By Kevin Meyer
Toyota just announced that it was suspending sales of eight of its most popular models while it investigates the accelerator pedal sticking problem. Good for them… finally.
There are supposedly two distinct problems, one where the floor mats create the sticking and some new manifestation of a similar issue. A few months ago Bill took Toyota to task for going about tackling the problem in a distinctly non-Toyota fashion.
Many of us in the lean community – all of us long admirers of Toyota
and ardent proponents of the business and manufacturing model they
spawned – have had to make excuses for Toyota and rationalize some of
their failings recently. The latest one, however, demonstrates just
how far they have slipped from the principles that propelled them to
greatness.
Appropriate containment of the problem was not put in place to protect the customer when it was first noticed and appropriate problem solving was not implemented. Very disappointing, and Toyota’s reputation suffered.
But with that in the past, let’s take a look at today’s news. Not only are they suspending sales to contain the problem, they pulled one of the biggest andons ever by stopping all of the related production lines. What has not been reported widely is that in the Toyota supplier system this immediately cascades all the way across first, second, and third tier suppliers. Across the country production lines are stopping, inside and outside Toyota. Inventory will not build up.
I have to give Toyota kudos for the guts to do that. How much you want to bet that they will also keep the employees on the job to help with problem-solving and to perform additional training?
What do you think a traditional manufacturer would do? Would they even stop sales? Even if they did, would they stop the final assembly plants? And even if by some miraculous spark of brilliance they stopped a final assembly plant, would they cascade the stop throughout the supply chain? Highly doubtful. Most likely they’d keep production running then try to bring them back if and when a solution was found. And would they continue to pay the employees in order to provide additional training? Yeah, right.
For that matter how many of you, even the lean cognoscenti among us, would allow employees, or perhaps even leads and supervisors, to shut down an individual production line? Let alone encourage and celebrate it knowing that finding a problem is a good thing?
Time will tell if Toyota has really found its lost mojo, but this is a good sign.
Jamie Flinchbaugh says
I think this is more than just mojo. This is a massively expensive demonstration of protecting the customer first. For anyone that’s work on an automotive problem of this magnitude, it can be massively complex and misleading particularly because so much of the data is out of your control. I don’t take them down for their previous steps in this effort because based on what they knew at the time, it was an appropriate step. Based on the data available, shutting everything down could be more irresponsible. And we certainly don’t know what they were doing behind the scenes.
This is an interesting move. It’s impressive.
Let’s also talk about the lessons of why you do this so that companies can learn from it. First, it helps protect further customers. No more in the field means no more customers getting faulty product. Second, it focuses resources. A stopped line creates not only an urgency to drive this problem and no others. But it also eliminates all other distractions, excuses, and activities that can consume resources and attention. And third, whether you are stopping a whole line or just a segment, it freezes the current state so if there is something that requires observation, it can be done.
I hope Toyota solves this problem effectively and rapidly. But I also hope companies can learn the lesson for themselves.
Paul Todd says
I suspect we’re seeing only the latest chapter in a long story. By not finding or acting on the problem sooner, Toyota now faces a potentially much bigger problem with vehicles already on the road. They need over two million new pedal assemblies immediately just to fix existing cars – more than a year of production at current rates.
What does the person who bought a Camry last month do with her beautiful new car that is not safe to drive? The dealer cannot yet fix it, cannot provide a timetable for when it can be fixed – do they take back the car? Provide a rental for an indefinite period? I suspect neither.
The Explorer-Firestone disaster is the closest parallel, but in that case there were a dozen other tire brands that could be substituted immediately.
The nightmare senario for Toyota is the eventual discovery that the problem is not the floor mats, nor the gas pedal, but a mysterious software flaw in the electronic throttle. That could be a fatal outcome.
Scott Dailey, C.P.M. says
“How much you want to bet that they will also keep the employees on the job to help with problem-solving and to perform additional training?”
I’ll bet you my entire net worth that the tier 2 and tier 3 suppliers don’t keep their employees on the job to work on problem solving, plant maintenance or addn training. With the huge drop in volume from ’08 to ’09, even Toyota suppliers are hurting and simply don’t have the cash to weather this type of storm.
Jim Fernandez says
I hope what your thinking is true. That Toyota is doing the right things for the right reasons.
However, I think that maybe this shutdown is a carefully devised plan to take advantage of a product problem. I think that Toyota might be solving an economic problem by shutting down production, and laying off employees. And they are doing these things using the gas pedal issue as cover. Using a “we care about our customers” message while strengthening their $$$$ bottom line.
In the next few months you might be posting a message on this blog with the title, “Toyota turns their back on 60 years of Lean progress.” I hope I’m wrong.
Raman Ohri says
“How much you want to bet that they will also keep the employees on the job to help with problem-solving and to perform additional training?”
At least in Indiana, this is correct: http://ow.ly/10YkR.
Scott Dailey, C.P.M. says
Raman,
Your article only addresses Toyota plants, and not tier 1/2/3 suppliers.
Scott
Norm Weber says
I think the writer above hit the nail on the head regarding Toyota’s suppliers. Many were already weakened as Toyota is not their only customer and now shutting down this entire pipeline, while championed as lean, may cause chaos and further supplier disruptions to the rest of the industry who also use the same suppliers. How many people in those smaller shops will be doing new and unfamiliar jobs over the next few weeks adding risk to quality and part integrity?
Kevin says
Good comments. I bet Scott is right that the real disaster probably begins at the tier 2 level where they both don’t have the cash nor the deep commitment to TPS to support this. If tier 2/3 collapse, that will present a whole other problem.
To Jamie and Paul’s comments, I’m sure Toyota hasn’t miraculously spun on a dime. There are probably several facets to this decision, and it probably includes a panic that there’s the potential for something far more ominous. If you have the potential for a 1 in a million deadly accident, but no root cause let alone solution, how do you mitigate? Will it take a week, or months?
This will be very interesting to watch.
Mark Welch says
Jim,
My take on this is a little different than yours. I would think that what Toyota is doing – shutting down the lines – is only hurting their bottom line. If they’re not making product, they’re not making money, so I don’t understand how it could strengthen their bottom line. Help me understand your thinking. Thanks.
Kevin says
Mark – “the bottom line” is a long-term creation, not the short-term creation that most traditional manufacturers believe it is. If you’re cranking out product, but there may be a problem, you are creating a potentially disastrous situation for the long-term even though you may have short-term profit. Also, while GM/etc are thinking about reviving already excessively large dealer networks and thereby creating even more finished goods inventory capacity, Toyota has long said they want to dry up unsold car inventory further. This might be one angle to their solution – the “taking advance of” that Jim mentions.
Key Toyota concept: stop everything as soon as a problem is found, and fix it immediately. I saw it happen several times an hour at their Lexus plant in Kyushu, and we’ve read how it happens in each of their manufacturing- and non-manufacturing business processes. Now they are doing it on an enormous scale. But the big question is whether it’s really out of commitment to the original TPS, or to a fear of what the problem might be?
Mark Welch says
Gotchya. Thanks for clarifying, Kevin.
Jeff Henderson says
Was Toyota really being altruistic and a lean manufacturing hero by stopping production & sales?
http://www.freep.com/article/20100127/BUSINESS01/100127023/1318/U.S.-Toyota-had-to-stop-troubled-production
Jim Fernandez says
This is interesting. In every article I have read about Toyota, it always mentions shutting down production and sales, and recalling vehicles in Canada and North America. What about the rest of the world?
Maybe Jeff is correct, and this move is a result of the requirements of our laws. Or could this mean the financial risk of lawsuits only exists in these two countries?
Paul Todd says
Regarding other countries, from the Detroit News today:
“Toyota faces further questions because similar pedals that are at issue in the United States are on some vehicles in Europe. Toyota hasn’t decided what it will do in Europe. Beginning in December 2008, Toyota received complaints in Europe about the sticky accelerator pedals on its Aygo and Yaris vehicles.”
You can bet regulators around the world are asking some tough questions of the local Toyota managers.
Emmer says
As of Jan. 28 Toyota announced it will expand the recall to Europe.
NPR reported this morning that Toyota has stated there is no problem with cars that have Denso-produced gas pedals, only those with CTS-produced (Indiana) pedals, but they are publicly treating both the same.
It will be interesting to see how this unfolds.
RalfLippold says
Having worked in a German OEM (BMW) for a couple of years doing lean implementation I can fully understand what happened to Toyota.
Especially when problems are so fuzzy, you as the top management have to decide whether that’s a deal or not. What charge of cars from which plants are amongst the “suspects”?
Some decades ago my father had a similar problem with high end TV studio cameras. As head of the maintenance department at German Televison what to do around a mistake that came into action only for a fraction of a second and could not be reproduced. There is always a tradeoff of going to fast with overwhelming evidence (that in the end is not true) or wait a bit longer to find out what is really going on (and take action then).
I am pretty much with JamieFlinchbaugh who wrote first in the comments line – it is really a complex thing to find out where in the vast system of producers, subcontractors, and other influences the error could have occurred from.
One thing almost none of the other car OEM (especially the premium ones) seldom do is a publicly announced recall action of this kind. Mostly recalls are handled in a way the public (besides the owners of the cars) are not getting any information on it!
I am pretty positive that Toyota again will use this move together with the public announcement during the World Economic Forum in Davos to learn for the future on top of what they are already today:
the champions of lean thinking and systems thinking in the world:-)
Paul Todd says
I’m still a fan of Toyota, but I’m not blinded by my admiration. The recalls and the sales halt resulted from protracted negotiations with the government over many months, not because Toyota felt it was “the right thing to do.” Okay, complying with a federal order is the right thing to do. As the dirty laundry is aired in the media and in Congressional hearings, we as students of Toyota need to be prepared to learn some unpleasant truths about the organization.
Jamie Flinchbaugh says
I really loved the title of this one. Few people have been vocal about challenging Toyota in their living up to their own principles as you guys have. All the people willing to say they weren’t now is a lot of monday-morning quarterbacking. I think you at least earned the right to do so.
I have been resisting writing about the Toyota case because so little is actually know about the defect itself, and cause and effect isn’t clear. But I have been getting enough questions about it. I don’t think this changes anything about Toyota’s success. They still have dramatically fewer recalls than others. And of course no one that knows lean would say they were anything close to perfect.
I did write up some of my thoughts and lessons in observing the story on my blog here: http://jamieflinchbaugh.com/2010/02/the-fall-of-the-mighty-toyota/
George says
Pulling the Andon was the right thing however might have been counterproductive to PR. This action is unheard of by the public which is not familiar with Toyota’s culture, and what most are thinking is “What went so wrong that Toyota decided to shutdown 8 models at a cost of tens of millions of $ per day?