“As Toyota Closes In on GM, Quality Concerns Also Grow”

• Toyota finds itself confronting “mushrooming quality problems”– Rapid growth has spread thin Co’s famed quality

masters• Co revenue has doubled in last decade• Goal for next decade is to increase global market share

from 10% to 15% (~= to GM)• Paradox: getting bigger doesn’t always mean getting

better

– Pressure is on to retrain American ees to take up slack (given that quality is key element of business strategy)

• Co has launched multiple “special task forces” at trouble spots in North America and China to overhaul shop floor mngt

– At same time Co has launched world-wide campaign to simplify production systems

“As Toyota Closes In on GM, Quality Concerns Also Grow”

• Toyota still generally outscores rivals on industry surveys of quality and reliability– But lead has narrowed and in certain key

segments disappeared

– Georgetown KY plant (Camry) has fallen from #2 rated N.A. plant in 2001 (behind Toyota’s Ontario plant) to 26th, 15th, and 14th in 2002, 2003, 2004

• Some hourly assemblers began ignoring standardized work processes

• Camry has fallen from #1 in J.D. Power initial quality survey to #8

– Top three in 2004 are GM and Ford MI plants

“As Toyota Closes In on GM, Quality Concerns Also Grow”

• Complicating factor is that TPS experts typically fluent only in Japanese, American counterparts fluent only in English– TPS typically taught hands-on; moving to manuals

and videos• Side note: number of students studying Japanese in U.S.

institutions of higher education rose to 52,000 in Fall 2002, up 21% from 1998; 34,000 students studying Chinese, up 20%

– Toyota turning to affiliated (keiretsu) assembly-specialist Cos such as Kanto Auto Works for experts to help open new plants and train local ees

• Toyota objective is to eventually outsource to affiliates partial or entire mngt of some mfg plants outside Japan

“As Toyota Closes In on GM, Quality Concerns Also Grow”• Georgetown has established OD Group, to

nurture American TPS leaders and diminish reliance on Japanese TPS masters– Similar effort underway at NUMMI

• Movement away from parts shelves to system where logistics workers synchronize packages of parts given order of vehicles on assembly line (“kitting”)– Form of error-proofing, or poke yoke– “Smooth flow, memory simple, motion simple”

• Goal is to limit number of decisions hourly worker makes per vehicle to two or less

• Georgetown ee used to have to make multiple decisions to choose among 24 kinds of visors and nine different seatbelts, depending on which vehicle was coming down line

» Source: Wall Street Journal, 8/4/04; 8/5/04; 7/13/05; 8/2/05