Toyota Data Collection Offers Lessons for Operational Resilience

Meagan Douglas
Wed, Oct 17, 2012

In order for manufacturers to handle product recalls without causing a severe disruption to operations, they need to have strong data collection procedures in place. Although it isn't easy to overcome major challenges like a massive recall, there are companies that have managed to do so. Julian Birkinshaw, a professor of strategic and international management at London Business School, told Bloomberg Businessweek that despite the multitude of issues Japanese car giant Toyota has faced in recent years, the company has been able to bounce back and perform well. As a result, a current recall has not caused too much trepidation for investors.

Birkinshaw compared Toyota's operations to those of a London cab company that was not able to bounce back as easily when faced with a recall.

"In a turbulent business environment, companies need resilience - the ability to bounce back when faced with adversity," he wrote. "One important part of this is operational resilience - recovering from threats to your day-to-day operations - by having the ability to respond quickly, and by building duplication and redundancy into your operations. It turns out [the cab company] had a very fragile supply chain, whereas Toyota’s was a lot more robust."

Toyota's data collection system is complicated, but the company has streamlined and tweaked its processes to iron out flaws. According to its International Material Data System manual, Toyota contacts suppliers via email to collect data on specified parts. The supplier's IMDS contact person then fills out a datasheet, which is sent to Toyota's internal database, and the system cross checks the information to ensure the parts are meeting requirements.

Although this process is complex, there are software solutions that will help businesses implement this type of system. One of these solutions is Oracle E-Business Suite. According to Oracle's automotive solutions website, by using the application, companies can significantly improve their processes by reducing costs, increasing pipeline visibility and enhancing their customer service system. By complementing Oracle ERP solution with RFgen's automated data collection solutions, companies can see even more benefits, creating the kind of operational strength that is enabling Toyota to respond with precision and calmness to a significant recall.

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