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Toyota’s safety recalls – Are they indicators of problems associated with quality management, outsourcing or simply indicators of setting inconsistent competitive priorities in operations strategy? Toyota is known for its innovative operations management practices. Over the last three decades Toyota has received many awards for their excellent quality and performance. The marketplace has rewarded them with higher sales and market-share, ultimately making them the world’s largest producer of automobiles. So what went wrong in January 2010? Are the safety recalls due to faulty gas pedals an example of an isolated, one-time problem or are they symptoms of bigger long-term problems with Toyota and also the automobile industry? Topics that the essay must address: · How has operations strategy and competitive priorities evolved in the automobile industry during the last 100 years · What are the positive and negative tradeoffs associated with outsourcing production functions to supplier organizations? · What quality systems and procedures and systems should Toyota have followed to ensure that faulty automobiles are not delivered to the customers?
Expert Answer
This is summed up in the following points (can be elaborated)-
- Cost pressure plays a crucial role. Productivity improvements are to the tune of 4%. Suppliers have to reduce structural cost, penetrate new markets and consequentially satiate the demand of the customers. The footprint design must be in sync with the company’s strategy and technology roadmap. The stakes are high and the industry is competitive. Automotive companies are pouring billions of dollars to innovate which includes developing products and building up infrastructure. And all this in return of uncertain returns.
The positive tradeoffs are in terms of almost no inventory etc. to be maintained by the auto producer.
Then the supplier is held responsible in case of situations where safety recalls happen due to any component supplied by such a supplier. In absence of outsourcing the automaker is entirely held responsible for any such defect.
The negative tradeoffs in outsourcing production function to the supplier organizations-
- The supplier may back off from his commitment at the last minute; this could hamper the automaker’s reputation.
- Then the quality of the standard of the component may vary, this again could affect the long term deals entered by the automaker with its buyers
- The competitive edge is also compromised when the supplier provides with the components since another competitor may enter into an agreement with the supplier to provide for the equipment.
The quality systems and procedures and systems that can be followed by Toyota are –
- Total Quality Management (TQM) – This technique of managing quality can help in maintaining the super most standard. Here continuous improvement is the key. The strategy lies in continuously reducing the errors in manufacturing, streamlining SCM. This ensures long term customer loyalty.
- Also adherence to QMS like ISO 9001:2008 can make good business sense. A process approach is followed for project execution. It helps to identify, measure, control and improve the various core business processes. This leads to improved business performance.
