It has been an interesting few months watching the recall related events unfold at Toyota. What started out last October as a simple recall to sort out a problem with an accelerator pedal getting stuck underneath the floor mats of their cars has now turned into Toyota’s largest ever recall. Toyota emerged from the recent downturn in the economy and posted a near $2billion profit in the remaining three months of last year. The global recall will effectively see this profit wiped out. So what happened?

Toyota has been the global leader in adopting lean manufacturing processes for many years. They have significantly increased the number of vehicles that they can build off of a single car platform and as a result they have rationalized their supply base to support the development of these ‘global’ car platforms. In recent years Toyota has been able to position their Lexus brand to compete with the likes of BMW and Mercedes and they have set up numerous joint venture operations with for example PSA Peugeot Citroen and more recently Aston Martin. Sharing car components across a range of different vehicles is a common practice across the automotive industry and Toyota is no exception. However I think this particular recall highlights a problem when you have one company supplying a part for so many different car models.

Despite all the technology that you find in today’s cars, having an accelerator pedal mechanism fail due to excessive amounts of friction between the linkages is a rare occurrence. Was it a manufacturing problem associated with their Chinese supplier or an incorrect design specification provided by Toyota?  Either way this is irrelevant now as a fix to the problem has been found, courtesy of a small shim which will be placed behind the accelerator pedal to restrict its movement and hence reduce the chances of the mechanism sticking again. But is there anything that could have been done to avoid this situation in the first place or indeed shorten what will be a very long wait for many customers to get their cars fixed?

Last week I read an interesting article in Automotive Logistics magazine which said the Toyota recall highlighted a number of issues concerning visibility across Toyota’s supply chain. The last comparable recall was ten years ago during the Bridgestone/Firestone tyre recall with Ford’s Explorer SUV. The total cost for both companies reached into billions of dollars. As with the Ford/Firestone situation, Toyota will need to get replacement or modified parts distributed to customers as quickly as possible, so as not to have a long term impact on customer satisfaction levels. The repaired parts will need to be delivered across a global network of dealers and service centres. In addition these parts need to reach vehicles that are in transit at compounds, ports or staging yards. Toyota may be forced to undertake repairs at these locations rather than wait for the cars to reach the dealers.  The more cars they can repair in the same location, the less recall related logistics costs they will incur.

AMR Research recently suggested that the accelerator pedal recall could be reflective of larger problems with the management of Toyota’s supply chain. Firstly, as highlighted earlier, the recall highlights the risks that accompany a global car platform strategy however the efficiency benefits, until now, almost certainly outweigh the risks. What could be more worrying is that with the global expansion of their manufacturing plants, Toyota may not have paid enough attention to improving supply chain visibility and monitoring to support their global business. It is probably no coincidence that Toyota dropped 5 places in two years on AMR’s list of Top 25 Supply Chains.


There have been some very different reports coming out of North America and Europe as to when the accelerator problem was identified and what steps were taken to try and address it. For example when Toyota implemented a modification last year they uncovered a different, but related case of pedals sticking. This led to further investigations and as a consequence a safety recall is now in place. Now we are just starting to hear of electronics related issues with their Hybrid Prius vehicle. So three separate problems related to the same area of the car. Whatever is happening across Toyota’s supply chain at the moment, AMR has suggested that Toyota and its suppliers should become more vigorous in monitoring all the channels in its supply chain, including improving the collaboration with its suppliers and dealer networks to help identify these potential problems earlier and spot potential trends before the problem gets out of hand.

Toyota has a tough challenge on their hands to maintain their position of not only being the world’s largest car manufacturer but producer of high quality and innovative vehicles. So could improved visibility and collaboration have helped Toyota in this situation?, almost certainly.

At GXS we have many customers who have implemented our visibility solutions to help keep track of global shipments, in Toyota’s case knowing when these replacement part kits are going to arrive at a dealer location or car storage depot will be key to winning back customer confidence and more importantly customer satisfaction. Knowing the exact delivery status of all of Toyota’s cars and where they are in the delivery supply chain would certainly help with a recall situation such as this. Then there is the collaboration side of things. Just before Christmas I attended an internal meeting to discuss how our partnership with RollStream could benefit companies and customers that may be involved with a recall situation. A collaborative platform such as RollStream would certainly help keep track of potential recall situations and more importantly keep everyone up to date, right across the trading partner community, of what steps are being taken to address the situation.

Despite this recall issue we cannot ignore Toyota’s success with globalizing their manufacturing operations, developing multiple cars off of the same vehicle platform and rationalizing their supply base around the world. But how much longer will Toyota be able to live up to their advertising slogan, “The car in front is a Toyota”. With the current recall underway the last thing Toyota needs are customers worried about “The car BEHIND being a Toyota”.

I believe that Toyota will be able to weather this storm and improved levels of supply chain visibility and collaboration will help Toyota avoid a similar recall, certainly on this scale, from happening again.

For another B2B perspective on recall situations please take a look at this blog entry from my colleague Srini Muthusrinivasan