AP Photo/Mike Householder

Yesterday, Toyota announced that it is recalling 5.8 million cars after their airbags were found to contain deadly components. The inflators were produced by supplier Takata.

The company stated that, after additional tests, the air bags contained shrapnel that can cause serious injury to passengers.

US regulators are concerned that ammonium nitrate is used, which can cause the bags to explode with excessive force.

There have been 16 deaths across the global that have been attributed to the used to the chemical compound.

The recall will cover 1.16 million vehicles sold in Japan, 820,000 in China and 1.47 million in Europe. It does not apply to cars sold in the United States.

The models under question are the Corolla and Yaris subcompacts, produced between May 2000 and November 2001 and between April 2006 and December 2014.

The part is produced by Takata, who is currently facing massive legal compensation costs for the 16 deaths that have been attributed to its use of ammonium nitrate.

Toyota was once the world-leader in supply chain management and so admired were its practices that they have been emulated across the auto industry and beyond.

But recently, the once unparalleled firm has faced a number of setbacks. The Japanese giant may fall behind VW as the world’s largest car manufacturer this year. In June this year, the company recalled nearly 3 million cars after defects were found in its airbag systems.

It was heavily hit by the March 2011 disaster and, despite claiming to have rendered its supply chain ‘earthquake-proof’, was knocked back again this year following the Kumamoto quake in Southern Japan. As a result of that shock, Toyota suspended 26 out of 30 production lines as disrupted suppliers failed to meet orders.

Toyota’s ideas of kiazen (‘continuous improvement’) and developing long-term, collaborative partnerships within a network of suppliers have often been identified as the reason for its rapid success.

It seeks to take a genchi genbutsu approach – to understand the root cause of problems – and reflect and how they can be avoided. When disruptions occur within the supply chain, Toyota is careful to take a ‘no blame’ path and seek to create a solution by understanding the situation and then improving.

Such a long term and even ‘enlightened’ approach to production is often jarring to the short-term pressures of Western business.

In fact, it is through the robustness of this system that Toyota has survived and even grown from similar disruptions in the past. The aim for the company is not to suffer from these shocks, but to grow stronger from them.

The issue here can potentially be hubris. Toyota’s claim that it has ‘earthquake-proofed’ its supply chain was clearly over-confidence, or, at least, telling the investor community what it wanted to hear following Fukushima.

The company is still fallible. It will continue to face such shocks.

Its challenge is to continue learning from its mistakes and to continue working with suppliers as partners to prevent these disruptions from damaging the brand. It has already faced two airbag-related recalls this year, it is it to retain its dominance, Toyota needs to apply its own philosophy and learn from its mistakes.

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