Posts Tagged ‘OPM01’

In attempt of expansion and growth, Toyota failed to live up to its culture, the “Toyota Way”. “Toyota Way” was the DNA of the company back then and it proven effective. It made Toyota one of the most successful car manufacturers in the world. But upon reaching its peak, they forgot their identity. Let us remember the Toyota Recall Crisis that occurred last 2008 and 2009 in the United States, Latin America, Europe, and China. Huge number of Toyota vehicles (Camry, Lexus, and Solara) was requested to be returned back to fix the alleged defects (either floor mats or the gas pedal) of the units. The factors that led to this are time, outsourced suppliers, and quality management.

 

First, Toyota was focused and persistent for global growth in a short period of time. As Washington Post’s Blaine Harden (2010) noted “Toyota sacrificed quality for global growth and got burned”. Though they produced more units than they ever did, the quality was sacrificed resulting to callbacks. This cost them billions of dollars and the image of the company was heavily affected.

 

Second, Toyota relied on ‘lean production’ (outsourcing the local suppliers). Since they opened new factories overseas, for faster chain of supplies and lesser cost of producing (import, freight, etc.), they depended on local suppliers. As cited by The Economist’s James Womack “meant working with a lot of unfamiliar suppliers who didn’t have a deep understanding of the Toyota culture”. As a result, it jeopardized the quality of the cars they were producing since the parts they were getting from their local suppliers were not as the same as with the suppliers they were getting from their original suppliers.

 

Lastly, Toyota failed to implement its best asset in addressing its constraints, the total quality management (customer focus, continuous improvement, teamwork) during its global expansion. As noted by Harden (2010):

There is an expert consensus that growth itself derailed the Toyota Way, blurring its focus on quality, thinning its stable of expert mentors and undermining its capacity to respond to consumer complaints.

This is a clear statement that Toyota prioritized in producing cars; however, failed to maintain the quality they were once known for.

 

To sum it up, quality was the main factor why Toyota could not prevent in making recalls. They failed to meet the standards they set due to its desire for global expansion (1) in just a short period of time; (2) practice of lean production by outsourcing unknown local suppliers; and (3) failure to observe total quality management, all, for the cost of faster production. Clearly, Toyota did not employ the ‘Toyota Way’ in the process of expanding. Now, it is up to them to regain the stature they had once.  

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Improvement and existence are achieved, if and only if, constraints are to be addressed and fixed. Constraints are weaknesses, “pabigat” that hinder the company from its own growth. And we all know that continuous improvement is the key to existence. Let us face the reality; all firms in the industry have their own constraints. And if they fail in finding ways on solving these constraints, they may not continue to exist. To better understand this, let me use ‘the basketball world’ as an example as I discuss my evidences.

Balance is the key to a more efficient way of doing things. As Eli Goldratt (1996) cited “If you optimise already strong links without strengthening the weakest, all you do is heighten the imbalance – which translates into inventory”. In basketball, there are a handful of skills to be mastered that will gauge how good the player is. One of which is rebounding. Imagine a basketball player whose height is 6’11 but does not know how to position his self under the ring. No matter how tall he is, he won’t be able to grab the boards; hence, he is not effective.

Know your throughput. As what Ken Bell stated “if a department only needs to run for three days a week, then only run it for three days a week”. Either shortage or excess in any form of output or production is bad for the company. To relate this in the world of basketball, let us say a basketball player practice day and night. It will make him more competitive; however, over fatigue will become an issue. Come the day of the game and there’s a chance that he won’t be able to execute due to exhaustion.  

Lastly, one must find new ways on how to handle the existing constraints, if the previous solution did not work. The old dilemma says: “If people generate an improvement and redundancy is the outcome, then the process of improvement will be discontinued”. To better discuss this, let us talk about Lebron James of the Miami Heat. He is considered to be the greatest basketball player today. Why? Because at the start of each season, he seems to develop a new arsenal of his own, it could be the low-post move, outside shooting, defense, rebound, etc. He constantly adds new things to his play and that makes him to be a great threat to other teams. 

To end this article, I will combine the three examples I based from my evidences. First, the ‘tall player’: no matter how financially stabled and high-technology a firm is, if it does not improve its weakest link (other factors such as customer service, location, etc.), the company is not subject to improvement. Next, the ‘over-fatigue guy’: the company must know its capacity. The company must not try to pass the limit because it may produce more products but the demand for that product is less, resulting to surplus.  Lastly, ‘Lebron James’: a firm must not stop in solving the existing (or most crucial) constraint until it is fixed before the management goes to the next. In solving this constraint, the concept of creative destruction may be applied. Therefore, no matter how small or big the constraint is in one’s company, it must be addressed as quickly as possible because the mere fact it exist; there is a threat to one’s firm improvement and existence.