Toyota’s Troubles

Recent recalls ding automaker’s image—or do they?

It has announced two significant recalls in the last few months. It has taken away bonus pay for many of its managers and union workers. Before late last year, it had operated in the red for three straight quarters.

Are we seeing a kink in Toyota Motor Corp.’s armor?

"Clearly, Toyota has its back up against the wall like it never has before," said Sean Kane of Safety Research and Strategies, a consulting firm in Rehoboth, MA.1

In late November, the automaker said it had to replace accelerator pedals on about 4.3 million vehicles in the United States—its largest U.S. recall ever. The company said the pedals could get stuck in the floor mats, while some contended the accelerator problem was connected to other issues. The models included in the recall were the Toyota Camry, the top-selling passenger car in America, the Toyota Prius, the best-selling gas-electric hybrid, and the luxury Lexus ES350.2

What this recall will cost Toyota in dollars and cents is unknown. A Toyota spokesman said the amount would be covered by what the automaker sets aside for such cases.3 He also said Toyota believes the problem was limited to the United States because the floor mats in question were not sold elsewhere.

Also late last year, Toyota had to recall 110,000 Tundra trucks from 2000-2003 model years because it feared excessive rust on vehicle frames could cause spare tires to fall onto roads and create hazards for other vehicles.4 In addition, federal regulators were investigating complaints of engines stalling on some Toyota Corolla and Matrix models.5

The company isn’t saying whether the recalls will have a large effect on company earnings. Sales in the United States fell about 25% last year, the same as the overall market.

Coinciding with the recalls, however, are slashed bonuses, which are usually tied to company performance. About 8,700 managers in Japan saw their winter bonus payments cut by 20%, and union workers had 18% less in bonus money compared with 2008. Toyota’s top executives and board also surrendered their bonus pay.6

None of this news—the recalls and bonus cuts—would seem to help Toyota’s long-standing image as an innovative, reliable, stable, quality-driven industry leader.

"Often, when people buy a Toyota, they are buying it because it’s trouble-free," said Jake Fisher, a senior engineer at Consumer Reports magazine. "If all of the sudden there’s this perception that Toyota isn’t flawless, you may see people think twice."7

Not so fast, according to a quality survey released late last year. Toyota ranked No. 1 in perceived quality by Automotive Lease Guide (ALG), a provider of data and consulting services to the automotive industry. Honda came in second. Scoring is based on surveys of 3,000 to 4,000 U.S. consumers.8

"Toyota and Honda consistently lead the industry when it comes to perceived quality," said James Clark, ALG’s general manager. "These companies have maintained a long history of durable power trains, which resonates with consumers and often leads them to rate other characteristics like safety and design positively as well."9

Following the pedal recall, Toyota reaffirmed that safety is "our utmost concern. Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified."10


  1. "Another Dent in Toyota’s Reputation," International Herald Tribune, Dec. 2, 2009, www.asq.org/qualitynews/qnt/execute/displaySetup?newsID=7593.
  2. "Toyota Formally Announces Acceleration Fix," Associated Press Financial Wire, Nov. 30, 2009.
  3. "Another Dent in Toyota’s Reputation," see reference 1.
  4. "Toyota to Recall 110,000 Tundras Due to Rust," Associated Press Financial Wire, Nov. 25, 2009.
  5. "Latest Toyota setback: Claims engines stall," Associated Press, Dec. 7, 2009.
  6. "Toyota Slashes Bonuses for Managers," Associated Press Financial Wire, Nov. 30, 2009.
  7. "Another Dent in Toyota’s Reputation," see reference 1.
  8. "Toyota, Honda Lead in Perceived Quality," Professional Services Close-Up, Nov. 20, 2009.
  9. Ibid.
  10. "Toyota Announces Details of Remedy to Address Potential Accelerator Pedal Entrapment in the U.S.," press release, Nov. 25, 2009, www2.toyota.co.jp/en/news/09/11/1125.html.

Mark Edmund, associate editor


Ford Fusion Named Car of the Year

The 2010 Ford Fusion was named Motor Trend’s car of the year for 2009, beating its competitors in six new categories: design achievement, engineering excellence, intended function, efficiency, safety and value.

Despite a 25% drop in overall car sales this year, Fusion sales were up 15% in the first 10 months of 2009. The vehicle is also the No. 1-selling domestic car, as it set a sales record in April 2009, the first full month of sales for the redesigned 2010 model and for the new Fusion Hybrid. Overall sales of the Fusion were at an all-time high for 2009.

The Fusion—now among America’s top 10-selling vehicles—is the country’s most fuel-efficient mid-size sedan among hybrid and conventional gasoline models. It gets 34 miles per gallon on the highway when equipped with a four-cylinder engine and six-speed automatic transmission. The gas-electric hybrid version gets 41 miles per gallon in the city.

It was the first time a Ford car had won since 2003, when the Ford Thunderbird got the honor. Ford’s 2009 F-150 was Motor Trend’s truck of the year last fall. The Fusion’s first model year was 2006.



Report: Government Agencies Wasted $98 Billion in ‘09

Government agencies wasted more than $98 billion in taxpayer dollars last year, $26 billion more than the dollars they wasted in 2008, according to a recent government financial report.

Agencies wasted the most dollars on questionable claims for tax credits and Medicare benefits. Questionable Medicare payments represented roughly $36 billion of the wasted dollars.

The jump was due, in part, to changes in how improper spending was defined and an increase in overall spending as a result of the recession. The $98 billion figure is likely to increase this year, the report said, because the Health and Human Services Department will impose new, stricter documentation requirements.

President Barack Obama signed an executive order late last year to instruct the Office of Management and Budget to target government programs that waste money. The government "must make every effort to confirm that the right recipient is receiving the right payment for the right reasons at the right time," Obama wrote in Executive Order 13519, released Nov. 23.

The order is intended to make these efforts a priority for officials in charge of major federal programs. It also mandates that each agency have a website for the public to access and report information on improper payments.



Quality Professionals Offer Ways to Cut Healthcare Inefficiency

Solving payment problems and restructuring malpractice suits are two areas that would help eliminate the massive waste within the U.S. healthcare system, according to a recent ASQ survey of healthcare quality professionals.

The 120 healthcare quality experts surveyed said they would first target billing, coding and insurance claims to reform the current healthcare system. Quality methods could help reduce the overload of billing and insurance paperwork that adds expense and causes frustration and delays for patients and doctors.

The experts surveyed also agreed that tort reform and limits to liability claims against doctors must be established to decrease the cost of liability insurance paid by physicians.

The group of experts recommended other solutions to fight the waste, including:

  • Mandate a universal system of electronic healthcare recordkeeping with barcoding to provide real-time, nationwide access to patient records.
  • Implement the Baldrige criteria and ISO 9001 in provider organizations.
  • Create a free-market competition for insurance.
  • Standardize preventive care and annual medical check-ups and make them more accessible and affordable.


To Cut Costs, Executives Favor Benchmarking

Benchmarking has become the most popular tool for executives exploring ways to cut costs and change course in today’s economic downturn, a recent global survey found.

Bain & Co., a management consulting firm, surveyed 1,430 international executives on what tools they were using to manage their organizations. Most of these decisions were being driven by short-term, cost-cutting goals.

"Seven out of 10 executives surveyed say they are worried about how they’ll meet their growth targets in 2009, and six out of 10 are planning for a downturn that they expect will last at least until early 2010. That concern is reflected in the increasing popularity of benchmarking as a way to achieve cost-reduction targets," according to the survey.

In addition to benchmarking, most executives were focused on strategic planning, mission and vision statements, customer-relationship management and outsourcing to run their organizations.  Total quality management and lean Six Sigma were two other tools mentioned in the top 25 tools that executives said they used.

Visit www.bain.com/bainweb/publications/publications_detail.asp?id=27075&menu_url=publications_results.asp to see the complete survey.


NIST Announces 2009 Baldrige Recipients

Five organizations have been named recipients of the 2009 Malcolm Baldrige National Quality Award.

AtlantiCare of Egg Harbor Township, NJ, and Heartland Health of St. Joseph, MO, were Baldrige recipients in the healthcare category. Honeywell Federal Manufacturing & Technologies of Kansas City, MO (manufacturing category), MidwayUSA of Columbia, MO (small business), and VA Cooperative Studies Program Clinical Research Pharmacy Coordinating Center of Albuquerque, NM (nonprofit), round out the 2009 class of Baldrige recipients.

Last year, three organizations received the award.

Baldrige examiners sorted through the applications of 70 organizations this year: 42 in the healthcare category, nine in education, eight in nonprofits, four in service and two in manufacturing. Fifteen of the applicants were selected for site visit reviews in October. Judges met in November and made their recommendations to the U.S. Secretary of Commerce.

The Baldrige program is managed by the National Institute of Standards Technology, an agency of the U.S. Commerce Department, with sponsorship and administrative support from ASQ.


Quick Poll Results

Each month, visitors can take a short, informal survey, and we post the results.

Here are the numbers from a recent Quick Poll:

"What’s the most effective way to get a raise?"

  • Become more flexible at work. 35.5%
  • Take on more projects. 25.7%
  • Pursue education and training. 23.5%
  • Pursue more certifications. 17.3%

Visit QP’s home page for the most recent poll question posted:

"How have you been using social media tools?"

  • To network and advance my professional career.
  • To connect with friends and family.
  • To find news and information.
  • I don’t use any social media.


Akao, QFD Creator, Named Honorary Member of ASQ

Yoji Akao, the pioneer of the quality function deployment (QFD) method, has been named an honorary member of ASQ.

Akao, also known for his tireless promotion of hoshin kanri, or breakthrough planning, joins an elite club of 24 people who have been named honorary members of ASQ. The group includes quality gurus such as Joseph M. Juran, W. Edwards Deming, Armand V. Feigenbaum and Kaoru Ishikawa.

In a letter announcing Akao’s honorary membership status, Paul Borawski, ASQ’s executive director and chief strategic officer, lauded Akao’s "remarkable achievements as an academic" and congratulated him on a "lifetime of service, leadership and influence."

Akao and Shigeru Mizuno created QFD in Japan in the 1960s. QFD is a structured method in which customer requirements are translated into appropriate technical requirements for each stage of product development and production. The process is often referred to as listening to the voice of the customer.

QFD was first presented to an American audience in 1983, when Quality Progress published the article "Quality Function Deployment and CWQC in Japan," written by Akao and Masao Kogure. Shortly thereafter, the Kaizen Institute (then Cambridge Research) invited Akao to Chicago to lecture on QFD.

Akao will be recognized during ASQ’s World Conference on Quality and Improvement May 24-26 in St. Louis.


ISO Survey: Food Certifications Up 96%

In 2008, more organizations implemented International Organization for Standardization (ISO) management system standards for food safety and information security, according to a recent survey.

Certification to ISO 22000:2005, the requirements for food safety management systems, shot up by more than 96% from 2007 to 2008. Certification to ISO/IEC 27001:2005, the requirements for information security management systems, increased by more than 20% during the same time period.

"This a clear demonstration that [certifications] have become essential tools of the world economy and retain their attraction for organizations even in time of crisis," said the authors of The ISO Survey of Certifications—2008. "It is also possible that organizations look to management systems for supporting their objectives even more during a crisis."

More information about the survey is available at www.iso.org/iso/pressrelease.htm?refid=Ref1274 (case sensitive).


ASQ President-Elect, Board Candidates Named

James J. Rooney has been identified as the candidate for ASQ president-elect for the 2010-2011 membership year by the board of directors.

Rooney will become the 62nd president of ASQ following this year’s elections, assuming another candidate doesn’t enter the election through petition.

Rooney is the director of quality and lean Six Sigma services at ABS Consulting in Knoxville, TN.

Other candidates announced late last year for the ASQ board of directors are:

  • Chairman: Peter L. Andres, quality engineer, Boeing Integrated Defense Systems.
  • President: E. David Spong, now a consultant, retired president of aerospace support for Boeing Integrated Defense Systems.
  • Treasurer: William B. "Bo" McBee III, vice president, enterprise business, total customer experience and quality, Hewlett-Packard Co.
  • Director: Michael Adams, retired vice president of quality at Allegheny Energy Inc.
  • Director: Alexis Goncalves, senior manager and Master Black Belt, Pfizer Inc.

Election results will be announced during ASQ’s annual business meeting, to be held at the World Conference on Quality and Improvement May 24-26 in St. Louis.


QP looks back on an event or person that made a difference in the history of quality.

Jan. 1, 1924

Genichi Taguchi was born on this date. He is known for developing statistical methods to improve quality and reduce costs, often called the "Taguchi Methods."

The Taguchi Methods are an engineering approach to quality control in which Taguchi calls for offline and online quality control and a system of experimental design to improve quality and reduce costs. It is a trademarked term of the American Supplier Institute, where Taguchi serves as executive director.

Taguchi was born in Takamachi, Japan. He first studied textile engineering but later became interested in statistics. Following World War II, Taguchi worked for the Institute of Statistical Mathematics from 1948 to 1950 and contributed to industrial experiments related to the production of penicillin. Later, he worked at Electrical Communication Laboratory in developing crossbar and telephone switching systems.

He has written several books, including Experimental Design and Life Test Analysis and Design of Experiments for Engineers, and he has taught at Aoyama Gakuin University in Japan.


Who’s Who in Q

Name: Seth Rajeev.

Residence: Fanling, Hong Kong.

Education: Master’s degrees in physics and electronics (specialization in laser electronics) and telecommunication from the Indian Institute of Technology in Roorkee, India.

Introduction to Quality: In 1997, Rajeev worked as manager of product application in quality assurance at Samtel Color Ltd. in India. Later, he received his Six Sigma Black Belt (BB)  training and completed two BB projects.

Current Job: Senior manager, supplier quality management in the consumer lifestyle sector, Philips Electronics Hong Kong, Ltd.

Previous Experience: Director of quality, Thomson Electronics in China.

ASQ Activities: Senior member since 2008. Certified as a Six Sigma BB in 2006.

Recent Honor:Received the excellence award from Philips Electronics Hong Kong in November 2009 for work in developing a Six Sigma culture in its regional supplier organization in Asia.

Family: Married, one daughter.

Favorite Ways To Relax: Listening to music, cooking and playing billiards.

Quality Quote: Defects are not free. Somebody makes them and gets paid to make them.

ASQ News

ALLIANCE WITH MADRID GROUP ASQ recently formed an alliance with Madrid Excellence, a quality organization based in Spain. The pact centers on knowledge and product sharing, as well as training activities. Madrid Excellence, or Fundación Madrid por la Excelencia, is a nonprofit organization that promotes quality and excellence in businesses.

APPLYING FOR OTT Applications for the 2010-2011 Ellis R. Ott Scholarship are now available through ASQ’s Statistics Division. The $5,000 scholarships are for students in master’s degree or higher programs with a concentration in applied statistics or quality management. During the last 12 years, Ott scholarships totaling $175,000 have been awarded to 34 students. Last year’s scholarship winners were Wendy Kisch, Iowa State University, and Jessica Jaynes, University of California, Los Angeles. For more information and an application form, visit www.asqstatdiv.org. Applications are due April 1. Contact Lynne B. Hare at lynne.hare@comcast.net with questions about the scholarship.

SR THINK TANK ASQ recently hosted a social responsibility (SR) think tank in Milwaukee to discuss the importance of SR and the essential role quality can play in this cause. Representatives from Aurora Health Care, the Better Business Bureau, Georgetown University, IBM, Leader to Leader Institute, Manpower Corp., Potawatomi Bingo Casino and the University of Wisconsin-Milwaukee participated in the event, along with four former ASQ presidents. Chris Jordan, a photographer who was the keynote speaker at another SR event hosted by ASQ last year, also participated. Clem Bezold, a noted futurist, facilitated discussions at the event.

MORE ENTERPRISE MEMBERS Aurora Health Care, UnitedHealth Group and CareFusion have become the latest ASQ enterprise members, joining 20 other organizations at this level of membership. For more details on enterprise membership, visit www.asq.org/enterprise.

TOP OF THE TAG Technical advisory group (TAG) 176 has elected leaders for the 2010-2012 term. They are Alka Jarvis, chair; Paul Palmes, vice chair; and Denise Robitaille, vice chair. Scott Bickley was appointed secretary. TAG 176 develops the U.S. positions on International Organization for Standardization technical committee 176, which covers quality management and quality assurance.

PARTNERSHIP FORMED ASQ has signed a pact with Naylor LLC to handle the marketing and sales activities, advertising and sponsorships for several of ASQ’s publications, online and digital media resources, and events. Based in Gainesville, FL, Naylor has been managing media and events for associations for more than 40 years.

LEAN IN HEALTHCARE A new ASQ course about leading lean teams in healthcare settings will begin Feb. 2. The 11-week course will offer ways to use lean to improve workflow to reduce medical errors and decrease potentially harmful delays in patient care. For more information about the course, visit www.asq.org/leanteams/index.html.

Capitol Q

ASQ representatives recently met with David Blumenthal, national coordinator for health IT, and members of his staff to explore ways ASQ can assist the Office of the National Coordinator (ONC) to modernize health IT. The ONC wants to involve ASQ in national and community-level activities. Blumenthal asked ASQ for comments on a matrix of competencies for several job functions within a healthcare IT workforce and assistance on developing a performance framework for health IT. ASQ also will provide examples of cost savings for small physician practices using quality methods

Capitol Q is a regular Keeping Current feature that highlights ASQ’s advocacy efforts with government leaders. More information can be found at ASQ’s Advocacy Room at www.asq.org/advocacy/index.html.

Word To The Wise

To educate newcomers and refresh practitioners and professionals, QP features a quality term and definition each month.


Developing in the mind’s eye a process without waste.

Source: "Quality Glossary," Quality Progress, June 2007, www.asq.org/quality-progress/2007/06/quality-tools/quality-glossary.html.

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