Problem Statement
The organizational management in Toyota should aim at testing and crosscheck vehicles before releasing them to the consumers. The accelerator crisis could have been caused by laxity of the Toyota management due to the failure of checking the safety and the required security measures of the vehicles. The accelerator crisis led to the devastating recall of more than 4.2 million Lexus and Toyota vehicles. The unintended acceleration of resulted in hundreds of fatalities in the United States. The process of testing and checking the suitability of the vehicles before they are released should be upgraded, and quality and assurance managers should become keener to avoid such crisis from happening in the future.
History of the Toyota Accelerator Crisis
The first incidence occurred on August 28, 2009, when a Patrol Officer Mark Saylor was driving 2009 Lexus ES350 with his family members (Cole, 2011). All over sudden, the car accelerated out of control and hit the car in front. Within a short period, the car caught fire, and four people died on the spot due to the car crash. It was reported that the car had no brakes and that is why it over speed. On September 14, 2009, a report came from Toyota indicating that the floor mats were faulty and were interfering with gas pedal (Cole, 2011). This was after servicing the Lexus that caused the accident due to uncontrollable acceleration.
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On September 29, 2009, Toyota announced the first recalling of the floor mats that were already in 4.2 million Lexus and Toyota vehicles (Liker, 2011). The customers were advised to remove the floor mats and put them in the truck so that they could no longer interfere with the gas pedal. The CEO, Akio Toyoda apologized to the Saylor family for losing members in such a tragic accident and apologized to the customers who were affected by the recall.
According to the Toyota spokesman, the company did not have a safety override to control the brake pedal acceleration, but the company was considering making such a program. The National Highway Traffic Safety Administration (NHTSA) and local authorities investigated the Lexus RX 400 SUV (Liker, 2011). The results showed that the accelerator pad and the floor mats jammed, causing the vehicle to accelerate without control. After this investigation, Toyota Company decided to have the second recall where it aimed at fixing the acceleration issue on already sold cars. However, the management did not accept the defect because the letters for recall indicated that there was no defect that existed. On the contrary, the NHTSA publicly rebuked Toyota for making such a statement, since the vehicles had an underlying problem (Greto, Schotter, Teagarden, & Management., 2010). Toyota Company claimed to carry out an investigation that would include the 2008 models, the seven accidents, and 26 unintended acceleration cases.
The denial of the defects heated up media discussions and Los Angeles Times accused Toyota of hiding defects from customers. However, the acceleration crisis happened again on December 26, 2009, when a Toyota Avalon crashed into the lake due to the out of control acceleration. On January 21, 2010, Toyota made another recall of 2.3 million Toyota vehicles with the acceleration problem (Austen-Smith, Zemel, Diermeier, & Management., 2011). The company did not include the Lexis and Scion models during this recall.
Toyota’s Organizational Processes
The key problem with Toyota was in the operations management. The main responsibility of the operations management is to ensure that products meet customers’ needs and are of the highest standards. Global operations management is guided by four theories: lean, six sigma, business process redesign (BPR), and reconfigurable manufacturing systems theories. But the Toyota crisis will be analyzed using these global models, except the lean model.
The BPR theories focus on redesigning the businesses processes within a company with an aim of increasing the quality of services and products reducing the cost of production (Andrews, Simon, Tian, & Zhao, 2010). This theory is also referred to as re-engineering of the manufacturing process. This theory has been applicable in the Toyota Company, and that is why the company thrived well in the production of new vehicle models. However, the manufacturing process was not well scrutinized to show the possible faults associated with the new 2009 models that caused the acceleration crisis.
The second global operations management theory is Reconfigurable manufacturing systems (Austen-Smith, Zemel, Diermeier, & Management., 2011). This theory allows quick adjustments within the company to improve the efficiency of production and to make new products. Toyota Company is well known for releasing new car models every year.
The Six Sigma model focused on quality and was initially developed between 1985 and 1987 at Motorola (Cole, 2011). This model advocates for six control limits to check the standards of products. It involves qualitative and quantitative measures. The role of the operations management in Toyota was to use this model to measure that quality and sustainability of the released models. This model helps to reduce faultiness in products in any business.
Toyota’s organizational processes were considered faulty at the time of acceleration crisis. Toyota had the habit of dismissing customer’s complaints and lacked efficient procedures to handle the safety problems that were identified. The investigation panel used the floor mats as the core reason for the acceleration failure. The management was slow to discover the main problem with the pedal and floor mats, even after receiving complaints from the customers. The organization also took long to initiate the first recalls. The company was not quick to respond to the customer’s needs and increased the vulnerability of the consumers. More car accidents were being recorded as a result of over speeding and loss of lives.
Toyota Company was well known for manufacturing quality vehicles until when the accelerator crisis happened. It raised a lot of concern in the public, social media and local authorities of how the company had jeopardized the safety value. The operations management should have taken more time in checking the safety of the models before releasing the vehicles to the customers (Greto, Schotter, Teagarden, & Management., 2010). Consequently, after receiving the first complaint, the company should have the taken the initiative of addressing the complaint by carrying out an investigation. After realizing the key problem, it would have allowed the company to initiate the first recall. As a result of this crisis, Toyota Company suffered a great loss trying to correct the mistake on already sold car models and rectifying the internal processes. With time the company understood that quality, customer, and profit are directly proportional.
Cost-benefit Analysis
Toyota Company seemed to value money more than life during the acceleration crisis. This is because they delayed in initiating the first recalled and failed to address most of the customers’ complaints even after knowing that the acceleration faultiness had caused several deaths. Authorities demanded all files and records of internal communications which showed clearly that the company had prioritized profits over the value of human life. Toyota Company had sacrificed quality and safety of the vehicles to make more money by selling the car models. The company compromised on quality and put the life of the consumers in danger. Several lives were lost, and many people were injured as a result of the uncontrolled acceleration speed.
Toyota Company has the responsibility to repair all the recalls and compensate the families who lost their loved ones. It also incurred a great cost trying to build back its image and to regain trust from the consumers. However, Toyota is not the first motor company to put the lives of consumers at risk with the aim of gaining more profits. In 1977, Ford memo indicated that the company knew about the motor defects in Pinto models that caused crash-related fires. The success of Toyota Company was built on safety and quality until it compromised these values in 2009 (Liker, 2011). Over three million cars reported having the acceleration failure which cost the company. It would have been less costly if the company had decided to fix the problem before releasing many more car models with the same problem. Customers’ needs are crucial in sustaining any business. Once the customers are not satisfied, the company should work towards improving and satisfying the consumers.
Innovative and Sustainable Solution
Towards the realization of the importance of sustainability in the society, Toyota Company can design vehicles that respect the environmental sustainability. This means that environmental sustainability and safety of human life should be prioritized in the process of making new models. Any new technology should be tested and retested in the vehicles before release to ensure that it is safe for human life and sustainable to the environment. The research and development department in Toyota Company should be encouraged to carry out intensive research and analysis covering all steps of production. The company should not be focused on making more money, but it should be capitalized on human safety and sustainability. This will help in protecting the brand image of the company and will attract more customers by winning their trust. This solution is important because Toyota is a global company which needs global operations management. Therefore, the company should be leading in human and environmental sustainability efforts by ensuring that the products are safe for humans and environmentally friendly.
Recommendation
To achieve sustainable solutions, the company needs to embrace democracy leadership in the decision-making process. During the crisis, there was no communication between the different departments working on the new Toyota models. Workers were only allowed to know little information about the progress if need be. The decision-making process did not involve all the participants. Thus it was difficult to resolve the issue within the organization before releasing the product to the customers. Since the company was aiming at making profits at the risk of the consumers, it made it difficult to correct the mistake. For this reason, the company should consider making a few samples before mass production of any new model. The few samples can be tested, and mistakes can be easily corrected.
Since Toyota Company is not the first motor company to make such mistakes, it is important to consider the keen analysis of new models to prevent another scandal from happening in the future. Research has shown that Ford and Volkswagen Companies have suffered a similar crisis. This means that manufacturing of vehicles is a risky business and the only way to manage the risk is by having practices that prioritize the human safety. Also, listening to customers’ complaints and addressing them as quickly as possible is an important practice. The customers are important in ensuring the success of the business. Without them, the company will fall because there will be no consumers of the products. Consequently, once the customers are satisfied, it boosts the brand image of the company.
Conclusion
The Operations management department of Toyota Company failed the company because of their reluctance in solving the acceleration problem and not addressing the customers’ complaints. The company took more time to initiate the first recall to repair the problem. Even after realizing the problem, the company publicly denied the defects which caused hundreds of fatalities across many roads in the United States. The company also refused to share the information recorded from their data recorders about the problems that were being experienced with the sticky accelerator pedals and electronic throttle controls. Lessons learned from the crisis is that human safety should come before the much-anticipated company profits from the production of vehicles. The accelerator crisis led Toyotas stock price to decline by 20 percent which was a $35 billion loss of the expected market value. The Operations management should consider overseeing the safety and quality of new car models. The accelerator crisis would have been averted by Toyota through preventive mechanisms and a proactive approach that should have been employed by the company’s operations management in detecting the signals that could have led to the problem. Based on the detected signals, the operations management team would have then analyzed the possible threats associated with the crises and taken the appropriate prevention measures that would have been able to avert the problem.
References
Andrews, A. P., Simon, J., Tian, F., & Zhao, J. (2010). The Toyota crisis: an economic, operational and strategic analysis of the massive recall. Management Research Review , 2040-8269.
Austen-Smith, D., Zemel, E., Diermeier, D., & Management., K. S. (2011). Unintended acceleration: Toyota's recall crisis. Evanston, IL: Kellogg School of Management.
Cole, R. E. (2011, June 22). What Really Happened to Toyota? Retrieved from http://sloanreview.mit.edu/article/what-really-happened-to-toyota/
Greto, M., Schotter, A., Teagarden, M. B., & Management., T. S. (2010). Toyota: the accelerator crisis. [Glendale, AZ]: Thunderbird School of Global Management.
Liker, J. (2011, February 11). Toyota’s Recall Crisis: What Have We Learned? Retrieved from https://hbr.org/2011/02/toyotas-recall-crisis-full-of
