Toyota sales have taken a beating after the quality problems of 2010.  May 2011 sales declined by almost a third compared to May 2010.  May 2010 sales were barely better than those during the depth of the great recession in May 2009 (a 45% drop from 2008).  In comparison, Ford’s sales have have actually increased by a third since 2009!

So, it might be worth looking into the root causes of Toyota’s quality problems.  In the aftermath of all the recalls, Mr. Akio Toyoda laid out a four step plan to fix Toyota’s image.  All four steps dealt with either improving the actual quality control or safety checks.  The conventional wisdom seems to maintain that if there are quality problems, increase quality control or safety checks (Toyota advisory panel says safety management changes aren’t enough: “

Automotive News reports that management changes made by the Japanese automaker haven’t gone far enough to fix all that ails Toyota. For example, the panel, which is led by former Transportation Secretary Rodney Slater, feels that Toyota decision-making is too centralized to Japan, which could mean that individual regions don’t have the flexibility to act on issues in a timely fashion. Further, the group found that even with recent management changes, it’s still too difficult to identify a clear chain of command in the Toyota safety department. The panel reportedly also referenced ‘skepticism and defensiveness’ towards outside safety complains as a reason issues weren’t solved sooner.”

Clearly, large organizational problems, such as authority to make decisions etc need to be fixed.  However, these problems have not changed for decades.  Every time I have worked with large Japanese organizations with large US presence, I have always found significant cultural conflicts.  Why did the quality problems start now as opposed to 20 years ago?  Is it because of quality control?’  Clearly, Toyota thinks so.  In fact, Toyota made a big deal about the new devil’s advocate policy that puts in an additional round of quality control AFTER the car has been fully designed and tested.

The ‘devil’s advocate’ approach to vehicle design is a key element of the new Toyota. Under the plan, the company gives engineers four extra weeks to tear down and evaluate new vehicles.
The goal is to use the car in ways the owner’s manual doesn’t even consider. That’s because Toyota found out the hard way last year that customers use cars in unpredictable ways. It traced some unintended acceleration cases to gas pedals being jammed by stacked floor mats — an ill-advised practice for which Toyota engineers didn’t plan.

As we remarked earlier, the problem does not seem to be arising from a lack of quality control.  In fact, Toyota is legendary in its Toyota.  If unpredicted customer behavior can be found after the design is completed, why can it not be found before?  It would be much easier to fix problems during design rather than after the production has started!  As the article above pointed out, the push to fix problems after the design is complete cost a lot more and are never very effective.

Toyota and the supplier switched to crisis mode. They designed a new pinchless wiper and the Yaris still made the scheduled start of production in November.
“We really had to push hard,” recalled Katsutoshi Sakata, Toyota Motor Corp.’s lead executive for quality research and development. 

Toyota has a very thorough manufacturing process (the Toyota Way and the Toyota Production System).  So, the likely problem lies with design…  As Knowledge@Wharton from the Wharton School of Business pointed out, the key challenge is in the ability to manage increased complexity of new automobiles.

MacDuffie: And that creates tremendous demands on the designers, right?
Fujimoto: Right, it’s a nightmare for the designers. You have to take on all these constraints. It’s like solving gigantic simultaneous equations involving structures and functions. For example, with the Prius recall, the problem resulted because Toyota tried to improve fuel efficiency and safety and quietness at the same time through a nice combination of very powerful regenerating brakes, plus the latest antilock brake system, plus the hydraulic braking system.
But the relationship between the three kinds of brakes changed with the new design, and then drivers could have an uneasy experience when there was switching between the different brakes a little bit…. Toyota failed to see this problem in the right way, at least in the beginning.

The Toyota design organization seems to be based on the traditional model of apprenticeship.  Where engineers go through years to learn about the design ecosystem (suppliers, their capabilities, integration into overall design, etc.).  However, the rate of technology change has increased tremendously – especially when one considers electronics and computers.  Since cars are increasingly computerized, waiting for years to learn the system just does not work.  Hence, the quality problems are most likely design and R&D culture problems.  Toyota recognizes the problems, and has taken steps to reorganize its R&D departments (See Behind the scenes at Toyota’s R&D center Part I and Part II).  As the the advisory panel rightly pointed out, Toyota needs to find ways to bring the Toyota Way to R&D.

In addition, the company should apply its vaunted Toyota Production System and Toyota Way principles outside manufacturing, the report said.
Toyota’s manufacturing error detection, based in part on going to the source of the problem to understand root causes, is “unhelpfully narrow,” the report said.
This manufacturing approach is “not applied rigorously enough” in vehicle design, corporate governance, customer feedback and regulatory affairs, the report said.

FYI – This article is not meant to be a criticism of Toyota or their products.  In fact,  I am a proud owner of a Toyota vehicle.  The article is intended to help us learn about challenges in R&D management…

Article first published as Toyota’s !uality Improvement Changes Aren’t Enough on Technorati.