Good OM Reading: What Really Happened to Toyota?

Consumers in the US were surprised in Oct., 2009, by the 1st of a series of highly publicized recalls of Toyota vehicles. It began with 3.8 million cars brought back  for uncontrolled acceleration. Over the next 4 months, 3.4 million more  recalls followed for gas pedal and software glitches. Then from Feb.-Aug., 2010, 13 more recalls followed. Just as things seemed to be settling down, 2 more recalls were announced in Jan.-Feb., 2011. The total had now reached 20 million vehicles!

How could this happen to the company that shaped the modern approach to quality improvement, asks UC-Berkeley Prof. Robert Cole  in his excellent article in MIT Sloan Management Review (Summer, 2011). Had auto execs all over the world “been chasing after the wrong manufacturing model”? And to what extent did the problems originate with product design and assembly and to what extent to Toyota’s manufacturing systems?

One factor Cole found was a “reverse halo effect”. Toyota buyers in 2010 had heard a barrage of negative news and became far less forgiving about minor quality flaws than previous owners. A 2nd factor was that competitors’ products were improving to the point that Toyota didn’t look as outstanding by comparison as it had in the past.

Cole’s analysis found 2 root causes for Toyota’s problems: (1)management’s ambitious plans for rapid growth (which did not focus on quality issues already arising), and (2) the increasing complexity of the actual auto product.

I think this is an article that you will enjoy reading and that you will be able to use in your OM class.

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