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There have also been some minor complaints about the driving mechanisms in the Corolla and Camry models, and stalling in some Corolla models. Overall, during a 12-month period, Toyota recalled some 10 million vehicles through August 2010—an extraordinary number given that the company sold only approximately seven million vehicles during this same period. 2

In the software business, producers and consumers are accustomed to product defects and an occasional recall as well as lots of “patches” or product fixes (see my earlier Communications column, “Who is Liable for Bugs and Security Flaws in Software?” March 2004, p. 25). Compared to automobiles, though, software product technology is relatively new, and the design and engineering processes are highly complex, especially for large systems with many interdependent components. But to what can we attribute so many quality problems in an industry as mature as automobiles and in a company so renowned for quality and manufacturing? Moreover, when even the mighty Toyota can falter, what does it say about “staying power”—the ability of a firm to sustain a competitive advantage and keep renewing or expanding its capabilities?

 

systems and managerial Process Problems One way to think about the Toyota debacle is to divide the problem into categories: the production system, the product development system, and, for lack of a better term, general manage-

to what can we
attribute so many
quality problems in
an industry as mature
as automobiles and
in a company so
renowned for quality
and manufacturing?

ment. These systems and managerial processes also reflect intangible corporate values such as what kind of commitment the organization has to quality and customer satisfaction.

The Toyota production system does not seem to be the cause of the quality problems experienced over the prior decade. In the past, Toyota has exhibited a significant advantage over its mass-producer competitors in physical and value-added productivity. The competition has improved, but it is unlikely that any firm has actually passed Toyota in manufacturing prowess. Data related to manufacturing or assembly quality, such as the number of defects reported by customers in newly purchased vehicles, generally has placed Toyota at the top of the auto industry or at least among the leaders. This past year was different due to the recalls—Toyota fell from sixth to 21st in the annual J.D. Power’s survey of initial quality. 3 However, the recent quality problems expose the limits of Toyota’s production system. Making components or receiving supplier deliveries “just-in-time” as the assembly lines need the components minimizes inventory and operating costs, and exposes quality problems visible to assembly workers. But it does not detect design flaws that surface during usage of a product.

In terms of product development, including design and testing processes, Toyota has slipped a notch. The company seems to have tried too hard to reduce costs due to rising competition from low-cost but high-quality competitors such as Hyundai in Korea or new entrants in China. It is clearly a lapse in design and testing when accelerator pedals get stuck on loose floor mats, or when new types of plastic pedal materials become sticky after being exposed to moisture and friction. It is also a problem of design and testing when drivers feel that braking software or on-board computer controls and sensor devices seem to malfunction or operate crudely. Toyota’s engineers and U.S. government safety investigators have not been able to replicate the conditions that caused some customers to complain about these software-related problems. But the kinds of problems we saw in 2009–2010 indicate Toyota engineers need to do a better job in product de-