Getting Off the Mat
Toyota responds to crisis, but how will it salvage its image?
It already has a tall order to fill: repairing millions of brakes and sticky gas pedals. Will Toyota have enough in the tank to accomplish an even more challenging task—restoring its image as a quality leader?
The No. 1 automaker in the world1 won’t be top dog for much longer if it doesn’t revisit its quality structure and take a hard look at the problems behind these high-profile recalls, said Ron Atkinson, past president of ASQ and a retired 35-year veteran of the North American auto industry.
"In the near future, Toyota needs to rigorously evaluate its quality systems—right from concept through market testing—to ensure that it is maintaining the highest standards in every step of the process," Atkinson said. "Long term, it needs to ensure that [the potential changes to its systems] it has put in place are maintained."
But will that be enough? More than 7 million vehicles of various makes and models were recalled over concerns about sticky gas pedals and floor mats that could get stuck in accelerators. And another 400,000 Prius cars were recalled because of brake problems. That translates to a lot of angry and apprehensive Toyota drivers, frustrated not only because of the needed repairs, but also because of Toyota’s perceived slow response to the troubles.
Toyota began ramping up its crisis management and public relations operations early last month in attempts to salvage its image. That included full-page ads in newspapers, frequent radio spots, more visible company executives speaking to media—even an apology from the chief executive—and closer attention to customer service.2
John Karjanis, a senior manager of product safety, security and liability at Nokia, said he can’t fault Toyota too much for how it handled all the recalls.
"They are dealing with multiple issues, which are possibly unrelated, all coming together on multiple models at the same time," said Karjanis, who previously worked for Johnson & Johnson on crisis management issues during the massive Tylenol recall in the 1980s.
Unlike the high-profile tire recalls of 2000, in which there was some finger-pointing between Bridgestone/Firestone and Ford, "Toyota is making a much better effort and is responding pretty well to [the recalls]. Toyota is communicating with media, customers and dealerships and taking responsibility," said Karjanis, who drives a Prius and professes he will buy another one.
Changes beyond the immediate crisis, however, must occur for Toyota to recover.
"What Toyota needs to do is understand the world demand for transparency and social responsibility, especially when it has a visible spot as the No. 1 automaker in the world," Atkinson said. "That [ranking] comes with certain obligations, which includes rigorously and diligently researching any complaints on any of its products worldwide—and taking immediate action to protect the health and safety of the public."
Some critics contend Toyota has gotten a pass over the years when it comes to media scrutiny and being seen as an untouchable quality leader.3 The massive worldwide recalls—churned by a 24-hour news cycle—might have been a harsh wake-up call for Toyota, prompting it to re-examine the way it operates.
"Toyota has had issues and recalls in the past. All automotive companies have," Atkinson said. "These [vehicles] are very complex products with thousands and thousands of components … Things are going to happen that do not show up all the time under the extensive tests that vehicles are put through before they go out on the road. That happens with anybody who makes a complex device."
When problems do arise, companies need to be socially responsible and "initiate recalls and be transparent in their organizations," he said. "What’s so very important is taking fast action to investigate the problem, find out root causes and resolve it.
"I’m not sure [this crisis] will knock Toyota off the top spot; I really can’t predict," Atkinson said. "It is hurting them. Anything like this will hurt you. [The key to overcoming the crisis] is the way you respond to it.
- U.S. News and World Report, "Toyota Passes GM as World’s Largest Automaker," Jan. 21, 2010, http://usnews.rankingsandreviews.com/cars-trucks/daily-news/090121-toyota-passes-gm-as-world-s-largest-automaker.
- Erin McClam and Emily Fredrix "For Toyota drivers, confusion and growing anger," Associated Press, Jan. 29, 2010, http://news.yahoo.com/s/ap/20100130/ap_on_bi_ge/toyota_confusion.
- Jim Henry, "So Much For Media Bias: Everybody Bashes Toyota," BNET, Feb. 3, 2010, http://industry.bnet.com/auto/10003536/so-much-for-media-bias-everybody-bashes-toyota.
—Mark Edmund, associate editor
Healthcare Bill Would Hurt Industry, Medical Device Makers Say
The majority of medical device manufacturers (see pie chart below) said they think the pending healthcare legislation on Capitol Hill will hurt their industry, according to a recent ASQ survey.
Respondents to the medical device industry survey, conducted in late January, also said increased FDA oversight and compliance with regulations will be their top challenges this year. Other challenges in the medical device industry include:
- Weathering the impact of healthcare reform.
- Reducing costs while maintaining quality.
- Addressing the effects of a proposed innovation tax.
The medical device manufacturers also were asked to identify areas of medicine in which their industry could see rapid growth in the next three years:
- 31.7% identified neurology.
- 30% identified cardiovascular.
- 25.2% identified orthopedics.
"These opportunities are such industry hotbeds because of the growing senior population," said Dan Brown, an ASQ medical device expert. "And while it’s clear that population will contribute to the economic growth of manufacturers, the pending healthcare legislation has most major equipment purchasing organizations using a wait-and-see approach."
A total of 234 people responded to the survey, conducted in late January.
Quality Helps Company Efforts to Innovate
Quality processes do not stifle creativity at major corporations, and some companies are actually using quality tools and approaches to balance efficiency and innovation, according to a recent ASQ report.
Companies must understand, however, that quality process tools aren’t appropriate for all pieces of a job, and they "should carefully analyze where the tools can best benefit the bottom line," Liz Keim, past president of ASQ, said in the report, "Fresh Thinking on Innovation and Quality."
The 12-page report profiles DuPont and Procter & Gamble (P&G) as they took steps to integrate creativity-generating functions of R&D and product development with regular process management structures and practices.
For example, DuPont uses Six Sigma methods and a business development process to promote consistency and speed when designing and developing products and bringing them to market.
P&G, too, uses a mix of quality processes to coordinate its efforts to innovate. In particular, P&G has built an internal organization of multidisciplinary teams that look for innovation opportunities outside existing business units.
"More than any other factor, systems are the way we avoid dependence on ‘eureka!’ approaches to innovation," Robert McDonald, P&G COO said in the report.
"We select innovation projects, allocate resources and ultimately bring the best innovations to market with highly disciplined processes and systems."
The complete report can be accessed at www.asq.org/2010/01/innovation/fresh-thinking-on-innovation-and-quality.pdf.
Study: Companies, Employees Benefit Directly From ISO 9001
Companies that adopt ISO 9001 are much more likely to stay in business and, in turn, experience faster sales growth than those that choose not to pursue certification to the quality management system standard, a new study finds.
ISO 9001 adopters also seem to grow their employment bases, total payrolls and average annual earnings much faster than companies that do not adopt ISO 9001. In turn, employees experience indirect benefits when their companies take on ISO 9001.
The report, "Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers," is the "first large-scale study to examine changes in employee outcomes after their employers adopt ISO 9001, including wages and frequency and magnitude of worker injuries," wrote the study’s authors, David I. Levine of the University of California, Berkeley, and Michael Toffel of the Harvard Business School.
The study examined the experiences of manufacturing firms in California that adopted ISO 900l and analyzed data from the Directory of ISO 9000 Registered Companies, Dun & Bradstreet and the Workers’ Compensation Insurance Rating Bureau of California.
The study will be published in Management Science later this year. A final version of the working paper is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1237730.
Survey: Some Unscathed by Recession
One in four U.S. manufacturers have not been impacted by the recession, according to recent survey.
The survey of 150 manufacturers suggests large manufactures have weathered the storm the best: 29% of companies with more than 1,000 employees reported no impact at all. Medium-sized organizations reported seeing the greatest impact, saying the economy has resulted in layoffs of full-time workers.
The report also indicated 19% of companies surveyed said the economic downturn has had a "great" or "very great" impact on their business.
Other results of the survey, conducted by Advanced Technology Services, indicated:
- Respondents reported the lack of skilled labor will cost their organizations an average of $11 million during the next five years. The cost reported is highest for larger companies and is estimated at $17 million.
- The majority indicated they would fill positions with full-time workers when the economy recovers. Nearly one-third said they would also fill positions through outsourcing with contractors or a flexible workforce.
- Nearly 70% of survey respondents in corporate and plant roles within their organization said the Obama administration should institute policies to encourage and promote skilled-trades training and education.
- Thirty-six percent said economic growth will resume by the first or second quarter of this year, whereas 23% expect growth later in the third or fourth quarter. One-fourth don’t expect growth until 2011 or later.
- Nearly a third of small manufacturers expect to see no growth at all in demand in 2010 and anticipate business activity starting to pick up in 2011. Many bigger companies say they are already seeing tentative signs of growth and expect economic recovery this year.
For more details on the survey, visit www.advancedtech.com.
ASQ Award Medalists, Honorees Named
Yoji Akao, the pioneer of the quality function deployment method, will be recognized as ASQ’s most recent honorary member at this year’s ASQ World Conference on Quality and Improvement, May 24-26 in St. Louis.
Eleven other thought leaders will be presented ASQ medals at the conference:
Deming Medal, Paul Batalden, Dartmouth Medical School, Hanover, NH.
Edwards Medal, Douglas Beigel, COLA, Columbia, MD.
Feigenbaum Medal, Kanthassamy Senthilmaran, Computer Sciences Corp., Santa Clara, CA.
Grant Medal, Mohamed Zairi, European Centre for Best Practice Management, Keighley, UK.
Juran Medal, Jorge Gerdau Johannpeter, Gerdau Group, Porto Alegre, Rio Grande do Sul, Brazil.
Lancaster Medal, Spencer Hutchens Jr., Intertek Services Corp., El Segundo, CA.
Medal, Stephen N. Luko, Pratt & Whitney, East
Shewhart Medal, David W. Bacon, statistical consultant, Picton, Ontario.
Three members will receive Distinguished Service Medals:
- Blanton Godfrey: For a distinguished career of contributions to the quality profession; for establishing broad quality improvement initiatives in healthcare, education and industry; and for personally demonstrating exemplary quality practice internationally by blending statistical and managerial quality methods.
- Noriaki Kano: For successfully promoting the cause of quality; for effectively communicating quality principles and teaching quality methods globally; for creatively inventing the theory of attractive quality; and for selflessly serving humankind as one of the dominant thought leaders for total quality management.
- Søren Bisgaard: For exceptional service to the quality community by investigating, writing and teaching statistical methods and their innovative applications for improvement of business and industrial processes, thereby enhancing the quality of management.
25 ENTERPRISE MEMBERS Ingersoll Rand, the manufacturing giant, has become the latest high-profile corporation to join ASQ as an enterprise member. Ingersoll Rand joins 24 other ASQ enterprise members. To find out more about this membership category, visit www.asq.org/enterprise.
TAG LEADERS ANNOUNCED New leaders for the U.S. Technical Advisory Group (TAG) to ISO/TC 207 on Environmental Management have been elected. They are: Susan L.K. Briggs of Textron Systems Inc. as the group’s chair, Joseph Cascio of Booz Allen Hamilton as vice chair and Thea D. Dunmire of Enlar Compliance Services as secretary. The leaders will serve on the TAG through Dec. 31, 2012. Members of this TAG to ISO/TC 207 provide input and help develop standards related to environmental management.
IQPC CONFERENCE ASQ is participating at the International Quality and Productivity Center’s (IQPC) American Shared Services and Outsourcing Week Conference this month in Orlando, FL. The conference covers topics related to business process improvement, including lean and Six Sigma, operational cost reduction, customer service and performance measurement.
SCHOLARSHIP DEADLINE Applications for the Richard A. Freund International Scholarship are due April 1. Named after the past ASQ president, this scholarship recognizes graduate study in the theory and application of quality control, quality assurance, quality improvement and total quality management. For more information and the application form, visit www.asq.org/about-asq/awards/freundscholar.html.
TEAMS COMPETE The International Team Competition will mark its 25th year at ASQ’s World Conference on Quality and Improvement May 24-26 in St. Louis. Teams from 10 countries will demonstrate their quality improvement projects to judges and compete for gold, silver and bronze awards. For more information about team competition activities, visit at http://wcqi.asq.org/team-competition/index.html. From there, you can also find links to other activities at the world conference.
FOUR NEW STANDARDS that establish requirements and best practices for conducting energy assessments in manufacturing plants and other types of industrial facilities have been released, the American Society of Mechanical Engineers announced recently. The standards cover process-heating systems, pumping systems, steam systems and compressed air systems, and provide a basis for operators of industrial facilities to measure energy efficiencies, improve environmental performance, optimize fuel utilization and perform other important energy assessments. More information about the standards can be found at http://catalog.asme.org.
THIS YEAR’S WORLD Standards Week will be held Sept. 21-24, with U.S. ceremonies in Arlington, VA. A preliminary schedule has been released by the American National Standards Institute. For more information, visit www.ansi.org/meetings_events/wsw10/wsw.aspx?menuid=8.
A NEW STANDARD gives food manufacturers another way to control food safety hazards. ISO/TS 22002-1:2009, Prerequisite programmes on food safety – Part 1: Food manufacturing, outlines requirements for prerequisite programs needed for safe food products. It is intended to support ISO 22000:2005, which outlines requirements for a food safety management system. More details are available at http://www.iso.org/iso/catalogue_detail?csnumber=44001.
NEW BALDRIGE BLOG Leadership and staff of the Baldrige National Quality Program have launched Blogrige—a new blog for commentary and observations about the award. Visit http://nist.typepad.com/baldrige_program.
Word To The Wise
To educate newcomers and refresh practitioners and professionals, QP features a quality term and definition each month.
(kwing ‘ kungks)
A tool that creates frequency distributions. Beads tumble over numerous horizontal rows of pins, which force the beads to the right or left.
After a random journey, the beads are dropped into vertical slots. After many beads are dropped, a frequency distribution results.
Quincunxes are often used in classrooms to simulate a manufacturing process.
The quincunx was invented by English scientist Francis Galton in the 1890s.
- "Quality Glossary," Quality Progress, June 2007, www.asq.org/quality-progress/2007/06/quality-tools/quality-glossary.html, p. 54.
QP ONLINE ON PAPER
Quick Poll Results
Each month at www.qualityprogress.com, visitors can take an informal survey, and we post the results.
Here are the numbers from a recent Quick Poll:
"Which group would benefit most from applying quality to customer service?"
- Government services 45.9%
- Airlines 35.3%
- Food service 9.4%
- Auto repair 9.4%
Visit www.qualityprogress.com for the most recent poll question:
"What is at the crux of Toyota’s recent troubles?"
- Poor leadership
- Rapid expansion
- Supplier issues
- Losing sight of quality
Who’s Who in Q
NAME: Fawzi A. Bawab.
RESIDENCE: Dubai, United Arab Emirates, and Gatineau, Quebec.
EDUCATION: Master’s of science in industrial engineering from the University of Jordan.
CURRENT JOB: Partner with Meirc Training & Consulting, focused on strategic quality management training and consulting, process improvement and continual improvement. Meirc has a strategic alliance with ASQ to provide training on Six Sigma and manager of quality/organizational excellence certification.
PREVIOUS JOB: Training director at BSI Inc. in Canada, the United States and Middle East.
FIRST EXPERIENCE IN QUALITY: Site engineer in charge of quality control and quality assurance for the builder of a concrete and steel project.
ASQ ACTIVITIES: Bawab is a senior member, having joined ASQ in 1998. He is a certified quality manager and is an ASQ-approved Six Sigma instructor.
OTHER ACTIVITIES: Former registered ISO 9000 lead auditor for the International Register of Certified Auditors, TS16949 auditor for the International Automotive Task Force and Six Sigma Green Belt. Bawab has performed more than 400 third-party quality audits in the Americas, Europe and the Middle East, and has delivered more 600 days of training on topics such as leadership, management, quality management and process improvement.
PERSONAL: Married, two children.
FAVORITE WAY TO RELAX: Reading books, traveling, golfing and spending time with family.
QUOTE: In Quality is Free, Philip Crosby wrote: "It is not possible to know what you need to learn." Our journey to quality and learning is never-ending. You need to keep your self-development motor on all the time. Training can provide many opportunities to enhance organizations to develop their staff competencies and improve organizational performance and teamwork.
DATE IN QUALITY HISTORY
QP looks back on an event or person that made a difference in the history of quality.
March 20, 1856
Frederick Winslow Taylor, considered one of the first management consultants and the father of scientific management, was born on this date.
Through his definitive work on scientific management, The Principles of Scientific Management, leadership would come to know as much about each job as the workers, and, as a result, could tell leaders just how much effort the workers were putting forth.
Taylor’s goal was to increase productivity without increasing the number of skilled craftsmen. He achieved this by assigning factory planning to specialized engineers and by using craftsmen and supervisors displaced by the growth of factories as inspectors and managers who executed the engineers’ plans.
Workers and their unions disliked scientific management because it called for the methodical, scientific investigation of the elements of each job. Workers feared that if they increased their productivity, many of them would lose their jobs. Taylor said less expensive goods meant there would be more buyers and, as a result, more, not fewer, jobs.
Taylor’s approach led to remarkable rises in productivity, but it had significant drawbacks: Workers were once again stripped of their dwindling power, and the new emphasis on productivity had a negative effect on quality.
To remedy the quality decline, factory managers created inspection departments to keep defective products from reaching customers. If defective product did reach the customer, it was more common for upper managers to ask the inspector, "Why did we let this get out?" than to ask the production manager, "Why did we make it this way to begin with?"
- ASQ, "The History of Quality—The Industrial Revolution," www.asq.org/learn-about-quality/history-of-quality/overview/industrial-revolution.html.
- Freeman, Michael G., "Don’t Throw Scientific Management Out With the Bathwater," Quality Progress, April 1996, pp. 61-64.