Did Toyota’s Lean Supply Chain Go Bad?

There's been a lot of finger pointing in the press recently when it comes to Toyota’s suddenly accelerating escapades, which seemed to downshift into third gear with the accelerator floored (even to the point of a made-for-media car chase and forensic pile-up in California earlier in the week when a Prius accelerated and was tracked down on a freeway). From a supply chain standpoint, the media coverage appears equally as scandalous. On his blog, Mark Szakonyi, a journalist, recently cited two supply chain experts who argue that Toyota may be mismanaging its own lean approaches. According to one expert, Szakonyi quotes, Toyota "got greedy and extended its link in the supply chain to suppliers who didn't have the same dedication to quality as Toyota."

Specifically, Toyota "got into trouble by spreading themselves too thin in their pursuit to overtake General Motors as the world's biggest car maker. They expanded their web to include tier-two suppliers, and one of those suppliers was the maker of the throttle-pedals that showed dangerous initiative when it came to speed." Another expert cited in the article, Mike Loughrin, suggests "it wasn't a failure of lean but a corruption of the model by cutting costs and ignoring the resulting risks." Regardless, it would appear the supply chain intelligentsia is pointing their fingers at Toyota's sourcing and supplier management efforts.

I’m not sure if this is entirely right or fair. Toyota--and Honda for that matter--have always been about cost reduction. But they've gone about procurement by thinking through the total cost elements of a particular purchase (e.g., buying a component vs. individual piece parts) instead of employing the hard-nosed unit cost-driven sourcing strategies employed by GM, Chrysler, and others. Personally, I think the failure here had little to do with lean or procurement strategies. Rather, it came down to an Asian type of management deference that, despite its claims to the contrary, quietly discouraged dissent so management could save face rather than confront issues as they came up. To me, this feels analogous to Korean Air, which used to have one of the worst safety records due entirely to the fact that co-pilots would not challenge their peers in the cockpit.

Wikipedia suggests that "Korean Air has a relatively high accident rate...between 1970 and 1999 it wrote off 16 aircraft in serious incidents and accidents, with the loss of 700 lives. [But] since the last crash in 1999, a change in culture at Korean Air has vastly improved safety." Might Toyota need a similar change in culture that takes a Western-style approach to encourage a more challenging tone to peers and management when warranted? Perhaps. I'd rather save lives than save face.

Jason Busch

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