International Journal of Engineering and Applied Sciences (IJEAS)
ISSN: 2394-3661, Volume-2, Issue-8, August 2015
15
www.ijeas.org
Abstract— Over the years, the automobile industry has been
continuously bedevilled by the continuous recall of vehicles as a
result of manufacturing defects. The recall of vehicles in the
automobile industry is not limited to any particular
manufacturer. Defective components or parts have always been
attributed for the reason for the recalls, while some have
attributed it to uncontrolled growth and expansion. For
automobile companies to keep up with the growth in the
automobile industry; it must be ready at all times to satisfy its
numerous customers with quality, reliable and affordable
products. Reliability of the product is essential to keep a good
customer base. The competitive nature of the automobile
industry requires that companies comply with international
safety standards in the manufacture of cars while ensuring that
components and parts supplied to production shop floor are
capable (CP), and where defects have been identified, Failure
Mode Effect Analysis and Critical Analysis (FMECA) be
carried out on such components. The aim of this research paper
is to investigate the causes of manufacturing defects in the
automobile industry, a case study of the remote causes and
effects of Toyota’s transmission malfunctions in cars. In other to
achieve this, the number of recalls from various automobile
companies was investigated, with a detailed case study analysis,
with SWOT and PEST analysis on the case study company.
Index Terms— Manufacturing, defects, Toyota,
transmission, recalls, strategy
I. INTRODUCTION
The automobile industry has evolved overtime from the era
of the vehicles that were powered with steam, dubbed
“horseless carriages”, through the era of the high pressure
steam engine, (American Museum of Cars ND) to the mass
production of the Ford Model T in 1909. Since the invention
of the automobile over fifty years ago, it has brought with it
more deaths and enormous sorrow and deprivation to people
(Nader1965). With its perceived problems, the motor car has
been called „the machine that changed the world‟ (Womack
et
al. 1990). The auto industry is a representation of the
technical spectacle by humankind, as one of the fastest
growing sectors in the globe. Its active development stages
are explained by sort of rivalry, life cycle of product and the
demands of consumers.
The automobile industry today is occupied with issues of
product safety, customers request for new styling features and
Bebeteidoh Oyinkepreye Lucky, Department of Marine and
Mechanical Engineering, Niger Delta University, Wilberforce Island,
Bayelsa State, Nigeria
Stephen Takim, Department of Mechanical Engineering, Cross Rivers
State University of Science and Technology, Calabar, Cross Rivers State,
Nigeria
making the automobile more comfortable (Biswajit
et al.
2007). The famous era of the automobile came in the
1950/1960 where companies like the Ford Motors, General
Motors (GM) and Chrysler where holding sway in America.
The transfer of Ford Motors mass production model to
Western Europe and Japan after World Wars I & II, brought
about two important trends, first which was industrial
advancement which led to the growth and production of the
German and Japanese auto markets, and the second important
trend which was as a result of the oil embargo from
1973/1974, which led to the export of fuel efficient vehicles to
the United States of America from Japan (Biswajit
et al.
2007).
The amount of vehicle recalls in the U.S. has increased
substantially over the past twenty years, with over 30 million
cars recalled in 2004 (Yong-Kyun and Hugo 2013). The
Japanese auto maker Toyota Motor‟s place in the
international automotive business where it is seen as a market
leader looks unstable following a run of recalls which began
in late 2009; as a result of floor mats making accelerator
pedals to stick, (Business Monitor International, 2010) haven
long been tagged as the acme and innovation of Japan‟s
industrial strength and manufacturing quality. (Wu
et al,
2010).
With the Toyota Production System (TPS) which prides it
first as a safety related company, secondly as a company that
is bent on the quality of cars that they build and thirdly as a
company that puts much interest on the volume of vehicles
produced, (Monden 2012: xxvi), Toyota is faced with a
massive problems related to quality that has cost lives, and are
also faced with colossal nightmare as a result of bad public
relations which has put the company on edge. (Southworth
2010: 32). This has led to massive recalls, that has come as a
test to the „
‟The Toyota Way‟‟ production philosophy (Joshi
2003).
The automobile environment has become very intricate and
demanding. Several factors can be attributed to the various
recalls that have been made over the years by Toyota, to
correct the manufacturing „
defects‟ that have necessitated the
recalls.
As it is known presently the functionality and features of cars
have become very complex, with the increase in the number of
wires, computer chips used in auto electronics, and sensors; it
has become very bewildering in the testing of quality control
along with problematic uncertainties and interferences (Feng,
2010). Toyota informed the general public that the defects
found in its vehicles that were recalled had caused no accident
and could be repaired in an hour and will cost the company
millions of dollars (Kubota 2012). Before the recalls due to
transmission glitches in 2009, the leadership position that
Toyota has built in quality as reported by Consumer Reports
Manufacturing defects in the automobile industry, a
case study of the remote causes and effects of
Toyota‟s transmission malfunctions in cars
BebeteidohOyinkepreye Lucky, Stephen Takim
Manufacturing defects in the automobile industry, a case study of the remote causes and effects of Toyota’s
transmission malfunctions in cars
16
www.ijeas.org
and J.D Powers hadn‟t been compromised except on the
pages of newspapers and the electronic media (Liker and
Ogden 2011:158).
The high rate of vehicle recall as a result of defects in
manufacturing, has led to both manufacturers and end users
suffering the brunt, in safety and financial terms. In the past,
failure of products were adjudged to local or functional
mistakes in product design, the manufacturing process, or
improper use of materials used in the manufacture of parts
used in vehicle assembly, it is known knowledge that product
quality and safety can have significant repercussions on an
international scale (Marucheck 2007).
Several researches have been done in areas of vehicle recall
over the years (Yong-Kyun and Hugo 2013), (Minhyung
2010) and (Kubota 2012), but little has been done in the area
of finding out the root cause of these defects and if it is as a
result of Toyota‟s manufacturing strategy. The objective of
this study is to determine if defects are as a result of Toyota‟s
manufacturing strategy, to examine the role of suppliers in the
manufacture of cars and to determine the role of Toyota‟s
Just-In-Time manufacturing technique.
This paper is organised as follows, in other sections literature
review, methodology, collection of data described and
discussion, while the final section has the conclusion and
recommendation, with an added appendix which shows the
case study, the swot and pest analysis
A. LITERATURE REVIEW:
The United States alone accounts for 22,000 deaths, about
29.5 million injuries, and over 700 billion dollars in losses as
a result of „unsafe‟ and „defective‟ products statistics has
shown (Xiuli, Baozhi and Hanqing 2012). According to
Europa (1985) a defective product is that which doesn‟t
deliver the necessary safety that an individual is expected to
get from every product he or she purchases, while taking the
following into consideration:
▪ How the product is presented.
▪ How the product is put into use.
▪ How long it takes to circulate the product.
James R. Evans and William M. Lindsay (2005) defines
“
defect”as a distinct abnormal characteristics of a
manufactured item with respect to its quality. While Crosby
(2005) looking into defects defined it to mean when
manufactured products, do not conform to the expected or
accepted standard of quality but does not necessarily mean a
failure of that product. The European Union (EU 2010) in its
assessment of „‟
defects‟‟ categorised it into three, namely
„‟minor defects‟‟,
“major defects” and “
dangerous defects”.
According to VOSA (2013) a vehicle is said to be defective if
a piece of its design or manufactured part is likely to bring
about a major threat of death or injury to the user. The United
States Code for Motor Vehicle Safety (Title 49, Chapter 301)
defines “
defect” as every form of deficiency associated with
the construction, component and performance of automobile
or automobile equipment (Safercar.gov 2010).
Minor Defects (As defined by the EU 2010)
• When there is no meaningful consequence on the
well-being of the passanger and automobile.
• When a reassessment is not essentially vital.
1) Major Defects
• Might affect the safety of the automobile and also put other
road users in danger with more significant non-adherence.
• Making use of the affected automobile will subject to
limitations pending when it passes a technical audit.
2) Dangerous Defects
• Dangerous defects puts road users at instant danger.
• Automobiles under this cartegory should be taken off the
road.
Such vehicles even if repaired has to be properly re-examined,
and must must pass a technical audit before been put back on
the road.
B. Defects in Automobiles Leading to Recall:
The recall of automobiles by manufacturers has been
attributed to one form of
„defect‟ or another; vehicle recalls
can pose a serious problem for manufacturers (Kumar and
Schmitz 2011). This has left both regulatory agencies,
customers and the media al a loss. Manpreet
et al. (2011)
describes product recall as the withdrawal of a product from
the market as it was manufactured and sold to the customer.
Their research went further to state that recalls which are
undertaken as a result of dearth in safety, implies that the
product stands as a possible danger to the user, and companies
make announcement advising customers to discontinue usage
of such products. In an earlier research carried out by Dawar
and Pillutla (2000:215) product
„defects‟ was defined as
product harm tragedy, that are discrete in nature, having good
publicity in which products are found to be
„dangerous‟ and
„defective‟. The FDA U.S defines product recall as the
correction or removal of a marketed product; the FDA feels
are in violation of the laws of the United States of America,
while the National Highway Traffic Safety Administration
covered by an Act of the U.S. Congress (National Traffic and
Motor Vehicle Safety Act 15 U.S.C. 1381 OF 1966) to
enforce safety standards of vehicle manufactured in the U.S.
or imported into the U.S. for use, defines recalls as;
• When a motor vehicle equipment or motor vehicle fails to
act in accordance with the Federal Motor Vehicle Safety
Standard.
• When the vehicle or equipment has
„defect‟ present in it.
According to Nader (1966:41), the manufacture of
automobiles using defective and substandard parts and
components is conventional fact to industry watchers and
workers, with “
defect” ranging from windows falling off its
channel, handles of doors falling off, oil leaking from engines,
wheels of manufactured cars falling out of alignment, coupled
with damaged head-lights. In the result of a product failing, it
must either be fixed or replaced, in any of the cases the
product must be tracked, transported and the manufacturer
must apologize for the error (Genichi Taguchi and Don
Clausing 1990). Young-Kyun and Hugo (2011) in there
research added that when a defect is found out by the
manufacturer or regulatory agency, which in the case of the
United State of America is the National Highway Traffic
Safety Administration,(NHTSA) a decision has to be taken
whether a recall will be issued, and how many units and
models that will be affected. Due to the heterogenous nature
of vehicle recalls due to defects, each defective unit is known
to have a different threat level. In the words of Southworth
(2010) Toyota as an organization or certain people inside
Toyota have wandered away from the guiding principles of
International Journal of Engineering and Applied Sciences (IJEAS)
ISSN: 2394-3661, Volume-2, Issue-8, August 2015
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the company, and the issues affecting Toyota can only be
explained by those people.
1) Recall from other Manufacturers:
Below is a brakedown of the biggest recalls of all time in the
automobile industry as published by Sauter
et al. (2013) in the
Wall Street Journal and Fox Business (2010).
•
General Motors (1971): The recall of over 6.7 million
cars covering the period between 1965 and 1970. The recalls
were as a result of seperated motor mount which permit s the
car engine to elate and cloud thereby making the throttle of the
car to increase momentarily. Company officials initially
denied the existence of any
„defect‟ . Not until a letter from
consumer advocate Ralph Nader to then GM Chairman,
informing him that the motor mount failure leads to vehicle
accelerator been jammed, shifting of gears, and power loss in
the braking and steering system.
•
Volkswagen (1972): In conjunction with NHTSA,
Volkswagen recalled 3.7 million cars as a result of the
loosening of the screws securing car windshield wipers of
model manufactured from 1949 to 1969, which made drivers
to struggle during snowy conditions and rain storms.
•
Ford (1972):As a result ofseat belt webbing braking from
its connection Ford Motors recalled over four million vehicles
for fixing. The resultant result of this
„defect‟ is that driver
will not be able to lock in the shoulder harness as a result of
brakage of the grommet. This recall affected vechile models
manufactured in Fords factory lines in the U.S. from 1970 to
1971.
•
General Motors (1973): In 1973 G.M once again issued
recalls for over three million vehicles, from the Oldsmobile,
Chevrolet, Pointac and Buick lines. The drivers ability to
steer the vehicle became an issue due to stones finding there
way into the engine compartment and getting stuck. General
Motors in correcting this „defect‟ had to construct a gravel
shield over the steering coupling of the car.
•
General Motors (1981): In 1981 over five million
vehicles were recalled by General Motors for its Chevy
Malibus and Buick Regals brands, as a result of damage done
to the car frame and lower rear control from the fracturing of
the bolts, which in turn affects the car suspension system. All
vehicles affected were manufactured from 1970 to the early
1980s. In caseswhere the bolts fracture, the vehicle control
arm will be released from the car, bringing about a loss in
control.
•
Ford Motors (1981): Ford Motors recalled over
twenty-one millionvehicles of itsMercury and Lincoln brands
from 1970 through 1980. The recall was made as a result of
„defective‟ parking gear that could refuse to engage, even
after the driver of the vehicle has engaged the car to park and
the indicator lights showing the car to be in park. As a result of
this „defect‟ over six thousand accidents, one thousand seven
hundred and ten injuries and ninety-eight fatalities, that were
attrubuted directly to transmission slippage.
•
Audi 5000 (1978-1986): Long before Toyota‟s unintended
acceleration surfaced, Audi recalled over three hundred and
eighty-nine thousand,one hundred and two cars manufactured
between 1978 through to 1986 as a result of unintended
acceleration.
•
Honda Motors (1995): As a result of belt buckle failure,
Honda Motors was forced by the National Highway Transport
Safety Administration (NHTSA) to recall over three million
cars in 1995. The recall affected vehicles manufactured from
1986 to 1991 model years, in the Acura line. The seat belts in
the models recalled had the possibility of breakage.
•
Ford Motors (1996): Ford Motors in 1996 recalled over
seven million cars and trucks as a result of
„defective‟ ignition
switch, which resulted in the vehicle short circuiting. The
„defect‟ was capable of causing fire in the vehicle steering
column. Vehicles affected were the Mercury and Lincoln
manufactured from 1988 through 1993. The Los Angeles
Times in its 1996 article reported that most of the fires
affected vehicles that were parked, and had been shut off for
hours.
•
Ford Motors (1999-2009): After issuing a recall in 1999
to address issues relating to short circuiting affecting its speed
control system, the report of the recall noted that it could lead
to under hood fire in three different models manufactured
from 1992 through 1993. In 2005 problems with the speed
control deactivation still led to more recalls, which affected
about five million, two hundred thousand SUVS and pickup
trucks. The recalls were followed by subsequent ones in 2006,
2007 and 2008.
Figure 1: Toyota, Honda and Nissan‟s overseas production
and Recalls (Minhyung 2010).
Figure 1 shows the overseas production and recalls for
Toyota, Nissan and Honda. From 2000 through 2009, there is
a steady increase in the production of cars and also recall from
Toyota Recalls (Minhyung 2010).
2) Recalls from Toyota:
The tragic accident in 2009, in San Diego, California in which
the Saylor family comprising Mark Saylor, his wife, his
daughter and brother-in-law lost their lives, when the Lexus in
which they were travelling careened out of control at over
100mph, and plunged into a ravine after colliding with an
oncoming car, (Liker and Ogden 2011:60-61) has once more
brought Toyota to the public glare with issues of
„defects‟
leading to a recall. There is no gainsaying that Toyota has
brought this upon its own head, while noting that recall is a
common phenomenon in production, the mere fact that
Toyota allows cars it has manufactured to go out with
„defective‟ brakes and accelerators shows that something is
wrong (Pilling, 2010). Liker and Ogden (2011:69) described
as an overreaction the recall Toyota made on the issue of floor
mats leading to unintended acceleration, that it was not the
floor mat in general that caused the death of the Saylor family.
While differing from the position of Liker and Ogden,
Lehane, Fabiani and Guttentag (2012:96) averred that at the
time of the Saylor accident Toyota was well aware of safety
and quality issues with unintended acceleration, citing a 2009
Manufacturing defects in the automobile industry, a case study of the remote causes and effects of Toyota’s
transmission malfunctions in cars
18
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Los Angeles Times report in which the paper investigated
Toyota‟s quality and safety practices in which the under listed
results were gotten;
• The installation of drive by wire systems dating back to
2002 was the beginning of Toyota‟s acceleration issues.
• A total of 1, 200 complaints was received from Toyota
customers for uncontrolled acceleration and unintended
acceleration even after the floor mats were replaced.
• Toyota tried to stop the release of the data gotten from
on-board vehicle recorders that had experienced uncontrolled
acceleration.
• There has been more recorded death from uncontrolled
acceleration involving Toyota car than all other car
manufacturers put together.
This goes contrary to the Toyota‟s Production System,
according to Monden (2012:219) the satisfaction of the
customer and the quality of the manufactured product is and
end in itself in Toyota, while noting that product quality is an
essential part of the TPS. In a related development Liker
(2010) while describing the issues of recall with Toyota put it
in a more subtle way that incidents‟ leading to each recall
made by Toyota is small. In a later research by Cole (2011)
the researcher averred that recalls associated with the quality
and safety of Toyota‟s products was on the increase, that
between February to August 2010, Toyota made thirteen
distinct recalls, which affected both new and old models
having issues relating to fuel leakage and steering control.
According to Lehane, Fabiani and Guttentag (2012:95-101)
the exact issues with Toyota whether technically called a
“defect” or not, the basic fact was that the self-acceleration of
vehicles actually happened, in some cases leading to fatalities.
In the words of the researcher Toyota needed to tackle the
problem as it arose, instead of insisting that there was no
technical defect, rather than trying to construe the main reason
as to why the accidents were happening, in other to stay away
from the feared word “defect”.
Toyota‟s image among its customers clearly suffered with the
recalls, the release of several survey data reports swelled by
media reports have not helped the Toyota brand name (Cole
2011), a negative effect on stock price and adverse media
reports for publicly managed companies can cause a major
crisis for manufacturers (Kumar and Schmitz 2011). In the
year 2007 Toyota recalled over five million cars as a result of
its all-weather floor mats sold in its Lexus ES 350 and Camry
2007 to 2008 models. The all-weather floor mats could shift
forward as the vehicle is in motion, thereby making the
accelerator pedal to become stuck. Toyota issued another
recall in 2009, for it Toyota Sienna 2004 model for carpet
covers that also become stuck to the pedals leading to
unanticipated acceleration. The following year 2005 saw
another 1.1 million cars to the recalled by Toyota (Sauter
et
al. 2013).In the year 2012 Toyota made several recalls
affecting its Lexus RX350,Lexus RX400h, Lexus ES,Lexus
IS, Tacoma, Camry, RAV4, Scion iQ, and Veneza. According
to Stoy (2012) in March 2012 Toyota recalled around
682,000 vehicles, comprising 495,000 of its Tacoma trucks as
a result of
„defective‟ driver‟s side airbags that may possibly
fail to deploy and approximately 187,000 Veneza crossover
wagons and Camry Sedans, as a result of brake light problems
because of glitches during the production process. In June
2012 Toyota again made another recall of nearly 3.8million
vehicle to address issues with floor mat entrapment, this
particular recall affected its Lexus RX350, RX400h, ES, IS,
others are Toyota Camry, Avalon, Tacoma, Tundra and the
Hybrid Prius all 2010 models. Toyota earlier in 2009 had
issued similar recalls for the above vehicles. August 2012 saw
Toyota issue another set of recalls for its RAV4 manufactured
from 2006 to early 2011and the Lexus HS250h sedans 2010
model, as a result of glitches with the rear suspension arm.
Toyota warned its customer to ensure that the nuts on the rear
suspension is properly tightened, to avoid rusting that may in
turn make the arm to separate. Figure 2 shows the pedal
assembly with the
„defect‟ as shown in the circle on the left
hand side. Toyota added a precision reinforced bar to stop the
pedal lock.
Figure 2 Show the recalled pedal and the replacement pedal
(Cars UK 2010)
The recall of vehicles continued in October 2012, with Toyota
announcing the recall in the United States of about 2.47
million vehicles, to repair
„defects‟ with power window
switches that might cause a fire threat. The recalls affected the
Toyota and Scion models manufactured between, 2007-2009,
the Camry Hybrid, RAV4, Yaris, Scion XD, Scion XA,
Highlander, Highlander Hybrid, Corolla and Matrix. The
power window in the driver‟s side might become sticky, in the
event of the driver using a commercial lubricant to remedy the
situation, might lead to fire. Toyota has to provide special
grease to its dealers to address this particular defect. By
November 2012, Toyota recalled over 670,000 in the United
States for its popular hybrid car the Prius, to fix
„defects‟ with
water pumps and steering. Of the 670,000 recalled, about
350,000 were for defective electric water pumps, the work of
the pump was to circulate engine coolant, through the
drivetrain component of the car, which it was not doing
properly, which in turn stops the hybrid powertrain when the
car is in motion. The steering defect had to do with the splines
linking the steering shaft to the steering gear box which could
bend sooner or later with vigorous steering. This recall also
affected over 2.77 million globally. In the early days of the
month of November, 2012 Toyota recalled almost 11,200
Scion IQ vehicles to examine the fore passenger
occupant-classification system (OCS) weight sensor cables
and fix brand-new protective covers over the sensors. In a
press release issues by Toyota, it informed its customers that
there was an object close to the cables under the fore
International Journal of Engineering and Applied Sciences (IJEAS)
ISSN: 2394-3661, Volume-2, Issue-8, August 2015
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passenger seat which could come in contact with the cables
and cause harm overtime. Dependent on how damaged the
cable are , the vehicle airbags may not deploy as intended or
the seat belt and airbags pretensioner may be wrongly
triggered (Stoy, 2012).
According to a Bloomberg News Report of 5/06/2013,
Toyota is set to recall about a quarter of a million of its Prius
and Lexus Hybrid model built in the year 2009, of which
91,000 are in the North America. Both model are been
recalled due to faulty breaking system (Bloomberg
BusinessWeek, 2013). In early April 2013, CNN Money
reported that Toyota was recalling about 1.7 million cars
around the globe, as a result of airbag malfunctions. The
recalled cars cut across the popular Corolla, Tundra and
Matrix models. In this report Toyota attributed the fault to the
supplier of the airbags Takata Corp., a Japanese firm that
supplies part to Toyota (CNN Money 2013). With over 6
million cars recalled in 2014 by Toyota as a result of faulty
airbags manufactured by Takata, Toyota is very much
enmeshed in defects (Edmunds.com, 2015)
C. Causes of Defects
During manufacturing, quality „defects‟ will have several
roots (Timmings 2004: 210-214) and these roots are listed
below;
• Operator errors
• Process condition change
• Composition proportion change
• Material distribution
D. Toyota’s Company Strategy:
“Probably at no point in the history of man has there been so
much discussion about the rights and wrongs of the policy
makers… [Citizens have] begun to suspect that the people
who make the major decisions that affect our lives don‟t know
what they are doing…….They don't know what they are doing
simply because they have no adequate basis to judge the
effects of their decisions. To many it must seem that we live in
an age of moronic decision making”……………………….
Churchman (1968).
1) Strategy:
The task of growing or rebuilding a clear strategy is the
primary duty of an organization, which depends on the
leadership. With a good number of people against the making
of trade-offs and choices in an organization, a clear
knowledgeable outline to guide strategy is an indispensable
counter weight. It is necessary to have strong leaders who are
ready to make choices (Porter 1996).
“The threats to strategy are seen to emanate from outside the
company, because of changes in technology or the behaviour
of competitors. Although external changes can be the
problem, the greater threat to strategy often comes from
within. A sound strategy is undermined by a misguided view
of competition, by organizational failures, and especially by
the desire to grow” ……. Porter, 1996
Strategy can be defined as „a pattern in a stream of decisions‟
(Mintzberg 1972). According to Grant (2010:201) and Grant
(2013: 210) the primary reason companies come up with
strategies is to bring about a position of competitive
advantage over its rivals, which boils down to achieving
success. While Russell and Taylor (2006:33-37) describe
strategy as how a firm accomplishes its mission. Strategy
provides unity in the firm, consistency in decision making,
and keeps the firm focused and moving in the right direction.
In achieving an effective strategy, a firm has to do diverse
activities, different from what its competitors do, or by
performing it better than its competitors. According to Hill
(2005:31) Strategy represents the aspects of the direction a
company is taking, what a company wants to do and how it
can be implemented. The direction has to do with the
approaches the company will employ to help it select the
markets it will be competing in now and in the future, while
understanding the competitive drivers in its chosen market,
and being able to access how it can influence its market share
compared with that of its competitors. The implementation
has to do with how the company can equal or improve on the
competitive drivers that are involved, by making as priority
where and how its time and money are spent. Karnani (2006)
in a working paper titled Essence of Strategy: Controversial
Choices, defined strategy as set of unified choices: the
geographical area in which the company will be competing,
the source of its competitive advantage, the significant plan it
intends to offers to its customers, and the organizational
design it requires in executing the strategy. Slack, Chambers
and Johnston (2010:62) in there book Operations
Management defines strategy as the complete outline of the
actions and decisions, that impacts on the long-term route the
business in going to take. Strategy also includes the following:
• The setting of far-reaching objectives that guides the firm
in the direction of its complete goal
• The shaping of the direction which will enable the firm to
achieve the set goal
• Avoiding short-term objectives and stressing for long-term
• Doing away with individual activities, while dealing with
the complete picture
• Avoiding any distractions and confusions in the day-to-day
activities and running of the firm
In their paper in the Harvard Business Review, Eisenhardt and
Sull (2001) described strategy as a strategically
importantactivity, that is guided by a handful of modestrules
which are exceptionaland different. The difference does no
evolve from large core competence or tightly linked activities,
as with accepted strategies. It arises from
cultivatinguncomplicatedrules and staying focused on key
strategic processes. With the emmergence of a pattern from
the strategic process, the outcome can be a long term
competitive advantage to the company, and the length of time
the advantage will last can not be predicted by anyone. In an
earlier research by Porter (1996) while differing from the
views of Hill(2005:31) and Russell and Taylor (2006:33-37)
avarred that it is not all business decisions taken by a firm that
is strategic. Porter (1996) explaining further said that a
decision can only be strategic if it involves a firm wilfully
doing „
contrarily‟ from what its rivals are doing and if the
result of that disparity puts the firm in a maintainable
advantage.
In 1970 through 1980 the Japanese started a worldwide
revolution, initiating practices such as continous
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improvement and total quality management. This made
Japanes manufacturers have quality advantage and reduced
manufacturing cost for many years.In all the Japanese firms
rarely developed anyclear-cut strategy. Most Japenese firm
emulate and imitate one another, where rivals offer all product
varities of their competitors, and try to match each others
plant configurations. The gap of operational effectiveness
between the Japanese manufacturers and their western
counterparts is presently narrowing, the Japanese firms are
progressively been caught in a trap of their own making. For
the Japanese to escape the mutually negative conflict now
damaging theiraccomplishments, they have to learn strategy
(Porter 1996)
2) Types of Sytategy:
Figure 3 Types of Strategies (Mintzberg and Waters 1985)
Mintzberg and Waters (1985) in there research came up with
the different types of strategies namely;
• Intended Strategy
• Delibrate Strategy
• Realized Strategy
• Unrealized Strategy
• Emergent Strategy
As shown in figure 3, Mintzberg and Maters (1985) describes
emergent strategy as that which instills a lot of order, there
must be consistency in action over time. Once there is no
consistency it basically means there was no strategy or could
be simply called an unrealized strategy. While the intended
strategy is defined as the exact goals in an
organization,expressed in atangible level of facts, where there
should be nomisgivings, about what was anticipated before
the action was taken. Secondly, for the reason that
organization can be termed as a group action, in other to
despel any percieved distrust that the aims were
organizational, they must have been common to all actors, and
thirdly these collective intentions must have been realized as
intended, which means there must not have been any
interferance from any external force.
3) Toyota‟s Strategy:
Toyota‟s long-term vision in 1950 was for 1 out of every 4
persons in the world to be driving a Toyota. In which case
Toyota‟s goal in 1950 was to have a 25% global market share,
at the particular time the company was putting the Toyota
Production System and the Toyota Way in place. The
company‟s goal of achieving a 25 percent global market share
then, was more daring and did not put her into any problem, it
is then difficult to believe that over 50 years later that a
strategy to grow the company market share by 15% will derail
her (Liker and Ogden 2011).In 1970 Toyota had just a 2%
share of the United States light trucks and car market. In 1980
Toyota‟s market share inched to 3%, in 1990 it rose to 8%, by
the year 2000 it has risen to 9% and got into double digits by
2006 when it rose to 13%, while the same year saw the fall of
General Motors market share in the United States down to
26% (Stewart and Raman, 2007). According to Cole (2011)
the root causse of Toyota‟s problems with quality, can be
traced back to 1995 when then President Hiroshi Okuda set a
company global growth strategy target, which included
moving Toyota‟s world wide market share to 10%. This was
later morphed into a new target of 15% by 2010.
Toyota in pursuing growth intended to overtake General
Motors as the No. 1 automobile manufacturer in the world.
Giving his testimony in the U.S. Congress oversight
committee on the 24th of February, 2010, Toyota‟s CEO Mr.
Toyoda admitted that in the pursuit of growth his company
over stretched the Toyota Production System (TPS) to its
elastic limit and in so doing became „confused‟ about some of
its guiding principles (safety, quality and volume ), which
made it great; and in so doing forgot its focus of satisfying its
customers, its ability to stop think and make improvements
(Hutchins, 2010). However in a later research by Shim and
Steers (2012) both researchers avarred that in Toyota‟s quest
to expand rapidly in the global automobile marketplace, it had
to rely on electronics that are newly developed and in most
cases stayed uncertified. Further more with Toyota‟s
management feeling comfortable with the „
Toyota Way‟ , this
made both executives and managers apparently feeling that
everything was running smoothly. In a more recent research
Fan, Geddes and Flory (2013) attributed Toyota‟s quality
issues and recalls which began in 2003, to its rapid growth
which put strain on its design, manufacturing and engineering
processes.
The rapid growth of Toyota placed so much stress on
technology and management system, particularly over long
distances and across national cultures. As professor Jeffery
Kingston of Temple University, Japan put it “Toyota is so
used to dealing with successes that when they have a problem,
they‟re not sure how to respond”, and in the words of
Professor Kenneth Grossberg of Waseda University, he added
that “Toyota‟s management cannot turn on a dime. They have
so much invested in doing things the Toyota Way (Shim and
Steers 2012). According to Andrews
et al. (2011) Toyota‟s
effort to become bestselling automobile manufacturer in the
world, might have been one of the factors that damaged some
of its fundamental values and somewhat liable for the crisis
Toyota found itself. In other to be very a dominant player in
the auto market, Toyota made its presence felt in all
geographic fronts, while also diversifying in its product
development.
Liker and Ogden ( 2011) while not agreeing with the position
taken by Hutchins(2010), Cole (2011) attributed the root
cause of Toyota‟s problems to customer satisfaction rather
than its target to grow it market share globally by 15%. In the
words of the researchers, what persons who support the
“market-share-centric” views fail to realise is that Toyota‟s
quest to grow its global market share fell out of its customer
satisfaction goal Vision 2010;„‟To be the most admired
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automobile firm in the globe” Toyota knowing that the vision
is difficult to actualise, turned it to definite targets, which
gave birth to the 15% growth strategy.
4) Manufacturing Strategy:
The manufacturing strategy of a firm can be viewed from
several vantage points. It is defined as the idea for
repositioning an organization from its present position to
where it hopes to be. In determining a good manufacturing
strategy, organizations are faced with a wide range of choices.
In the hierarchy of industrial, corporate, functional and
business strategies, manufacturing strategy can best be
described as very functional. Manufacturing strategy can
further be described as how an organization makes use of its
activities in achieving its business goals. The manufacturing
strategy a firm adopts is dependent on the geographic
location. It is implemented in a sequence, that begins with the
formulation of strategy, which is at times described as
„intended strategy‟, which is what a company intends doing. It
should be of note that what is formulated is not what is
actually done, so „intended strategy‟ is followed closely by
„deliberate strategy‟ which is the action taken by an
organization to achieve its intended strategy. This is
accompanied by „Emergent strategy‟ which are actions not
originally intended, but executed as a result of changing
situations. The next in line is the „realised strategy‟ which is
the outcome that occurs, while „unrealised strategy‟ is the
expected outcomes that do not materialize (Miltenburg 2009).
Manufacturing strategy is one of the important functions that
support the successes of the overall objectives of an
organization. Manufacturing strategy is an array of
production guidelines designed to increase performance
along with trade-offs, among success criteria to meet the
manufacturing task determined by corporate strategy
(Ghazinoory, Khotbesara and Fardoei 2011).
Miltenburg (2005) averred that in formulating a
manufacturing strategy an organization must have to do the
following:
• Customer requirement must be taken into account
• Competitors must be taken into account
• Manufacturing capabilities must be taken into account
• Consideration of all options available to manufacturing
• List the yields that manufacturing will deliver and indicate,
in detail, the most favourable set of changes needed to achieve
them
Figure 4 Manufacturing policy determination process
(Skinner 1969)
KEY:
1. What other manufacturers are doing.
2. What we have in stock or can acquire to compete with.
3. How can we compete?
4. What has to be accomplished by us in other to compete?
5. Economic hindrances and openings common to the
particular industry.
6. Hindrances and openings common to the technology.
7. Our evaluated resources.
8. How we should set up ourselves to match resources,
economics, and technology to meet the task required by our
competitive strategy.
9. The implementation requirements of our manufacturing
policies.
10. Basic systems in manufacturing.
11. Controls of cost, quality, flows, inventory and time.
12. Selection of operations or ingredients critical to success.
13. How we are performing.
14. Changes in what we have, effects on competitive
situations, and review of strategy.
15. Analysis and review of manufacturing operations and
policies.
Various connotations of manufacturing strategy have been
given by several authors and researchers. The policy
determination model of Skinner (1969) encourages company
executives to see the determination of manufacturing policy
as an orderly sequence of steps as shown in figure 4; it shows
that manufacturing policy must originate from corporate
strategy, and the process of determining the manufacturing
policy is the process by which top management can manage
production.
5) Toyota‟s Manufacturing Strategy:
Toyota set a target to achieve 15% market share, which will
make it the biggest automobile manufacturer in the world
(Liker 2010). According to Fan, Geddes and Flory (2011)
The reputation of Toyota brought about many benefits
including market share, financial strength and customer
loyality, as a result of its growth. But it put strain on
engineering, design and production leading to several quality
issues, which began in 2003. In his research on Toyota
recalls, Cole (2011) traced the reasons for the quality
problems to firstly outgrowth of Toyota‟s executives
ambitions for rapid growth and secondly the increased
complexity of the company‟s products. The strategic focus on
growth wraped the “order of Toyota‟s traditional priorities”,
in which case growth has taken over Toyota‟s traditional
focus on quality. Historically Toyota had been known to be a
conservative company, but its aggressive growth targets were
out of character.
The expansion of Toyota gave its managemnt little or no
opportunity for modifying its systems and practices to
accommodate strong growth. Organizational motivations,
became cockeyed towards growth. Without policies that
guard the traditional focus on quality, important decisions
affecting new product development, production and supplier
management became prejudiced in favour of delivery ,
cost-cutting, meeting sales and profit target. Cumulatively
they had negetive impacts on the product quality. With the
Manufacturing defects in the automobile industry, a case study of the remote causes and effects of Toyota’s
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growth policy in place accelerated design cycle strained the
production and development system of Toyota, human
resources was pushed to the limit, thereby creating the needed
condition for quality failures. The supplier management
system and its overall performance was not left out of the
growth debacle. About 70% of the value added in the
manufacture of vehicles come from suppliers, so the
consequences of complexity and growth was felt althrough
the company supply chain. Design works had to be deligated
to contractor engineers outside Toyota for as much as 30% of
its developmental works, and bring in new suppliers because
existing ones could not keep up with the demand. Facing
internal man power shortages both in Japan and overseas
plants, Toyota had to hire contract engineers in other to boost
engineering capacity. This new policy challanged the
company‟s established way of doing things.
II. METHODOLOGY:
This research paper will be limited to Automobile
manufacturing in the United States of America, concentrating
on Toyota Motor Corporation, an automobile company
specialised in the manufacture of cars, trucks and buses. In its
manufacturing range there are cars like the Camry, Corona,
Corolla, Lexus, Land Cruiser, Sequoia, Rav 4, Hiace Bus,
Coaster Bus, Tundra and Tacoma Trucks. Data for this
research was obtained from interviews conducted, transcripts
of Toyota executives appearing before the United States
Congress and Senate, the BBC 2 video “The Recall” and case
study methodology, as our research methodology. Case
studies are regularly regarded as “qualitative by definition”
but quantitative can be used, the hypothesis usually emerges
from the study, though a careful theoretical framework should
be at hand at the commencement (Swetnam2004:38).
This research will contribute substantially to automobile
suppliers, manufacturers and regulatory agencies in the
United States of America by providing a detailed analysis on
the causes of defects and to recommend ways by wish
companies can ensure that their products are within the
process control limit. The research is also valuable for further
study.
In carrying out this research, the researcher is quite aware of
ethical issues involved. According to Orb, Eisenhauer and
Wynanden (2001) ethical issues are existing in every type of
research been undertaken, the procedure of the research
generates tension between the research aims in making
generalization for the benefit of the public, and the
participants rights to privacy. While Fisher
et al.
(2004:54-55) in describing why ethical consideration is
needed in research averred that researchers should avoid
treating people in an unfair manner and information gathered
in research should not be used to harm people, while noting
that would be researchers should not expect favours from
companies or individuals, to also remember issues of
confidentiality and anonymity. „
III. CONCLUSION:
The literature review and the case study of this research
project, confirms that manufacturing defects abound in the
automobile industry. Even with the huge sums of monies
automobile firms put into research and development annually.
The external business environment of Toyota, which includes
P.E.S.T (political, economic, socio-cultural and
technological) has shown that there is so much external
influence on the organization. These external factors have
tremendously affected the organizational culture (Toyota
Way), its response to customers, acceptance of responsibility,
and its inability to come to terms with the fact that Toyota is
now a global company, and no longer the Japanese company
started by the Toyoda family.
The internal factors of the firm such as company strategy,
leadership style, company culture, mode of communication,
goals and policies, commitment of management, level of
response by top management to issues and employee training
to mention a few, have also been identified by the researcher
as having a significant bearing on the failure or success of
Toyota.
Internal and external factors affect automobile companies
such as Toyota and as such have to be properly managed, in
other to reduce all issue leading to recall of automobiles.
When these issues leading to defects are properly managed,
monies will be saved, organizational rating and image will
improve and sales of manufactured products will also
improve significantly.
1) Issues of Manufacturing Defects in the Automobile
Industry:
Manufacturing defects come in different forms during
production and this has led to several firms recalling products
the world over. This same issue of defect is also high in the
automobile industry, with auto companies recalling millions
of cars annually to correct one form of defect or the other.
Defects in automobiles have led to several deaths in the U.S,
while auto manufacturers have also spent lots of money to
manage issues arising from manufacturing defects.
Causes of these manufacturing defects could be ascribed to
human or operator errors (parallax error, bending, hertz
deformation, and Abbe‟s principal), change in production
conditions, composition proportion change, material
distribution, and environmental factors.
Furthermore the researcher observed that an operator error
plays a major role in the production of defective materials.
While Toyota and other automobile companies will place the
reason for defects at the door steps of their suppliers, these
components and parts are manufactured by equipment‟s that
are managed and controlled by humans.
In the course of undertaking this research, the researcher was
able to identify other issues leading to defects in
manufacturing, from the semi structured and unstructured
interviews conducted. While all the interviewees agreed that
the JIT technique was good for manufacturing, they also
agreed that Toyota has kept a very good relationship with its
suppliers. They all supported the fact that the JIT technique
puts much pressure on the suppliers of Toyota (first tier
suppliers and lower tier suppliers). This same pressure is
being felt by the first tiers supplier‟s and flows down the
supply chain to other lower suppliers who provide
components and parts for the first tier suppliers.
It was also discovered in the course of the research that the
growth of Toyota also contributed to parts and components
being defective. Toyota‟s supply chain was stretched to the
limit; this was as a result of new plants been built all over the
world to meet up with its growth strategy.
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Through the increase in the number of production plants, the
traditional supplier could not meet up with supplies; which led
to a particular part being used for several model of cars,
thereby increasing the number of cars to be recalled in the
event of defects.
2) The Role of Toyota‟s Manufacturing Strategy
Toyota‟s drive for growth could best be described as the
corporate strategy of the firm at the time it was implemented.
While growth of every firm is necessary, Toyota left its core
principles behind while in the pursuit of growth.
While the then president of Toyota, Akio Toyoda identified
Toyota‟s core principles as first safety, second quality and
third volume. However, these principles became confused.
In pursuit of growth, volume became the number one priority,
while safety and quality were pushed behind. While the
researcher acknowledges the fact that building a clear strategy
is a responsibility of leadership of the organization as attested
to by Mintzberg (1972), Grant (2010) and Hill (2005),
adequate preparation was not made to cater for the expected
growth, which ended up over stretching the TPS and went
contrary to the Toyota Way.
The growth strategy put much strain on Toyota‟s design
system and its manufacturing and engineering process as
attested to by Andrews
et al.(2011), Shims and Steers (2012),
Fan, Geddes and Flory (2013). While Liker and Ogden (2011)
had a contrary view, both researchers attributed Toyota‟s
problems to customer satisfaction. This particular view of
Liker and Ogden (2011) still runs contrary to principle 1 and 5
of the Toyota Way. The researcheragrees with the
contributions of otherresearcherswho believe Toyota‟s drive
for growth put much strain on the company, thereby leading to
its high rate of recalls as a result of manufacturing defects.
The researcher was able to deduce that when strategy is
formulated by a firm, proper measures must be put in place for
it to realize this strategy. Manufacturing strategy is an element
of corporate strategy, and an important function that supports
the successes of the overall objectives of the organization.
While much was known about Toyota‟s strategy for growth,
little is known about the manufacturing strategy framework
that was adopted by Toyota.
While the researcher acknowledges the top-down method in
the development of manufacturing strategy, in which the
manufacturing task is dedicated to carrying out detailed
manufacturing jobs; which is derived from marketing strategy
and corporate strategy, little could be said of Toyota‟s
manufacturing strategy.
3) Role of Suppliers in the Manufacture of Cars and
Toyota‟s JIT Technique
Suppliers play a major role in the manufacture of cars, from
tier one, to other tiers in the automobile industry. While the
JIT technique has helped Toyota to get its products to the
consumer when needed and to reduce high inventory;
interviewee‟s described the technique as that which puts much
pressure on the suppliers.
From the supply of minor components and parts to that of
major components, Toyota depends on a particular supplier or
might depend on a narrow number of suppliers, which is
always difficult to replace. While the researcher
acknowledges the relationship Toyota has with its suppliers
from design of parts, right through to the manufacturing, the
same cannot be said of the relationship when issues of defect
arise.
Toyota should endeavour to stand by its suppliers when
manufacturing defects arise from the manufacture of parts
supplied to it.
Case Study Findings:
•
Leadership – The drive for growth by Toyota was a
corporate decision. From the model of Skinner (1969) and
Hill (2005), the manufacturing strategy function stems from
decisions taken by the corporate executive (corporate
strategy), which should be guided through from its intended
stage (intended strategy) to its realized stage (realized
strategy) as described by Mintzberg and Water (1985).
Although Toyota realized the corporate strategy which was to
achieve a higher market share, in doing so the manufacturing
strategy function which handles productivity, service, and
quality was not properly taken care of; which resulted in the
quality issues leading to manufacturing defects. Some will
argue that the defects from Toyota did not arise from the
production shop floor, which the researcher also
acknowledges; it is Toyota‟s responsibility to also carry out
rigorous statistical process control checks on all components
supplied to it.
•
Philosophy - Toyota is known for its TPS and Toyota
Way. These are philosophies that have seen the company
grow to the top of the auto industry and also allowing it to
make huge profits. Toyota while growing its market share
kept its so much cherished philosophy aside. It left its
traditional first safety, second quality and third volume,
behind it. This was attested to by its CEO Akio Toyoda.
Toyota also while growing its market share is believed to have
stuck to its TPS (Lean), which also enabled it to reduce
inventory, and waste during production; but in turn paid out
huge sums of monies running into billions in the maintenance
of defective cars, and payment to lawyers and court
judgement against it. This is also a huge waste, which TPS is
supposed to handle. The Toyota Way principle five says “Get
quality right the first time, by building the culture of stopping
to fix problems”. Issuing recalls as a result of manufacturing
defects, shows Toyota did not get it right the first time.
•
Sources of defects – The sources of defects from can best
be ascribed to operator errors, process condition changes,
composition propotion changes and material distribution.
•
Government – In the course of the research the author
observed that Toyota was singled out for the sessions with the
U.S. Congress and Senate. NHTSA as a regulatory agency
also had so much pressure put on Toyota, while the issue of
recall is known as an industry problem.
IV. RECOMMENDATION:
After a detailed and extensive research which analysed
critically several literatures on the subject manufacturing
defects in the automobile industry, a case study of the causes
and effects of Toyota‟s transmission malfunctions in cars; we
recommend the following;
•
Philosophy- Toyota‟s lean philosophy and TPS has been a
great system been applied by several companies the world
over. Getting quality right the first time will reduce the
amount of monies spent on handling issues of recalls. Toyota
should endeavour to stick to its Toyota Way and lean
philosophy, which enables it to eliminate all forms of waste;
by doing this Toyota and its suppliers has to forge a better
working relationship. Sticking to its lean philosophy should
Manufacturing defects in the automobile industry, a case study of the remote causes and effects of Toyota’s
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not be limited to its production plants alone; it should cut
across the whole supply chain, as shown in figure 9
Figure 9 Toyota‟s Supply Chain (Authors, 2015)
•
Handling the Causes of Defects 1-Toyota U.S. and its
suppliers should endeavour to exhaustively make good use of
FMEA (Failure Mode Effect Analysis), and to ensure that
measurement uncertainty errors are reduced to the barest
minimum. Measurements should be taken repeatedly and
averages gotten and calculated. Measuring instruments have
to be calibrated carefully. The researcher will like to note that
no matter how good an operator is, there will always be error;
these errors known as measurement uncertainty errors could
be reduced using Gauge R&R.
Table 3 A typical FMEA table(Lewis 2013)
Failure
Mode
Specific Cause
Effect of
Failure
Likeliness
of Failure
Detectabilit
y of Failure
Severity of
Failure
Risk Priority
· Likeliness of Failure: 1-10 with 10 representing most likely
· Detectability of Failure: 1-10 with 10 representing most difficult
· Severity of Failure: 1-10 with 10 representing most severe
· Risk Priority: (Likeliness of failure) x (Detectability of Failure) x (Severity of Failure)
Benefits of FMEA- Failure Mode Effect Analysis comes
with several benefits, which are listed below (Lewis 2013)
1. FMEA is a method that simplifies process improvement
2. It identifies and eliminates every concern at the early stage
of the development of a design or process.
3. Increases external and internal customer contentment
4. FMEA specifically lays emphases on prevention
5. This system may be necessary to meet an applicable QSS
(Quality System Standard)
•
Handling the Causes of Defects 2-Another method the
researcher would like to recommend to Toyota and its
suppliers is to ensure that the Process Capability (CP) is
rigorously done and to ensure that all processes are stable.
•
USAGE OF ISO 26262 Functional Safety Standard-
The researcher would like to recommend the usage of ISO
26262 functional safety standard due to the increasing
complexity presently in the automobile industry. This
standard offers guidelines and recommendations all through
the development phase of the product (N.I 2013)
Major Components of ISO 26262-ISO 26262 makes use of
systematic steps for the management of functional safety and
the regulation of product development process, from
conception to decommissioning (N.I 2013)
1. Provision of safety lifecycle for automobiles with complete
support which tailors the important activities at the life cycle
stages
2. The provision of a specific risk based automobile method
for determining the classes of risk
3. Makes use of Automotive Safety Integrity Level (ASIL) for
the specification of the safety requirements necessary for the
achievement of any residual risk
4. ISO 26262 makes provision for the confirmation and
validation procedures to guarantee an adequate and
satisfactory level of safety to be achieved.
Implementation of ISO 26262 tolerates using a basic standard
in measuring the safety of any system during operation. It
addition it make available the referencing of particular
components or parts of a structure because of a basic
expressions delivered by ISO 26262. This standard provides a
way in which the safety of any system is measured (N.I 2013)
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