How the VW Scandal Will Change the Industry

Volkswagen's Chief Executive Matthias Mueller would do well to learn from one of the great innovations of the Toyota Way — the Andon cord — as he works to overcome a costly scandal over manipulations of emissions readings in diesel cars made by the German automaker.

During the 1980s and 90s, the Japanese company was highly respected for its Toyota Production System, also known as lean manufacturing, aimed at reducing waste and increasing efficiency. Among Toyota's innovations was the Andon cord — a rope draped along the entire assembly line like Christmas tinsel. The idea was simple; any worker could pull the cord to seek help or even stop the assembly line immediately in the event of a problem. Production would only resume once the issue was resolved.

The Andon cord embodied the principle of Jidoka, meaning automation with a human touch. It managed quality control by following four steps in the event of a problem — find the defect, stop, fix the issue and, finally, investigate the root cause and install a countermeasure.

Read more "How the VW Scandal Will Change the Industry" at CNBC.