Tag: airbags

OM in the News: Saving Money and the Takata Airbag Crisis

A Takata airbag inflater.
A Takata airbag inflater.

The crisis over exploding Takata airbags does not seem to abate. Even in my own family, three of our cars have been recalled, but we have been waiting for months for replacement parts to become available. (And here in humid Orlando, the tricky properties of the ammonium nitrate propellants, or explosives, which can break down in moisture and warm temperatures, makes many people with these airbags nervous).

The New York Times’ (Aug. 27, 2016) historical article provides a case study of quality, supply chains, and reliability (the topics of Chapters 6, 11, and 17) worth sharing with your students. The Times writes:”In the late 1990s, General Motors got an unexpected and enticing offer. A little-known Japanese supplier, Takata, had designed a much cheaper automotive airbag. So G.M. turned to its airbag supplier, Autoliv, and asked it to match the cheaper design or risk losing the automaker’s business. But when Autoliv’s scientists studied the Takata airbag, they found that it relied on a dangerously volatile compound in its inflater, a critical part that causes the airbag to expand.”

Today, that compound is at the heart of the largest automotive safety recall in history. At least 14 people have been killed and more than 100 have been injured by Takata inflaters that exploded into shrapnel. More than 100 million of its airbags have been installed in cars in the U.S. by G.M. and 16 other automakers. New details of G.M.’s decision-making process almost 20 years ago suggest that a quest for savings of just a few dollars per airbag compromised a critical safety device, resulting in these deaths. (It turns out that workers at the Takata plant in Georgia manipulated tests meant to measure whether inflaters were airtight). Even with the record recall, deadly accidents and research critical of ammonium nitrate, Takata continues to manufacture airbags with the compound — and automakers continue to buy them. The airbags appear in the 2016 models of 7 automakers, and they are also being installed in cars as replacement airbags for those being recalled.

Classroom discussion questions:

  1. Are automakers also to blame ethically in this supply chain issue?
  2. Why is this a continuing problem?

OM in the News: Honda’s Rigid Parts Sourcing Leads to Massive Recalls

About 12 million cars have been recalled for defective airbags over the past 6 years and at least 2 people have died
About 12 million cars have been recalled for defective airbags over the past 6 years and at least 2 people have died

Honda is re-evaluating its relationship with Japanese air-bag maker Takata, which is behind Honda’s biggest series of safety recalls, reports The Wall Street Journal (Oct.2, 2014). The moves follow the discovery that defective air bags from Takata—some dating to the early 2000s—could send metal pieces into a car’s cabin, injuring drivers and passengers. Car makers are only now considering a change in how and where they buy their air bags, highlighting how entrenched and inflexible some automotive supply chains are, with a few companies supplying large swaths of the industry. Honda declined to disclose specific information about any of its supplier relationships, saying that such information is proprietary.

At issue is the inflater component. Takata’s inflater uses a different propellant than most of its rivals, which is cheaper but can be particularly volatile.  Takata said it makes the safest and most environmentally friendly products available. Honda is now ordering some of its inflaters from Daicel Corp. instead of Takata. But switching parts suppliers in the middle of an automotive production run is difficult and costly.

Honda also holds a 1.2% stake in Takata, which now has about 36,000 employees and 46 factories in 17 countries. To serve its far-flung customers, many of whom had shifted to JIT parts delivery to limit inventories, Takata kept plants in locations ranging from Malaysia to Morocco to Uruguay. It struggled to integrate those far-flung operations, and communication between the Japanese, European and North American divisions was poor.

Classroom discussion questions:

1. Why is it hard to switch airbag (or other auto parts) suppliers?

2. What tier suppliers are the inflater manufacturers?