Shortsighted: Toyota memo an example of worst practices in cost cutting
March 11, 2010 by Jared BilskiPosted in: Cost cutters, In this week's e-newsletter, Latest news & views, Management issues
These days, everyone is on the hunt for quick ways to save a buck. But if you fail to account for the bigger picture, your savings strategy could end up costing you big time — just look at Toyota.
Recently, an internal memo from the troubled automaker surfaced. In the memo, Toyota execs bragged about a maneuver in which the company negotiated a “limited callback” — as opposed to a full recall.
The execs pointed to savings of $100 million on a bulleted list of “wins” when it came to its decision to go with a limited recall.
We all know the rest of the story. The limited callback was followed closely by an incident where a family of four was killed because their Lexus’ gas pedal stuck under the floor mat.
Since then, Toyota has been in the midst of a PR nightmare, complete with allegations of faulty equipment, recalls and even a complete shutdown of production at several manufacturing facilities for a temporary period.
A more detailed time-line of Toyota’s problems can be found here.
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Tags: Execs, Floor mat, Full recall, Lexus' gas pedal, Limited callback, PR nightmare, Toyota, Toyota memo
