Is Toyota the author of his misfortunes? (Part 1)

Filed in archive Market Overview on March 1, 2010

California's Chronicle Herald did recently covered misfortunes of Toyota from supply chain perspective and highlighted an interesting point: The other big automakers might be the next...

Although it is Toyota that is currently in the dock after a crushing series of safety-related recalls across the world, competitors are only too aware that it could be their turn next. After all, there is not a single big carmaker that has not modeled its manufacturing and supply-chain management on Toyota's "lean production" system.

According to James Womack, one of the authors of The Machine that Changed the World, a book about Toyota's innovations in manufacturing, dates the origin of its present woes to 2002, when it set itself the goal of raising its global market share from 11 per cent to 15 per cent.

The target was "totally irrelevant to any customer" and was "just driven by ego," he says. The rapid expansion, he believes, "meant working with a lot of unfamiliar suppliers who didn't have a deep understanding of Toyota culture."

By the middle of the decade recalls of Toyota vehicles were increasing at a sufficiently alarming rate for Toyoda's predecessor, Katsuaki Watanabe, to demand a renewed emphasis on quality control.


There are also other more specific issues related to the strategy of Toyota in the recent years which I am going to cover in the next post; but before that, I want to know what are your ideas: What do you think Toyota should do to get out of this situation?