Toyota Turns the Clock Back a Decade to Improve Quality

Toyota Motor Corp. has assigned 1,000 engineers to help analyze quality problems and is extending time devoted to testing new models by an average of four weeks in an effort to head off glitches before vehicles enter production

Toyota has so far spent about $4 billion to correct the problem of unintended acceleration in its vehicles, but this has been mostly containment and not root cause correction. The changes suggested in this article are aimed more at root causes, and will cost approximately $400 million if we take the cost of 1,000 engineers to be $150 million per year and estimate the cost of 4 weeks of lead time and the reduction in outsourcing to be another $250 million. Could this be a demonstration of the 10X rule of the cost of quality?
Toyota reportedly saved more than $11 billion in the early 2000s thanks to its CCC21 efforts, and some have linked these cost reductions in the design process as well as supply chain costs as contributors to today’s quality problems. Cost reduction should result from following and improving safe, high quality processes that deliver to customer’s expectations. When cost reduction programs put quality before the other KPIs there is a danger that the overall costs increase in the long-run.

Mr. Uchimayada said he would like to reduce the amount of outside engineers working on research and development, but the process will take time. The company must wait for contracts to expire before it can bring the work inside the company. A company executive said the target is 10% outside engineering contractors, down from 30% now.

Not too long ago Japanese society considered lifetime employment a virtue and employees and companies considered it a given. As Japan’s economic bubble burst and as consultants advised them to modernize their employment policies in line with global best practices, this lifetime employment has gradually eroded to be replaced by an sea of what we might term lifetime temporary workers across a range of industries and professions.

When it comes to the impact of decisions by corporations on society, many of the unintended consequences do not become visible for years, even a decade. In BP’s case we see the distressing short-term impact of an eroded culture of safety, and can only guess at the long-term impact for BP and for the Gulf of Mexico. In Toyota’s case one of these may be the loss of company-specific values and knowledge relative to quality culture around the design and testing process among the 30% contract engineers. In Toyota’s case they may need to turn back the clock by a decade to return to the quality methods and processes that yielded famous results.

Corporations are what are known as “legal persons”. What we need are less legal persons whose purpose is to maximize shareholder return in the short term and more ethical persons whose purpose is to maximize social well-being in the long term.

Jon Miller

Jon has dedicated his 25+ year career to the field of kaizen, continuous improvement, and lean management. Jon spent the first eighteen years of his life in Japan, then graduated from McGill University with a bachelor’s in linguistics.