Toyota Quality Problems

QUALITY PROBLEMS AT TOYOTA

INTRODUCTION

Toyota is a multinational corporation headquartered in Japan and is the world's largest automaker. The company employs approximately 316,000 people worldwide. In addition to manufacturing automobiles, Toyota provides financial services through its division Toyota Financial Services. Toyota Industries and Finance divisions form the bulk of the Toyota Group, one of the largest conglomerates in the world.

History

Toyota started in 1933 as a division of Toyoda Automatic Loom Works devoted to the production of automobiles under the direction of the founder's son, Kiichiro Toyoda. Its first vehicles were developed in 1935 and were the A1 passenger car and G1. Toyota Motor Co. was established as a separate and independent company in 1937.

Company Overview

Toyota Motors was awarded its first Japanese Quality Control Award in the beginning of 1980s. Growth of Japanese companies like Toyota started in 1970s in the North America when oil crisis led people to prefer smaller cars with better fuel economy. American small cars were considered as entry level vehicles and were made of low quality as people did not prefer such cars initially. Japanese customers however, since beginning preferred small fuel-efficient cars that were manufactured with high quality. Hence Toyota became popular in the U.S markets and started growing rapidly.

In 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, the Toyota Motor Corporation.

In the 1990s Toyota began to branch out from producing mostly compact cars by adding many larger and more luxurious vehicles to its lineup, including a full sized pickup, the T100 (and later the Tundra), several lines of SUVs, a sport version of the Camry, known as the Camry Solara, and the Scion brand, a group of several affordable, yet sporty, automobiles targeted specifically to young adults. Toyota also began production of the world's best-selling hybrid car, the Prius, in 1997.

In 1999, the company decided to list itself on the New York Stock Exchange and London Stock Exchange. In the year 2001, Corolla became Toyota's most popular and bestselling car in the world. In 2002, Toyota entered a Formula One works team and established joint ventures with French Motoring companies Citroen and Peugeot.

In the year 2005, Toyota ranked eighth on the Forbes 2000 list of world's leading companies.

The company was number one in global automobiles sales for the first quarter of 2008.

Toyota's Philosophy

Toyota's management philosophy has four components:

* Long-term thinking as a basis for management decisions

* A process for problem-solving

* Adding value to the organization by developing its people

* Recognizing that continuously solving root problems drives organizational learning

Toyota Production System

Toyota has been recognized as an industry leader in manufacturing and production. The production system at Toyota works on the basis of following principles:

* Management decisions are based on a long-term philosophy, even at the expense of short-term goals

* Process flow is created continuously to bring problems to the surface

* Pull systems are used to avoid overproduction

* Culture of getting the right quality the first time

* Using visual controls so problems do not remain hidden

* Develop exceptional people and teams to follow company's philosophy

* Make decisions slowly by consensus, thoroughly considering all options

* Become a learning organization through relentless reflection and continuous improvement

* Adding value to the organization by developing its people, in particular, growing a hierarchy of leaders and great teachers and creating a cascading pathway for teaching of systematic problem solving

PROBLEM STATEMENT

Is the much acclaimed Toyota production system flawed and is Toyota in reality an icon of perfection?

In 2005, Toyota had to recall almost a million vehicles due to damaged front-suspension structures. In October of 2010, Toyota recalled 1.53 million vehicles, due to gas pump and brake issues. In August of 2010, 1.3 million were recalled due to faulty electronic control modules on various models made between 2005 and 2008. Now Toyota has stopped selling its Lexus GX460 SUV because of safety concerns. The following vehicles have been affected by recalls:

2005-2010 Avalon

2007-2010 Camry

2009-2010 Corolla

2008-2010 Highlander

2009-2010 Matrix

2004-2010 Prius

2009-2010 RAV4

2008-2010 Sequoia

2005-2010 Tacoma

2007-2010 Tundra

2009-2010 VENZA

According to BBC, the recalls would cost the company $2 billion plus a massive hit to its brand image. Toyota had long enjoyed a reputation for quality in North America and that image has been tarnished for years to come. Recalls are a powerful measure of quality because they are important determinant of customer trust ( Cole, 2010).

ANALYSIS

Toyota's reputation in the automobile industry