issued recalls for 420,000 vehicles globally over faulty engine parts, as well as recalls for 370,000 Toyota Highlander and Lexus SUVs over a defective clip that could cause a console panel to fall, and for 160,000 Tundra pickups to remove a passenger-side airbag shut-off switch. In one month, it issued recalls for almost as many vehicles as it did for all of 2004.

Toyota officials have openly acknowledged that the company's rapid growth, and its increasing reliance on plants around the globe, has strained its ability to maintain a gold-standard quality record. At a news conference in July, Toyota president Katsuaki Watanabe bowed deeply and apologized for the recall troubles.

"I take this seriously and see it as a crisis," Watanabe said at the conference. "I want to apologize deeply for the troubles we have caused."

Toyota may be going through a rough patch, but industry experts say the recall issue has to be viewed in context. Toyota's quality record is still tops in the business; in June, Toyota and Lexus captured 11 of 19 initial-quality awards handed out by industry watchdog J.D. Power & Associates. They just happen to be in the glare of the spotlight.

"They're the guys wearing the yellow jersey, so everyone's watching them," says James Womack, chairman of the Lean Enterprise Institute, a Cambridge, Mass., non-profit think tank dedicated to expanding the principles of lean manufacturing.

Womack believes Toyota officials are losing a lot of sleep over the recall issue and will redouble their efforts to have all employees follow the tenets of TPS. "I've been watching these guys for a long time, and they worry more than any group of people I've ever seen," he says.

"You can bet they're poring over their business processes to look for weaknesses. I'd also be willing to place a pretty high bet that Toyota will be able to come up with answers."

This article was originally published on 2006-09-05
Contributing Editor
Mel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.

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