Executive Briefings

Supply Chain Management's Role in the Crisis at Toyota

The global quality crisis now hammering Toyota has launched a debate about whether the blame should be placed squarely on the company's renowned system of supplier relations. At the very least, supplier executives say Toyota may be ready to reevaluate its method of early involvement and close, long-term partnerships with individual suppliers, as well as single-sourcing, in the wake of plans to modify or replace millions of faulty accelerator pedals around the world.

But the consensus among analysts is that Toyota's rapid expansion is at the core of the problem. They say the company can no longer maintain the same level of quality control and engineering rigor. And they say Toyota has rushed into relationships with suppliers it has not adequately vetted, shifting away from trusted Japanese-based companies in favor of new parts makers located around the world.

Toyota's recent problems certainly underscore how certain elements of its approach, including the cost-saving practice of using common parts and designs across multiple product lines, and reducing the number of suppliers to procure parts in greater scale can backfire when quality-control issues arise.

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The global quality crisis now hammering Toyota has launched a debate about whether the blame should be placed squarely on the company's renowned system of supplier relations. At the very least, supplier executives say Toyota may be ready to reevaluate its method of early involvement and close, long-term partnerships with individual suppliers, as well as single-sourcing, in the wake of plans to modify or replace millions of faulty accelerator pedals around the world.

But the consensus among analysts is that Toyota's rapid expansion is at the core of the problem. They say the company can no longer maintain the same level of quality control and engineering rigor. And they say Toyota has rushed into relationships with suppliers it has not adequately vetted, shifting away from trusted Japanese-based companies in favor of new parts makers located around the world.

Toyota's recent problems certainly underscore how certain elements of its approach, including the cost-saving practice of using common parts and designs across multiple product lines, and reducing the number of suppliers to procure parts in greater scale can backfire when quality-control issues arise.

Read Full Article