CAN THE TOYOTA WAY OVERCOME THE RECENT TOYOTA SETBACK? — A STUDY BASED ON THE THEORY OF CONSTRAINTS

Abstract

The Japanese carmaker Toyota has long been regarded as the pinnacle of Japanese innovation, manufacturing quality and industrial strength — particularly since it overtook General Motors in 2008 to become the world's biggest carmaker. Its "lean" manufacturing techniques and culture of continuous improvement were the envy of the business world. Companies sent delegations to tour Toyota's factories in the hope that some of its magic would rub off on them. But within a few weeks all this has changed. Problems with "unintended acceleration" of its cars which the firm has belatedly taken seriously, has resulted in a crisis within the company. Toyota's woes were compounded on 9 February 2009 when it said it would also recall 440,000 hybrid vehicles, including the celebrated Prius, to fix a problem with their brakes. The firm's reputation for quality, on which the business was built, is shattered. Its market capitalization has dropped by an amount roughly equal to the entire value of Ford. But the greatest damage has been done by its misreading and mishandling of the crisis. Surrounding this current problem, we came with an interesting question: Can the Toyota Way bring back Toyota to the lead? The aim of this paper has the intention to answer two significant questions. The first question is "Is the Toyota Way safe enough to prevent problems brewing outside its factories?" In order to address this question and get reasonable answer, this study tries to use the Theory of Constraints (TOC) to discover the root causes and countermeasures of how Toyota's Way can bring back Toyota to the lead. The second question is "Can TOC deal with this kind of complicated problem effectively?" From the case study, we successfully answered the two preceding questions, presenting some findings about TOC problem solving strategy.