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Customer Perception

What lessons can be learned from the current Toyota quality issues? This is a quote from a CNN/Money internet article of February 10, 2010:

“…if any documents come out which prove Toyota engineers knew something needed to be fixed, it will be difficult for Toyota to ever regain consumers’ trust. When your image is one that has been largely built on quality and dependability, you can’t afford that kind of smoking gun,” Hutson said.

I have been drawn recently to the bad news coming from Toyota. I don’t own one now but we used to. I have had high regard for the company and their Lexus division which products some of my family members and friends own. There have been no problems with those models.

Toyota seems to have at least three areas of technical problems including sticking gas pedals, non-functioning brakes and problems with steering. The loss of sales while these repairs are taking place has been estimated at $155 million per month. This does not count the cost of repairs being made around the clock. These costs may be small in comparison to the 30 class action suits (so far) for damages and loss of value to the re-sale of cars that is estimated at up to $6 billion. I understand that these diverse problems of quality occurred over a number of years and different types of models.

Further, I heard on the CNBC that Toyota may have been more concerned with increasing market share at the expense of quality. I am not typically a prognosticator of bad news, but this set of events is going to be threatening the future of the company and could be catastrophic. Toyota should be able to make the repairs, but will they gain the trust of their current and future customers? It took Audi more than 20 years after non-confirmed reports of their gas pedals sticking for the company to improve the image and grow by delivering quality cars. How long will it take Toyota to get back to a quality image with the confidence of the consumer?

What further intrigued me and focused my interest is the method and manner in which Toyota is handling the problem from a public relations standpoint. The commercials they are running point to their 50 year history of happy customers and quality cars. Top executives from both Japan and the USA have been on the news making statements of apology and announcing repair remedies.

What this brings to mind is the adage that there are two things that any business is judged upon. First is the ability to perform on the initial promises made to customers. Second is the ability to fix problems once they occur. I know my company has become very adept at fixing problems as they occur regularly and randomly in the manufacturing process. In the process of repair, we try to minimize costs, reduce delivery time and maintain client satisfaction.

Toyota is now facing judgment on the ability to fix a multitude of auto problems across different models and years, different continents and manage the law suits and bear the costs of all these issues accordingly. Johnson and Johnson has been the model for fixing problems with their adept handling of the Tylenol affair of years ago. That process resulted in seals being placed on many consumer products to assure tamper proof quality.

What are the vulnerable issues in your business that if left unattended can result in major company life-threatening situations? How well does your quality assurance model perform? Do you have appropriate and adequate insurance? Are you sacrificing quality to gain market share by saving costs?

While a bad garment may not kill someone as faulty brakes may, the crux of the issue is parallel. Can your clients trust that you are delivering the quality product or service you have promised?

You may want to do some risk analysis before your president needs to appear on TV and apologize or face a call from a valued, profitable client that you will be losing their business. As always, the cost of fixing the problems in a proactive preventative mode is significantly less than the penalties and extra costs to be suffered later on. Was it Ben Franklin who said “an ounce of prevention is worth a pound of cure?” I know Ben didn’t own a Camry but principles don’t change.

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