Toyota’s Problems and Lessons for Engineers

February 2010 Vol. 237 No. 2

Ramesh Singh

The recent problems with Toyota’s recall due to faulty accelerators in eight car brands have a very important message for engineers and managers dealing with engineering and designing.

Toyota has used CTS Corporation of Indiana to manufacture and supply the gas pedals for the eight models of cars whose sales have been halted in USA and, for some models, in Europe as well.

The application of the concept of lean manufacturing, which is a product of Toyota Motor Corporation’s factories in Japan, has led to this situation. The concept is not to be blamed; it has played well in the disciplined and dedicated workforce of Japan. But the transfer of the concept to North American environment coupled with rapid growth to capitalize on the ground lost by the Big Three American automakers may have resulted in a lack of monitoring over the application of this process. The lean manufacturing process’ key concept of cost reduction and generalized design of products has pitfalls, if not applied in its true spirit. It must also be recognized that every good engineering and manufacturing practice has its weakness that must be addressed at the engineering level. David Meier, an expert on lean manufacturing, says in his book The Toyota Way Fieldbook that there is a trade-off with standardization. The cost is reduced, but the risk is also increased.

The cost cutting and standardization are both essential parameters to stay in business, and the same concepts that American auto manufactures are generally accused of not practicing. But they require other disciplines to avoid disaster: the close engineering analysis of interchangeabilities (of parts, in case of Toyota) and once that is established, supervision of the manufacturing process, including tooling and process control. Toyota has possibly failed in this latter part of its engineering responsibilities.

The problems of Toyota will be resolved, albeit at the cost of some drop in public image and actual revenue drops. But this is not an issue isolated to Toyota or to the auto industry alone. All engineering activity is affected by Toyota’s crisis. It has highlighted the lessons that must be learned by all engineers and engineering managers serving in any industry. Engineers and engineering managers must be very careful in the application of generalized standards and extreme steps aimed only at the cost reduction process.

Engineers and engineering managers should conduct an actual, unbiased and professional cost analysis on the short-term and long-term impact of their decisions. Then they must analyze that impact. This analysis should not be examined through the prism of cost alone, but on a sound engineering basis, as we can see that there has been a clear disconnect between engineers and cost analysts in case of Toyota.

Toyota’s experience teaches that engineering activity is often overshadowed by a manager’s desire to cut cost and look successful in the short term. A good engineering manager should be able to see through these pitfalls and resist the temptations to “look good” to be true to his or her profession.

The pressure of the current economic crisis has shown that some popular cost management principles– especially popular among short-term profiteers–are failing American industry. Will we witness the failure of another management principle? Only time will tell, but considering last two decades of management practices aimed only at cost cutting, it should not come as a surprise.