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When Quality Control Turns Scandalous

APICS CEO

Friday December 8, 2017


Japan is dealing with another scandal tarnishing its reputation for quality. Toray Industries announced last week that one of its subsidiaries had faked quality data on its textiles. The Wall Street Journal reports that Toray joins Nissan Motor Co. and Kobe Steel in their quality scandal woes.

“The disclosure Tuesday adds to similar scandals at other Japanese companies that have undermined a national reputation for quality, and once again the failing was connected to the car industry,” Sean McLain writes.

Toray reports that its subsidiary, Toray Hybrid Cord, inappropriately overwrote data that was provided in inspection reports to customers. Toray Hybrid Cord processes industrial fibers for use in tire cords, cords for industrial use and carpet pile threads. The data manipulation occurred as far back as April 2008 with a range of products, including tire cords.

Toray began an internal investigation into the problem more than a year ago, but went public only when the information appeared on the internet.

 A statement issued by the company announced that “The Toray Group will redouble efforts relating to compliance adherence, and together with recurrence prevention measures, will do our utmost to recover the trust place in our company.”

Toray’s customers include car makers, airplane manufacturer Boeing and clothing company Uniqlo’s parent company, Fast Retailing. Boeing and Uniqlo are, thus far, unaffected; however, Toray’s investigation is ongoing. The company disclosed that shipments to 13 of its customers were affected.

Last month, Mitsubishi Materials admitted to shipping substandard products for eight months while it investigated product-quality data manipulation. Earlier this year, Kobe Steel was caught falsifying quality information on its products sold to Boeing, Toyota and others.

“The recent revelations have heightened scrutiny of corporate governance in Japan,” McLain writes.

Customer relationships

Going back to basics, let’s examine the definition of quality as it appears in the APICS Dictionary: “Conformance to requirements or fitness for use. Quality can be defined through five principal approaches: 1) Transcendent quality is an ideal; a condition of excellence. 2) Product-based quality is based on a product attribute. 3) User-based quality is fitness for use. 4) Manufacturing-based quality is conformance to requirements. 5) Value-based quality is the degree of excellence an acceptable price …”

When companies manipulate the data related to any of these approaches, they harm their overall reputation with the public and their relationships with customers. The long-term implications for Toray remain to be seen, but immediately after the announcement, Toray shares closed down 5.3 percent, according to The Wall Street Journal.

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