Tag: Toyota Recall

Lean Recalls – Compromising Safety?

Is there ever a time when risk outweighs the real fix?   As we are quickly learning from the latest news regarding Toyota’s proclaimed “savings” through limited safety recalls, the answer is “NO”.  The details of the story surrounding Toyota’s knowledge of the mounting safety concerns and the Toyota’s defense is very disturbing.  Toyota has responded by stating “Our first priority is the safety of our customers, and to conclude otherwise on the basis of one internal presentation is wrong.”

Are Toyota’s actions aligned with this statement? According to the news we’ve been reading, the answer again is “NO”.  We would suggest that Toyota’s attempt to downplay “one” internal presentation is extremely weak.  Why?  Simply because that one internal document happened to be presented by Yoshimi Inaba, Toyota’s top North American executive, and as such the content becomes much more significant and relevant.  An executive presentation is expected to be factual and with purpose.  To suggest otherwise and relegate this to the category of ‘discussion topics” and one person’s opinion is a real stretch.  If this is indeed the case, then there are real concerns within the leadership ranks of Toyota.  When the president speaks, people listen for a reason.  What they say affects in some way – good or bad.

Akio Toyoda, president of Toyota, and other executives are on the firing line as they present their case in the US congressional hearings.  In Akio Toyoda’s own words, “We pursued growth over the speed at which we were able to develop our people and our organization.”  As we have mentioned in previous posts, Toyota’s communication strategy has been lacking as this crisis continues to unfold.  We would suggest that this is indicative of the underlying problems that Toyota is experiencing.  Effective communication was once at the core of Toyota’s culture and to this end, we would agree that Toyota’s culture has been compromised.  What is debatable is whether this is strictly due to growth.  Is this a factor that is attributable to the sheer size of the company?  Is this the result of an evolution in culture that lost it’s roots?

As size increases, so do layers of management and the number of “gatekeepers” that attempt to filter out the critical information.  Whether or not the original message remains intact is one the faults of bureaucracy.  While Toyota traditionally has managed to “keep it real” and encouraged forward thinking and free dialogue, layers of management may have eroded this once highly characteristic trait of the Toyota culture.

Is Toyota solely to blame?  It appears that the government Safety Regulators have some explaining to do as well.  Surprisingly, the scope and extent of recalls can actually be negotiated.  The short lesson learned is that we cannot knowingly compromise human safety in our products and services.  In simpler terms, when human lives are at risk, there is no such thing as a LEAN Recall.

As we have emphasized through our many pages and posts, the culture is the company.  In our post, “Lean Execution:  Competing with Giants – It’s all about speed“, we featured two video clips of Domenic Orr, CEO of Aruba Networks, who discusses the rapid growth of his company.  “Thoughtful Speed of Execution” and learning to recognize Boulders, Rocks, and Pebbles, and teaching our gate keepers to do the same are two steps more than may have been taken already.

Related links:  Toyota vows shake-up, lawmakers seek more reform (Reuters), Toyota’s latest apology, Toyota apologizes for handling of safety issues,

Until Next Time – STAY lean!

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Quality is Priceless

The price tag for Toyota’s recent recall campaigns is estimated to be more than $2 Billion and the loss in share holder value is likely many times more than this.  Yet we remain optimistic and anticipate that Toyota will make it through this crisis.  We can only imagine what this kind of money could buy if wasn’t spent on repairing vehicles.

In our previous posts we differentiated between design and process failures.  Today we learned of yet another Toyota recall issued yesterday.  This time 8,000 0f the 2010 four-wheel drive Toyota Tacoma pickup trucks are being recalled for possible cracks in the front drive shaft.  In this case the supplier, Dana Corporation, discovered a problem with their manufacturing process that may also have affected parts supplied to Nissan and Ford as well.  Click here to read the full story.

We are reminded of the book titled “Quality is Free” written by the late Philip B. Crosby.  Many manufacturers around the world have learned that the cost of failure knows no bounds.  While it is possible to calculate the costs to repair defective products, the losses incurred due to lost sales, law suits, pending investigations, public relations, and reduced consumer confidence in general will never be known.

Because businesses are not charities, we can only expect that the price of future product offerings will include a portion of the company’s latest financial liabilities.  Naturally, if every product sold performed as expected or better and without flaw or incident, we could continue to focus on improving the quality of both products and processes.

It has been said that success breeds failure.  Success creates contentment, giving rise to complacency, and in turn results in lost focus.  So, what is the value of a process that yields perfect products?  In today’s global economy quality isn’t just a given – quality is priceless.

Until Next Time – STAY lean!

Toyota Recall: Quality versus Quantity!

There has been much speculation about what went wrong and what is still right at Toyota.   It has even been suggested that Toyota may have become blinded by the desire to be the number 1 automaker in the world.  This suggests that quality and quantity are interelated and that one will suffer at the expense of the other.  We would argue that this is simply not true in this case.  The question is, “What failed?”  Was it the product or the process?

Background Video:

We found an informative video about the Toyota acceleration issue that provides a little more insight than you may have read in the papers.   Click here to watch the video:

An Expert Opinion

We received another e-mail from Steven J. Spear, author of “Chasing the Rabbit“, that presents his perspective on what went “wrong” at Toyota.  Steven identifies 3 strategic areas that Toyota will need to address.  As we stated earlier, we don’t support the idea that Toyota grew too quickly.  The ability to effectively and efficiently produce  a product in mass quantities may be more challenging for the manufacturers but this should not have an impact the design or function of the product itself.

If a manufacturing defect was found to be the reason for the recall, we would agree that growth and increased demand for product may be a factor.  We’ve all been in situations where overtime is required to meet demand and the effect (stress and fatigue) this can have on employees over extended periods of time can be cause for concern.  All reports suggest that the recent flurry of recalls are driven by design or design related issues – NOT how quickly or how many vehicles were actually made.

The e-mail from Steven Spear follows:

Dear Colleagues,
 
What went wrong with Toyota is the flip side of what went right over so many decades. In the late 1950s or 1960s, Toyota was a pretty cruddy car company. The variety was meager, quality was poor, and their production efficiency was abysmal.
 
Yet by the time they hit everyone’s radar in the 1980s, they had very high quality and unmatched productivity. The way they got there was by creating within Toyota exceptionally aggressive learning. They taught employees specialties, but more importantly, they taught people to pay very close attention to the “weak signals” the products and processes were sending back about design flaws, and then responding with high-speed, compressed learning cycles to take things that were poorly understood and convert them into things that were understood quite deeply.
 
That allowed Toyota to come from behind, race through the pack, and establish itself as the standard-setter on quality and efficiency and complex technology. But since then, things have affected Toyota in terms of their ability to sustain this kind of aggressive learning. 
 
These include:
 
·      A rapid expansion in the number of people who had to be developed into aggressive learners with faster rates of business growth.
 
·      A rapid increase in the need for aggressive learning as the technological complexity of products and plants increased as well.
 
For more on this problem of overburdening the innovative capacity of an organization, please see my interview, “3 Questions: Steven Spear on Toyota’s Troubles,” conducted by the MIT News Office.
 
Best wishes,
Steve Spear
 

• “3 Questions: Steven Spear on Toyota’s Troubles,
   Interview with MIT News Office.
• “Toyota: Too Big, Too Fast,” by Gordon Pitts
   in The Globe and Mail (February 5, 2010)
• “Learning from Toyota’s Stumble,”
   e-article at HarvardBusiness.Org.
http://ChasingTheRabbitBook.com
  for preface, forward, intro, and blog.

Click here to get your copy of Chasing the Rabbit!

Our Opinion

We would support the idea that Toyota must revisit their advanced engineering and design processes to make sure that products released for production and the public in general are safe and robust.  If there is any weakness in the problem solving community, it may just be the disconnect between events that occur in the real world and the events that the Toyota engineering and design communities choose to acknowledge.  We would also suggest that any event that results in the loss of human life must be immediately and thoroughly investigated and evaluated.  To this end, perhaps Toyota’s size is compounded to maintain an effective communication strategy and is another area that should be revisited.

Tragedies occur on our highways every day and some of us may be tempted to categorize many of these accidents as “operator error”.  We have learned by working with Toyota and other automotive companies that “operator error” is not an acceptable root cause.  What is it that the operator did or didn’t do and, of course, why?  Consistent with Toyota’s “Plan versus Actual” thinking, the Advanced Design, Development, and Engineering strategy will be subject to a significant transformation as Toyota reflects on this experience.

Toyota has done a remarkable job of instituting manufacturing processes that we now know as lean.  In this respect, it is important not to confuse Toyota’s manufacturing strategy with design of the product itself.  Although design and process recalls may be related they can also be separable and unique.  Maple Leaf Foods announced a significant recall when deaths were linked to meat products found to be contaminated with listeriosis.  The recall in this case was directly attributed to the cleanliness of the equipment (process).  Stork Craft Drop-Side Cribs were also subject to recall in November of 2009 for products with manufacture and distribution dates spanning almost 16 years.  In this case, the product design, material selection, and installation methods were at fault.  History is rife with examples, including many from the original North American (Detroit) automakers.  

Most companies take responsibility for the quality of the products and services they provide.  We don’t accept the idea that, as consumers, we are vulnerable to a company’s ability to meet demand.  We expect Quality and Quantity – not one or the other.

Now that the Olympics have started, there will be other news that will keep us pre-occupied for the next few weeks.  During this time, the automakers can fix their respective problems and start selling cars again.

 Until Next Time – STAY lean!

Toyota: Managing Nightmares

The Nightmare

Toyota continues to be plagued by recalls.  The current acceleration issues (either floor mats or “sticky” accelerators), braking issues on the Prius Hybrid, and now reports in the USA of steering problems with 2009 and 2010 Corollas.  While the majority of the news reports focus on the next steps to repair faulty vehicles, the real nightmare is the human tragedy that was and may still be pending until these issues are resolved.

What is also surprising is the scope of the recalls as they extend to include 2004 model year vehicles.  This is a lot for one company to absorb over such a short period.  It is clear that a flawed design can bring a company to it’s knees overnight.  In the wake of this nightmare, it is also disappointing that Toyota has been less than forthcoming with their communication strategy.

Toyota Lessons Learned

A crucial lesson for Toyota and other companies is to learn to recognize when a problem is really a problem.  Rather than dismissing a fault or failure as a remote possibility or “highly unlikely event”, the key to solving any problem is acknowledging that one exists.  This may have been the greatest error of all in this case.

As consumers we may be too naïve to think that companies are operating with our best interests in mind and not necessarily putting the interests of their stakeholders first.  To be more specific, there is a very fine line between managing solutions, managing risk, and managing a profitable business.  Problems without resolutions or preventable measures are subject to risk management strategy and the price of many products on the market today include a company’s costs to manage risks and potential liabilities.

Responsiveness versus Excuses

Is it the investment or the lives that were lost that call for varying degrees of “investigation”, problem solving, and government intervention?  The timeline of events leading to the recall for accelerator issues spans months and perhaps even years when the problem was first reported.  What does it take before a company finally decides that an event has statistical significance?

The lesson that all companies can learn from this is that the value of human life cannot be measured or dismissed by a risk assessment or  an extremely remote chance of recurrence.  There is little comfort in statistics if you happen to be that one person in a million that has the problem.  We are not suggesting that Toyota dismissed prior reports of problems; we are simply asking “out loud” if they could have had cause to act sooner.

Some media reports have suggested that Toyota grew too fast over the past few years.  How would that have any impact on the design of the vehicle?  Toyota design changes are typically perceived as enhancements and improvements over time.  Yes, Toyota gained significant increases in market share as interest in hybrid vehicles grew with ever increasing gas prices.  Yes, increased volumes place an unprecedented strain on resources throughout the supply chain and perhaps even more so for those suppliers that have been surviving on reduced staff and personnel.  None of these are excuses for a failed design.  This was not a manufacturing defect as we understand it.

Toyota Trust

Unfortunately for Toyota, this recall is not a nightmare they can just wake up from – it is a bitter reality.  Although Toyota vows to improve quality, this needs to be demonstrated.  These same words were uttered by Toyota President Katsuaki Watanabe in 2006 as investigations were pending for the recall of over a million vehicles for a faulty steering component that was initially discovered in 2004.  Akio Toyoda now finds himself making similar commitments again in 2010.

When we consider the number of vehicles produced, we also have to consider the effectiveness of the solution seemingly contrived over recent weeks or, for the benefit of the doubt, months.

How do we really know the proposed solution is effective?  The reality is that we don’t.  As with the discovery of the original defect, only time will tell.  Despite all the testing performed to simulate “the real world”, it is crucial to understand that tests are only simulations – they are not real life.  Even though a failure is predictable, it is not always preventable and just because it didn’t happen doesn’t mean it can’t happen.

Restoring consumer confidence and trust will take some time and Toyota’s crisis management skills will certainly be challenged.  The communication strategy to date has been less than admirable by some accounts, while others continue to praise Toyota’s product line and have re-affirmed their confidence in the company.

Owing to their own lean principles, we are hopeful that Toyota will continue to embrace problems as opportunities to learn and to strengthen the company  and its products.  Toyota is the last company we would expect to see with this number of problems on their hands at any one time.

Our disappointment with Toyota is the lapse between discovery and fix, and subsequently the lapse in communication as the recalls are officially made public.  To this end, Toyota’s reputation may be waning.

Until Next Time – STAY lean!