OPM 3010 Module 6 Final Project: Toyota's Commitment to Quality After the 2009 to 2010 Recalls Example

Built-In Quality Under Strain: Toyota's Commitment to Quality Before and After the Recalls

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B.S.B.A. in Operations Management, Thomas Edison State University

OPM-3010: Operations Management

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Month Day, Year

Built-In Quality Under Strain: Toyota's Commitment to Quality Before and After the Recalls

Introduction

Toyota Motor Corporation, traded on the Tokyo and New York stock exchanges, is often treated as the model of quality in manufacturing. The Toyota Production System, from which lean operating systems take most of their methods, was built around the idea that quality should be built into every step rather than inspected at the end. Yet in 2009 and 2010 Toyota recalled millions of vehicles in the United States over floor mats that could trap accelerator pedals and pedals that could stick. This paper asks what Toyota's commitment to quality consists of, and what the recalls reveal about it.

Quality in the Toyota Production System

Collier and Evans (2017) describe lean operating systems as approaches that eliminate waste in all forms, and they trace many lean practices to Toyota. Two pillars of the Toyota Production System bear directly on quality. Jidoka, sometimes called automation with a human touch, gives machines and workers the ability to stop the line when a problem occurs, so that defects are fixed at their source rather than passed on. The andon cord, which any worker can pull to signal a problem, is its best-known form. Just-in-time production, the second pillar, keeps inventory low, which exposes problems quickly because there is no buffer to hide them.

Liker (2004) summarized Toyota's approach in fourteen principles, including building a culture of stopping to fix problems and getting quality right the first time, and using continuous improvement, or kaizen, to make processes better through many small changes. Spear and Bowen (1999) argued that the system's real power lies in rules that make every activity, connection and flow specific and testable, so that each process is an experiment that reveals problems immediately and invites improvement.

Garvin's Dimensions of Quality

Garvin (1987) proposed eight dimensions of quality: performance, features, reliability, conformance, durability, serviceability, aesthetics and perceived quality. Toyota's reputation rests chiefly on reliability, conformance and durability, the dimensions most directly served by building quality into each process. Toyota vehicles have long ranked near the top of reliability surveys, and their resale values reflect high perceived quality. Toyota has competed less on aesthetics and features, a choice consistent with a strategy that treats dependability as the order winner.

Deming's Principles

Deming (1986) urged managers to cease dependence on mass inspection by building quality into the product in the first place, to improve constantly the system of production and to drive out fear so that workers report problems. The Toyota Production System embodies all three: jidoka builds quality in, kaizen improves the system constantly and the andon cord depends on workers who are not afraid to stop the line.

The Recalls as a Test

The recalls of 2009 and 2010 tested that commitment. In late 2009 Toyota recalled millions of vehicles to address floor mats that could trap accelerator pedals, and in January 2010 it recalled more vehicles for pedals that could stick and briefly halted sales of eight models in the United States. Toyota's president, Akio Toyoda, testified before a committee of the U.S. House of Representatives in February 2010. In 2014 Toyota agreed to pay $1.2 billion to resolve a federal criminal investigation into how it had disclosed the problems to regulators and the public.

The problems did not arise on the assembly line, where jidoka operates, but in design, supplier parts and the company's handling of reports from the field. Toyoda's own explanation to Congress was that the company had grown too quickly and that its priorities had become confused, with growth placed ahead of safety and quality. The recalls suggest that the Toyota Production System's checks were strongest where the line could be stopped and weakest where problems surfaced slowly, in customers' cars and in reports that had to travel from the United States to decision makers in Japan. In Deming's terms, the system had not driven out the reluctance to report bad news upward, even though it had driven out the fear of pulling the andon cord on the line.

Toyota's Response

Toyota's response extended its quality system beyond the factory. The company set up a special committee for global quality led by its president, appointed chief quality officers for its regions, including North America, and gave regional managers more authority over recall decisions. It added engineering and field technical offices in the United States to investigate customer reports faster, and it installed brake override systems, which cut engine power when both pedals are pressed, on more of its models. These steps applied the logic of jidoka to the field: give the people closest to a problem the authority to stop and fix it.

Quality Costs

Collier and Evans divide the costs of quality into prevention, appraisal, internal failure and external failure costs, and note that external failures, found after products reach customers, are usually the most expensive. The recalls illustrate the point. The cost of repairing millions of vehicles, halting sales, paying fines and settling the criminal investigation far exceeded what stronger prevention in design and faster analysis of field reports would have cost.

Evaluation

Toyota's commitment to quality is real and systematic. It is built into the production system through jidoka, just-in-time and kaizen, and it is visible in the reliability and durability that customers value. The recalls showed its limit: a system designed to expose problems on the line was slower to expose problems that appeared in the field, especially across a large and fast-growing global organization. Toyota's response was to extend the system's principles, local authority, rapid escalation and stopping to fix problems, to that wider setting.

Conclusion

Toyota remains a model of building quality into processes, but its recalls show that a commitment to quality must cover the whole value chain, from design and suppliers to customers' experience, and must be protected when growth tempts a company to move faster than its checks. For any operations manager, the lesson is that quality systems need the same attention when the company is succeeding as when it is struggling.

References

Collier, D. A., & Evans, J. R. (2017). OM (6th ed.). Cengage Learning.

Deming, W. E. (1986). Out of the crisis. MIT Center for Advanced Engineering Study.

Garvin, D. A. (1987). Competing on the eight dimensions of quality. Harvard Business Review, 65(6), 101-109.

Liker, J. K. (2004). The Toyota way: 14 management principles from the world's greatest manufacturer. McGraw-Hill.

Spear, S., & Bowen, H. K. (1999). Decoding the DNA of the Toyota Production System. Harvard Business Review, 77(5), 96-106.