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What Really Happened to Toyota?

June 22, 2011 | Robert E. Cole | Operations

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. For manufacturing executives who have strived for decades to emulate Toyota, the mere suggestion that it had quality issues was a serious matter. 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 author argues. 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 supply and manufacturing systems? The author discusses two root causes for Toyota's quality problems. The first is an outgrowth of management's ambitions for rapid growth. Management's goal was to increase Toyota's global market share from 7.3% in 1995 to 10% over the next decade, then to 15% by 2010. The second is the result of the increasing complexity of the company's products. A typical auto sold in the United States or Europe has more than 60 electronic control units and more than 10 million lines of computer code "Ò a fourfold increase over what was common a decade ago. However, the author notes that any thorough analysis would also need to acknowledge the role of the company's centralized management structure. The result: Top management in Japan was less sensitive to the expectations of regulators, culture and politics in overseas markets, and consequently they were slower to respond to local problems.

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