The Zycus Forum: Could better intelligence have prevented the massive recall woes of the once revered Toyota Supply Chain?

Posted on May 18, 2010

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The following is the member transcript from a current Zycus Forum Exchange discussion regarding the question “Could better intelligence have prevented the massive recall woes of the once revered Toyota Supply Chain?”

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Use the following link to join in on, or to simply follow the discussion: Zycus Spend Intelligence Resource Group.  (Note: if you are not already a member you can join the group free of charge through this link or click on the Zycus Logo above.)

Question:

Could better intelligence have prevented the massive recall woes of the once revered Toyota Supply Chain?

According to one industry analyst, “better analytics tools, including software-as-a-service products, could help Toyota and other companies crunch the numbers,” and thereby avoid the problems which led to a massive recall due to safety concerns with acceleration.

How do you believe intelligence would have played a role in preventing the Toyota problem?

Dialogue:

Jagdeep Singh, Senior Associate, Integrity Consultants

Perhaps, to a degree. But it is human beings that are ultimately making the risk judgments, & oftentimes, poor or incorrect decisions which one may notice today, may have looked good at the time they were made.

Jon W. Hansen, Group Moderator

Given Deming’s work was best known and followed in Japan, was this an example of deviation from his core principles and, can it be corrected by a refocusing on Deming’s philosophy?

Richard LaCroix, Professor at National School of Public Administration – Athens, Greece

In difficult times, board decisions focus more on cost cutting (to look good on the stock exchange) rather than the right innovation decisions. The result -> less quality -> more production failures -> a bad reputation that will be hard to recover….

Jon W. Hansen, Group Moderator

Given the difficulty in recovering how does a company after making such a short sighted decision (or decisions) get back on track and ultimately restore market confidence while maintaining a desired profit level?

martin hogan, Owner, redbottle consulting ltd and Process improvement, quality, supply chain

The Toyota debacle is not only a bad human judgment. Bear in mind that it had not happened before, so it was in some respect an change in the way the company did business and was a conscious decision to do something different. This was not a ‘computer glitch’, if it involved computers or accounting, someone decided to alter the parameters of interrogation.

Quality was ignored, procedures were circumvented. The reason for legislation is that it stops executives, removed from day to day consequences, from making short term profit decisions that can kill.

Companies that make mistakes much return to the practice of sacking senior management (which is why they are paid millions of dollars).

I hope banks and politicians adopt a similar mia culpa responsibility for their own behavior, instead of trying to pass the buck.

Jon W. Hansen, Group Moderator

But there have been past problems with Toyota. For example, the following excerpt is from the show “For Want Of A Nail: The Pandemic Effect”:

“The July 20, 2007 Wall Street Journal published an article titled, “A Key Strategy of Japan’s Car Makers Backfires,” which begins: For want of a piston ring costing $1.50, nearly 70% of Japan’s auto production has been temporarily paralyzed this week. Blame it on kanban, the just-in-time philosophy of keeping as little inventory on hand as possible.(* Source: Pandemic Plan Blog).

There are many questions this raises for example how could a simple part worth a $1.50 bring down 70% of a country’s auto industry? what role did the utilization of ERP technology such as spend management play or not play in the situation – re were the proper tools there but not properly used or, was there an inherent flaw in early spend management applications?

Note – here is the link to the on-demand version of the live broadcast; http://www.blogtalkradio.com/jon-hansen/2009/05/26/special-broadcast-for-want-of-a-nail-the-pandemic-effect-

Once again, use the following link to join in on, or to simply follow the discussion: Zycus Spend Intelligence Resource Group.  (Note: if you are not already a member you can join the group free of charge through this link or click on the Zycus Logo above.)

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