Toyota’s Quality Troubles: Blame it on Complexity

Toyota’s recent quality problems and clumsy attempts at managing them stand as one of the most notable corporate stories of the past year.  The Company has faced a barrage of criticism over everything from product design to the failure of company executives to publicly acknowledge the issue head on.  The most damaging indictment may be to the famed Toyota reputation for quality.  Not surprisingly, this story has many lessons for other companies in terms of operational strategy, process design and culture.   

Recently K@W, a newsletter published by The Wharton School of Business, conducted an interview with Professor Takahiro Fujimoto, a leading authority on the automotive industry and the famous Toyota Production System.

Some of his conclusions on the Toyota saga include:

  • Excessive operational and product complexity were the root cause of Toyota’s quality troubles.
  • Historically, Toyota was very good at managing the complexity required to deliver industry-leading quality.  However, the company has reached a point where rapid growth, challenging product requirements and multifaceted operations have combined to raise the complexity level to a point where traditional strategies and norms are no longer as effective.
  • Some of the sources of Toyota’s complexity includes: large numbers of product configurations, intricate production systems and convoluted processes & structures.
  • Company executives were previously aware of the problems but were unable to prevent them.
  • Delays in responding to the crisis were exacerbated by management hubris, flaws in customer feedback mechanisms and a lack of clear ownership over the “complexity” problem.
  • Toyota’s problems are such that they could happen to any large company 

A challenge of any large organization regardless of sector, high operational and product complexity leads to lower productivity, increased duplication, resource misalignments, customer & partner confusion and unwarranted error rates.  

Tackling complexity in a large, multinational enterprise like Toyota is not easy given arduous consumer demands, a lack of quality data, competing stakeholders and implementation difficulties.  A variety of top-down and bottom-up approaches can be used to understand what needs to be cut, reengineered or enhanced without increasing revenue risk. This link outlines a product-focused methodology we have used to reduce complexity in a global B2B company. In this project, we dramatically reduced the number of product SKUs by over 60% leading to major cost reductions and indirect payoffs such as enhanced resource allocation and improved decision-making.

Many firms such as Unilever, P&G and Diageo have successfully undertaken complexity reduction initiatives that have saved millions of dollars.  The Toyota case will serve as a clarion call for other large firms (and not just automakers) who seek to grow profitably while ensuring high levels of customer satisfaction and scalability.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.


2 comments so far

  1. […] structures deployed.  Not surprisingly, complexity (both visible and hidden) come with an expensive price tag including unnecessary input, production, and selling costs as well as operational lethargy. […]

  2. […] structures deployed. Not surprisingly, complexity (both visible and hidden) come with an expensive price tag including unnecessary input, production, and selling costs as well as operational lethargy. […]

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