Needless to say, Toyota has managed to capture the complete interest of its customers, and the stakes are extremely high for the company, and potentially its supply chain partners. I refer to the ongoing unintended acceleration problem relative to certain Toyota vehicles.
Existing Toyota owners are justifiably concerned about their safety in driving such vehicles, and very typical of these types of incidents, clear answers are not yet evident. If one attempts to sort through all of the information that may be related to the specific problem at hand, it becomes rather confusing. Initially, this alleged problem was attributed to floor mats that were jamming the accelerator pedal. Now it seems that the root-cause investigation has widened to other potential causes.
My commentary is going to focus on the global supply chain risk implications stemming from this ongoing incident. In my view, what makes this particular situation so difficult is that Toyota is dealing with a problem that seems to have a lack of clarity in terms of root-cause, and significant implications if not managed smartly.
Supply Chain Matters has not been alone in making observations over these past months on perceptions that Toyota may have stretched its resources a bit too thin, and that quality was slipping. In my commentary in early December I observed that a multitude of major product recall incidents have tarnished the company’s previous stellar reputation as a producer of reliable vehicles. The effects of nearly two years of global recession, coupled with some business missteps, has also had a severe impact on Toyota’s sales growth and lack of profitability. Since that time, I, along with other Toyota owners have become increasingly concerned about the reported incidents of unintended sudden acceleration of select Toyota models.
On Monday evening, when I received email alerts related to the announcement that Toyota had suspended all new vehicle U.S. sales of models subject to the ongoing latest recalls, I immediately knew that this event was going to be unprecedented in terms of scope. As I pen this post it seems that the entire Internet and international media are running with all sorts of articles, reports and commentaries. Vehicles subject to recall have now been extended to Europe and China.
The clearest explanations as to the potential causes I’ve found thus far come from an AP story published on msnbc.com. This article notes that Toyota is telling governmental agencies that it thinks that a friction problem in its accelerator pedal mechanisms may be to blame. CTS Corporation of Elkhart Indiana, the supplier that produces the accelerator assemblies for Toyota states in a press release issued on its web site that the friction problem accounts for just a few cases of stuck accelerators. The vendor notes that its products are not implicated by the November 2009 Toyota recall, but further states “that CTS has been actively working with Toyota for awhile to develop a new pedal to meet tougher specifications from Toyota.”
Other experts express other various opinions ranging from complicated electronic sensors to a multiplicity of different factors. Separately, Ford Motor Company has halted production of its full-sized commercial vehicles manufactured by its joint partner in China, Jiangling Motors Co., after discovering that the accelerator pedals it uses came from CTS Corporation. Ford CEO Alan Mullaly noted in an interview on CNBC that while Ford had not noted any incidents of unintended acceleration, it was erring on the side of caution.
CTS supplies similar accelerator parts for Honda, Nissan and Mitsubishi Motors, but it appears that these three other automakers have received no complaints about the operation of accelerator pedals.
All of these issues should have been mitigated long before visibility reached global proportions. Why haven’t Toyota engineers been able to definitively correlate repair, warranty and customer feedback incidents for so any months? Why is CTS actively working on a tougher specification if the accelerator problem is termed limited in nature? Without definitive explanations of root-cause or solid action plans, customers are left with massive doubt and lingering negative perceptions.
In short, Toyota ‘s dilemma spanning dimensions of quality, safety, profitability, supplier loyalty and risk mitigation all rolled together in one very visible looking glass.
If there were any doubts about how important supply chain risk has become, stay tuned to this evolving story involving an icon of quality and dependability.