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Toyota’s Latest High Visibility Product Recall Prompts Fundamental Questions

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In the spring of 2010, global automotive provider Toyota was continuing to deal with the market aftereffects of a series of consumer perceived product quality lapses that resulted in rather significant and highly publicized product recalls. The notions of unattended vehicle acceleration caused by faulty accelerator pedals or misaligned floor mats, as well as other global product-related recalls, were all impacting Toyota’s brand image.

In our Supply Chain Matters commentary at the time, we noted the unprecedented formation of a corporate-wide steering committee that was chartered to oversee Toyota’s vehicle based quality processes and corrective programs. Chief quality officer roles were created among major geographies including Europe and North America, to insure localized autonomy on the decisions related to quality, vehicle safety or product recalls.

This week, Toyota announced a significant global recall involving 7.43 million cars, trucks and SUV’s involving vehicle years 2005-2010. The recall, which involves the equivalent number of vehicles included in the sudden unattended acceleration issues two years ago, is prompted by indications that the master power window switch may not have been produced properly in terms of lubrication.

A published article in The Washington Post (paid subscription or free metered view) was quick to note that this flaw “raises questions about whether Toyota Motor Corp. has solved quality and safety issues that embarrassed the company in 2009 and 2010.” The Post and other business media reports have been quick to quote Toyota as indicting that the window switch problem does not involve any crashes, injuries or deaths, but U.S. safety regulators alone have recorded over 160 fires and nine injuries.

When Supply Chain Matters read of this news, we reflected back on the creation of the global steering committee for quality which was tasked to avoid such major product recall incidents. The question that came to our mind was, if this problem part dates as far back as 2005, was this the purview of the global quality committee?

Kudos to the Financial Times because today’s edition featured commentary on this very same topic and they also reflected on the overall timeline. The FT reported (paid subscription or free metered view) that, according to documents filed with U.S. safety officials, Toyota was aware of the master window switch problem as far back as four years ago. It further indicated that Toyota did not respond sooner because it was unable to replicate the root cause. The FT notes that according to a Toyota filed report, it first received a field report from the U.S. in September 2008, indicating an unusual smell coming from the power master switch. From May 2010, more reports were received with consequent investigations and simulations performed to replicate the problem. It wasn’t until August of this year that investigations led to the discovery of uneven application of a specific lubricant on the power window mechanisms.

Thus, we revert back to our original question. What role did the global quality steering committee play, if any, and why did it take four years to replicate this problem?  Why is the North American chief quality officer not the prime spokesperson for communicating what happened and what the company is doing to resolve any consumer concerns?  Stated in another dimension- Is this global committee still chartered to catch these supply chain related quality problems before they involve expensive large-scale recalls that damage the brand?

Toyota has successfully overcome significant supply chain disruptions brought about by the 2011 major tsunami in Japan and floods in Thailand.  Herculean efforts from its supply chain teams overcame the potential of a global sales disaster. We were quick  in extending our praise.

In 2012, Toyota has come back with a vengeance in terms of U.S. market vehicle sales growth, outpacing most other competitors.

In 2010, the open question was whether Toyota would revert back to its former ways of opaque centralized corporate management, with revenue and output goals paramount to any other needs. Would the global-wide quality steering team have the corporate power, agility and dedicated resources to take proactive action on avoidance of future large-scale product quality issues and overrule sales team zeal for output?

These open questions remain and Toyota had better get cracking on the answers.

Bob Ferrari

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