William Roseberry Matthew Haines Taylor Badonsky Joe Aquila

  Native Name: トヨタ自動車株式会社  Founded: 1937  Headquarters:Toyota, Aichi, Japan  Area:International  Products:Automobiles, engines, motorcycles  Services:Banking, financing, leasing  Revenue:$18.58 trillion  Profit:$ billion  Divisions:Lexus & Scion Toyota Company Background

  The Working Relations Index (WRI) ranks the Original Equipment Manufacturer (OEM) based on 17 Criteria:  Supplier trust of the OEM  Open and honest communication  Timely information  Degree of help to decrease costs  Extent of late engineering changes  Early involvement in the product development process  Flexibility to recover from canceled or delayed engineering programs Measured Performance Differences for Toyota and Suppliers

  The scores are high for Toyota, Honda, & Nissan  They have priorities for quality versus cost focus  The scores are poor for Chrysler, Ford, & GM  They have priorities for cost versus quality focus Measured Performance Differences for Toyota and Suppliers

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  Key feature of selling strategy is to build in schemes that prevent unilateral (one-sided) actions to change volumes or commitments.  Toyota strives to reduce variability to ensure stable operations by systematic mix planning, careful sales and operations planning, and sensitivity to the impact of product changes throughout the supply chain.  Toyota must collaborate with suppliers to create value for customers.  Suppliers attain productivity improvements to a level that makes the supply chain competitive.  Toyota suppliers must be flexible so they can respond to daily order changes. Links to Toyota’s Processes

  Choosing a supplier is a long, drawn-out process that involves verifying whether the supplier will mesh with the supply network.  Both new and existing suppliers are expected to share their innovations with other suppliers that supply similar products.  The goal of the supplier is to maintain delivery performance, high quality, productivity improvements, and so one, over the life of the model. Choosing Suppliers

  Asanuma studied the Japanese industry and found key features in managing suppliers included independent but closely linked suppliers, long-term relationships, frequent collaboration, exchange of employees between companies over long periods, and cross-linked shareholding.  Published reports show that Japanese auto suppliers won renewal of their contracts 90 percent of the time versus 71 percent for suppliers to U.S. auto OEMs. Choosing Suppliers

  Toyota opened up a plant in England in  Toyota started with a list of 2,000 initial suppliers.  They evaluated using criteria such as “assessment of management attitudes, production facilities, quality levels, and research-and-development capability.”  They ended their list with a total of 150 suppliers using this criteria. Toyota Supplier Selection

  Auto OEMs, suppliers are organized into tiers, with tier 1 suppliers being assemblers of systems, who manage all relationships with tier 2 suppliers, and so on.  The bottom of the pyramid consists of tier 4 suppliers who form, perhaps, about 40,000 entrepreneurs who own a lot of the intellectual capital that is required to produce excellent components.  Working with these lower-tier suppliers was the key to making the necessary changes in a timely and efficient manner.  Toyota chooses suppliers across multiple tiers so as to guarantee availability of innovative solutions across the supply chain. Tiered Supplier Organization and Managing Relationships

  The pressure on a supplier is maintained by using a staggered system of model changes, which in turn entails a staggered system of negotiations.  The usual price commitment by Toyota to a supplier is for a one-year period, and prices are reviewed every six months, but the contract award is kept in place over the model life. Pressure on Suppliers to Perform

 Depth to Supplier Relations  Drawings from manufacturer to supplier are handled in various ways:  Drawings detail manufacturing product  Supplier designs manufacturing process  Manufacturer learns details about manufacturing process.  Specifications are given to supplier and they design the process.

 Monitoring Suppliers  Japanese manufacturers keep detailed data about supplier process.  Require information on raw materials and delivery times.  Manufacturer absorbs some of risk of supplier to better control process.

 Success to Supplier Relationships  Collaborative tools that have common standards all compatible.  Trust and share of intellectual property.  Modular views of processes and planning serving consumer needs.  Teams specified to solve problems.

  Construction of Cost Competitiveness in the 21 st Century  The CCC21 initiative focused on cutting the purchasing cost of 170 major components. The CCC21 System

  The Comprehensive Assessment Tool rates the supplier of a scale of 0 to 5 on a set of specific performance measures:  Mission  Reporting structure  Involvement of top management  Localization and self-reliance  Open mind to operation procedures  Organization with respect to Toyota interactions Toyota Checklist for Supplier Audits

  “ Variety of components produced by suppliers is consistent with their flexibility.”  “ Velocity of the parts flow is matched between the assembly line and suppliers … In short, the supplier velocity is matched to the assembly plant production rate.”  “Variability of orders to suppliers is stabilized through communication through planned volumes in advance.”  “Visibility of supplier operations and of Toyota plants is encouraged by the approach at Toyota to discuss problems first.” v4L Approach in Managing Suppliers at Toyota

  Implementing an ERP system for Toyota will streamline data in collaboration with suppliers more efficiently.  Currently, Toyota already utilizes SAP and Oracle depending on what region they’re in.  Australia uses Oracle.  Parts of North America uses SAP.  Toyota keeps all IT in house for enterprise architecture. ERP with Toyota Supply Chains