Marc Halpern also contributed to this article.

Toyota’s recent recall of more than two million vehicles for a suspected accelerator defect will have massive business implications. At the time of this writing, the recall involves eight vehicle models, representing 57% of Toyota’s U.S. sales alone, including the Camry, Corolla, Tundra, and other popular models. The recalls have shut down production in five U.S. plants, leaving inventory sitting on dealership lots around the globe.

How did this happen, and what steps could have been taken to avoid it? Although the root cause of the recall has yet to be validated publicly, any manufacturer on a path to expand globally while reducing new product time to market can learn from these events.

Local capability doesn’t readily translate to global markets

Toyota has ranked for many years among the top automotive manufacturers on J.D. Power and Associates’ automotive quality list. The company’s superior supply chain skills has landed it in the top 10 of AMR Research’s Supply Chain Top 25 every year since the ranking’s inception. The Toyota Production System (TPS) has been replicated worldwide by manufacturers aspiring to achieve the company’s operational excellence. Its new product introduction process takes advantage of unique, set-based design methodology that captures knowledge from many design alternatives to feed a steady stream of products to market.

However, as Toyota has expanded globally, it’s struggled to maintain its reputation for quality. Part of Toyota’s challenge has been to reduce new product time to market (TTM) while simultaneously opening new North American manufacturing plants. Such ambitions can stress product development and production systems that have worked historically. When combining these objectives with trying new technologies and methods, issues often arise. For example, back in 2006, former Toyota president Katsuaki Watanabe noted that in some cases company engineers may have rushed out products without conducting enough quality checks, such as building physical prototypes, relying too much on computer simulations. Toyota is a great manufacturing company with an enviable supply chain, but even the best companies are challenged when the pressure to reduce time to market is combined with global expansion.

Supply chain risk mitigation and rapid corrective action

Toyota’s case emphasizes the importance of embedding innovation into the supply chain to mitigate risk. The alleged cause of this recall defect is friction on the accelerator that develops over time, possibly resulting from condensation that causes the accelerator to stick. The part is produced by CTS Corporation in Indiana, which builds the product to Toyota’s design specifications.

The recall presents an opportunity for supply chain professionals to assess their companies’ preparation for reducing the risk of such a defect and to respond effectively if it does. Supply chain leaders should take away four key lessons.

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