500th Procurement Insights Post – Toyota’s Latest Trouble . . . GM all over again, except from within North America

Posted on February 22, 2010


This Wednesday in the first of what will be a quarterly appearance on the PI Window’s “Business Thought Leaders Series,” expert author Bill Michels will talk about the recent Toyota recall including the role that the auto manufacturer’s supply chain has and will play in this unfolding story and, the launch of ADR Academy’s new Adaptive Learning Program.  By the way, to learn more about Bill please visit the Business Thought Leaders Section of the PI Window on Business Blog.

The Toyota recall is a topic on which I am very much looking forward to hearing what Bill has to say, especially as it relates to a comment that was once made by GM’s one time top supply chain executive Bo Andersson.

Specifically Andersson’s assessment that the “best market to sell cars and trucks in is North America, assuming you don’t produce them there.”

The most recent comment that seems to reflect a “bash America mindset” was made by Joe Barkai, practice director at marketing intelligence and advisory firm IDC.  According to a February 2nd, 2010 Logistics Management article, when asked how this could have happened to Toyota Barkai suggested that “the problem is in America.”  Referencing conversations he had with “Toyota executives in the past,” Barkai said “he believes Toyota became too focused on competition with Detroit, at the expense of quality control.”

That’s like me, through my own lack of coordination, stubbing my toe and blaming my wife because she was talking to me while I was walking into the room.  On occasion I might even have made the suggestion that she was somehow at fault when I have inadvertently bitten my lip while eating because she had asked me a question at that particular moment.

Besides wondering why North American manufacturing prowess is once again taking the proverbial beating, despite what is at best an indirect involvement, I am of course interested in finding out what role if any, Bill believes the Japanese manufacturer’s supply practice played in the unfolding drama.

To Barkai’s credit, his suggestion that Toyota could have fallen victim to its own design in process in that they “may have been too efficient for the company’s own good,”  is worth noting.  Citing the similarity of design, the company uses the same parts and the same suppliers which according to Barkai means that a single part failure has the potential to have a broader impact across all models.

The fact that even a minor parts-related issue could easily affect millions of cars at once brings to mind the proverbial rhyme “For Want of a Nail” which illustrates that small actions can result in large consequences.  For Toyota, this then may actually be a case of deja vu.

Certainly the July 20th, 2007 Wall Street Journal article titled “A Key Strategy of Japan’s Car Makers Backfires,” gives compelling testimony to the truth behind the “Nail” proverb.  Specifically, and something that appears to speak volumes, is the fact that a piston ring costing a mere $1.50 temporarily paralyzed 70 percent of Japan’s auto production for one week.

If a seemingly innocuous, but obviously important “Nail” created a chain reaction of events that resulted in such catastrophic consequences, shouldn’t Toyota have learned something from the earlier experience?

Perhaps this is the reason why both Barkai and AMR’s Michael Burkett concluded that “Toyota dropped the ball when it came to analyzing reports of problems in the past,” reports they contended might have “helped the company avoid” the dangerous and costly acceleration issue they face today.

Once again, Wednesday’s PI Window on Business Thought Leaders segment with Bill Michels should be very interesting to say the least.

Remember to use the On-Demand Player below to access the February 24th live broadcast which begins at 12:30 PM EST.

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