Three Tripper

Lean? Or Mean?      
One of the first Toyota attributes that was thrown under the bus was Toyota’s vaunted “lean” manufacturing system.  In Automotive News, writer Robert Sherefkin compares Toyota’s reliance on few suppliers as the “auto industry’s version of a lack of biodiversity.”

As in so many things, the answer lies in “it depends”.  It depends by “lean” do you mean committing to an OEM/Supplier relationship and keeping inventories tight, or the 21st century version of “lean” which means “find the China price”.  The entire concept of Lean Manufacturing is to not hide problems under a blanket of inventory, but rather “expose the rocks” in inventory flow.  Having multiple suppliers and a large buffer of inventory would have been a greater disaster for Toyota.  If the problem is truly isolated to CTS-supplied pedals, then the problem’s root cause can be more quickly isolated and solved.   Having many suppliers would only add the variability of inputs and outputs making solutions hard to find, has well as introduce variability in manufacturing which might lead to many more failure modes.

The biodiversity metaphor is inapt, having a committed OEM/Supplier relationship is like the difference between being married and the various risks and dangers of sleeping around.

Commodity Market
For OEMs still enamored with beating up suppliers for low prices, though, the complexity of the modern automobile and the Toyota problem points out the shortcoming of having a “commodity” mentality when sourcing highly engineered and complex vehicle components and subassemblies.  As Ford learned in the days of the Firestone tire/Explorer debacle, you treat parts as undifferentiated commodities at your peril.  As we’ve seen with the Toyota accelerator pedal, we are no longer talking about a piece of bent, thick wire with a welded flat piece and a pivot in the middle somewhere.  There are electro-mechanical sensors, electrical leads, signals and interfaces with HVAC systems and fuel handling and engine management systems.

Suppliers, especially in these days of decreasing engineering capabilities housed in OEMs, are responsible more and more for the engineering and design of their parts.  Even if these parts are re-used across multiple vehicle lines, they are more and more capable and more and more highly engineered with value-laden attributes.  In fact, the more commonization that OEMs demand of their components, the more highly engineered the parts need to be in order to function properly in a wider set of environments.   No longer are many parts optimized for certain vehicle applications, but they are expected to be used in many vehicles with a number duty cycles.

New Developments
Not only are parts being placed in new applications that they may not have been initially designed for, but they are being merged into a new sort of automobile, the highly interactive and electronically sophisticated new vehicles of the new millennium.  In Thursday’s Wall Street Journal there was a big piece where NHTSA is investigating the potential of electro-magnetic interference (EMI) and its possible effect on the Toyota issue and other variable vehicle environments.

In addition, the Prius and Ford hybrid brake systems software issues demonstrate yet another 21st century issue for 21st century solutions.  Historically, the “gold standard” of software development has been one software error in 10,000 lines of code.  Now, vehicles are incorporating a half dozen or more ECUs (electronic control units) each with several tens of thousands of lines of code.  On top of that, with increasing safety and emissions regulations and increasing interactivity demands from consumers, the electronic complexity of our vehicles are increasing exponentially.  

There are suppliers who test electronic systems for glitches, but the process is difficult and time consuming.  In these days of increasing pressure for faster vehicle development, great strides have been made in shortening tooling times and development time and cost via virtual electronic simulation, rather than testing physical prototypes and real parts.  

The problem is that simulation software can be programmed to detect known failure modes.  The predictive capability of such simulations is a bit more dicey.  As more and more parts are being reused in vehicles for usages they may not have been originally designed for, the ability to ferret out not only mechanical interferences and problems (like sticky pivots), but EMI and software hiccups get more problematic.

All this argues for a bit more physical testing in live, real life environments, if only to stock the shelves of simulation software to predict potential pitfalls in the future.

Conspiracy Theories
Where would we be without conspiracies?  When the DOT Secretary Ray LaHood (sounds like Damon Runyon character, right?) suggested that Toyota owners park their cars, suspicious arose as his employer, the US Government, also owns GM and has a substantial stake in Chrysler.  While retracted, his reaction, as well as press’s feeding frenzy on Toyota’s problems does seem a bit contrived, especially as many hundreds of thousands of American jobs are at stake, given Toyota’s and their suppliers’ broad footprint in this country, as well as all the follow-on business and municipalities dependent upon Toyota and its supply base.

It is unlikely that there’s an active conspiracy out there.  More likely, it is the drama of a firm known for one thing – Quality – and the irony of its problems that has attracted all the fuss.  It is unlikely that Chrysler would benefit from Toyota’s problems as Chrysler’s quality reputation is not that high at the moment.  GM might benefit some, but the biggest benefactors are likely to be Honda, Hyundai and Ford, each of which operate in the full-line OEM space and don’t have GM’s baggage.

Whistling Past the Graveyard
While some OEMs were quick to pounce on Toyota’s ills, this doesn’t mean that the other OEMs are invulnerable to the same mix of hubris, impatience, overambition and bad luck that affected Toyota.  Tuesday’s Wall Street Journal featured a chart from NHTSA where selected other OEMs’ (Ford, GM, Honda) reported “vehicle speed and accelerator pedal controls” complaints were charted over the last 20 years.  Let’s just say that “let he who is without sin cast the first stone”.  Of course, each OEM has critical events in their past that they would rather not repeat.  I’ve already mentioned Ford’s own brush with death when the Firestone time fiasco not only cost a number of sales, but also effectively killed off one of Ford’s most reliable profit engines.

It isn’t that the sharks in the water shouldn’t circle around the wounded whale, but rather for all the reasons mentioned above, your own houses should be in order.  Like Scott Brown’s Republican victory in the bluest of blue states, if it could happen in Massachusetts, it can happen anywhere.  If a quality torpedo can hit Toyota, how are you dealing with the same risks?

What is the likely outcome now as crisis deepens?  Like the unfortunate homeowner scratching his head and asking for advice at the hardware store, eventually a diagnosis and cure will be found.  But Toyota’s quality virginity has been breeched.  In the 1990’s the Ford Explorer was unassailable.  Then the trucks began to rollover as their tires blew out.  Ford went on the public affairs offensive, just like Toyota.  Executives were called out to testify in front of congressional committees, just as the committees are writing up sub poenas right now.  After a period of agony, everything settled down again.  But the Explorer was never again the same, it was now just another SUV.  Toyota will survive, the company did sell nearly 1.8 million cars and trucks for a 17% market share in the United States last year.  But without some sincere and rapid reputation repair, it stands to become “just another car company”.