Posting 13
Toyota Supplier Relationship
In
1943, during World War Two, Toyota has a good relationship with their suppliers
to develop a streamlined supply chain. At the beginning, Toyota connected a
supplier association (renamed thereafter Kyoho Kai) to collaborate with their
subcontractor suppliers in the Toaki area to improve their products together.
It was a start to build up the supplier network between Toyota and their
suppliers. A key feature of GSCM in Toyota, according to
Donnelly et al. (2002) is that it is not only high quality and lower cost but
also the time taken to build them was far shorter than in Europe or the USA.
Winfiled
and Kerrin (1996, p.49) indicated that Toyota developed their global market
from the 1960s to the 1970s as the first step in Toyota’s innerinvestment in
manufacturing in both Europe and the UK. However, in the late 1970s and 1980s,
US firms faced competition from their Japanese counterparts, especially in the
automobile industry, where the Japanese car manufacturer, Toyota, utilized JIT
delivery to achieve efficient inventory management (Mount and Caulfield, 2001).
Donnelly et al., (2002) found that Toyota plants’ build time was about half the
time taken in America. From the 1980s to the 1990s, the second wave was in South-East
Asia, when Toyota invested in their local markets. However, the buyer and
supplier relationship was not participating extensively before the 1990s. This
agrees with Wagner (2006), who said the firms in the automotive industry were
required further to advance the supply chain presentation after the 1990s in
Western industries. Recently, according to Liu and Brookfiled (2006), China has
developed into a “workshop to the world” and also had become the most important
area in the world for Toyota to increase their market share in order to extend
their GSCMthere.
Toyota
set up their branches overseas, and they frequently keep their own standard as
a world-class manufacturer. That is why European suppliers would like to
cooperate with Toyota and become accustomed to Toyota model management.
Consequently, Toyota’s supplier also support this point to be a global standard
level in order to gain a significant market share through their buyer and
supplier relationship (Fabbe-Costes et al.,2006). Toyota had 210 suppliers in
11 European countries, of which 50 percent were UK-based in 1996 (Winfield and
Kerrin, 1996). It emphasizes lean production, efficiency and quality, and
provides an exemplary model of best practice for other firms. The Toyota UK
Company is one among many Japanese automotive manufacturers which claim new
specific developments in customer-supplier relationships (Wickens, 1987). In
other words, when firms join the Toyota supply chain, they need to adapt to the
Toyota production method and the social demands.
Winfield
and Kerrin (1996) indicated that, when Toyota moved to the UK set up their
plant and joined the UK suppliers, their aim was for Toyota (UK) to be a
world-class manufacturer. They also made a successful point that Toyota was
enthusiastic about modifying their technology to acclimatize to the local cultural,
social and industrial environment of the UK. Furthermore, Toyota continued to
modify their programmes and, reportedly, held more regular of team meetings and
training for the suppliers in key identifies interpersonal skills. In addition,
Winfield and Hay (1997) stated that Toyota also chooses their key suppliers who
had preventative behaviours about the way to adjust, perhaps requesting
detailed contingency plans and knowing how to take advantage of “learn as you
go”especially the buyer and supplier relationship. To encourage a close
relationship with their suppliers, Toyota also invites their suppliers to
contribute ideas towards product design (Ohno, 1988).
Toyota,
through their suppliers’ relationship, not only builds up an efficient supply
channel in terms of their products design or expertise transfer and training,
but also supports their suppliers in terms of economic and various suggestions,
involving Just in time (JIT) manufacturing systems (Winfield&Hay
,1997,p.458). The critical point is how the firms in Toyota’s UK supply chain
have changed their working attitudes towards management and have broadened this
into the suppliers’ organizations. Winfield and Hay (1997) said that there was
a generation gap between Toyota and their suppliers when the latter were
arranging training courses in interpersonal communication and problem solving.
In contrast, the Toyota suppliers not took on the “whole package” of change,
but also changed the effect on the manufacturing progress within the supply
channel in support of Toyota (Winfield and Hay,1997).
However, Toyota in Europe has constructed a collaborative relationship with their
suppliers. It is attractive to share expertise and knowledge between firms
compared with the traditional buyer and suppliers’ relationship whose only
focal point was on the trade processes in Europe. This is not only critical in
terms of cultural difference but also Toyota managerial methods in Europe. Wakabayshi
and Graen (1991cited in Cheng 1996) investigated Toyota in the USA in terms of
the organization’s operation and cultural collision. Further,they referred and
explained six aspects of the Toyota management model as
follows:
1.
selection and placement
2.
organization growth stages
3.
performance appraisal
4.
promotions
5.
rewards
6.
adopted Japanese management practices
The
first issue is to choose the key suppliers, then transfer and train professional
knowledge in order to make judgements and solve problems together.
Nevertheless, the Toyota management model is focused on the organization
development between the buyer and suppliers. Performance judgment images in
Toyota’s modernistic organization stress continuance, which is required to
avoid poor performance. In other words, good performance is needed to do
promotional activities in the new business marketing in the USA. The rewards
must be very fair among Toyota’s suppliers in order to adopt a Japanese
management reproduction in the USA. Awuah (2001) studied the Australian
supplier John and Bryce (J&B), who have a relationship with Toyota in
Australia. J&B is a supplier who sells pneumatic air tools to Toyota in
Melbourne, Australia. Toyota is famous for insisting on product quality, quick
responses, aggressive prices, technological support and a management system.
These elements are common directions for J&B in doing business with Toyota.
The impact of these elements on Toyota and the J&B supply chain members’ development
is focused on the quantities of the products and connected accessories, a total
of over 100 items to Toyota regularly. In addition, the J&B managers always
visit Toyota four times per week, attend meetings and solve problems together,
but the manger contacts Toyota every single day. This is a step by step way to
build up and maintain the buyer/supplier relationship.
As
a result, a lengthy and steady’s buyer and supplier relationship in order to know
equally the firm’s needs and how to exploit each other’s balancing ability in
meetings is required. Awuah (2001) reported that J&B said “They know us; they
trust us. If they ask us for something, they are pretty sure that they are going
to get what they want. If something is wrong at Toyota, someone is there
straight away. We supply goods; we back that up with reliable services and if
there are problems, we will help solve them”. The Toyota and J&B relationship
offers a basis for how a firm can represent its exterior capability
Posting 14
Selecting the Right
Supplier
Selecting the
suppliers who can meet your consumers’ demand for higher-quality ingredients
may bring some initial costs, but it will pay off over time through consistent,
high-grade materials. However, the process to find the ideal supplier is often
not easy and requires discipline and hard work.
Identifying a
Supplier
Before selecting your supplier, it is important
to gather the opinions of stakeholders and define the criteria for the
selection process. This list of stakeholders may include members from research
and development, purchasing, marketing, quality assurance and any other area of
your organization that touches the supplier selection process.
During this time, it is important to identify a
few suppliers to assess their capabilities and compare pricing. The supplier
selection team should work with the potential suppliers to establish
specifications. For example, they should explain how the supplier’s materials
would be used in your products and within the manufacturing process. Keep in
mind that the ultimate goal is a win-win situation for the supplier and
manufacturer; therefore, open and transparent communication is extremely
important.
A key criterion in selecting the right supplier
is value. Cost should not be the lone driver; you should instead look at the
total cost of ownership, which looks at the supplier’s:
·
Customer service
·
Delivery commitments
·
Reliability and responsiveness
·
Resource savings (hard and soft)
Measuring
Supply Performance
Another important step of the supplier
management process is developing an audit and assessment program. Best-in-class
supplier programs conduct audits throughout multiple stages of the
manufacturer/supplier relationship. You should always conduct an audit before
the contract is signed to confirm that the supplier does not have any
significant compliance or quality system failures that could affect your
ability to produce top-quality products. Another reason to conduct the audit
beforehand is to understand the supplier’s strengths and weaknesses before the
relationship becomes official.
Even after the contract is signed, you should
continue auditing, basing the frequency of the audits on the criticality of the
supplier. To determine the frequency, all suppliers should be categorized into
a level of risk or importance. This prioritization will help you be smarter and
more effective with your resources and place a higher focus on your important,
high-risk suppliers, while continuing to monitor second-tier suppliers.
Beyond an established audit program, you should
continuously monitor and assess each supplier’s performance. You can track
positive or sustained strong performances, as well as negative trends.
Gaining
Supplier Feedback
Another tool you can utilize with suppliers is a
self-assessment questionnaire. The supplier self-assessment can be used to
identify performance gaps, as well as discover how the supplier understands
their own operation.
In addition to audits and assessments, it also
is beneficial to monitor informative metrics that direct value to the business.
You should discuss and select the appropriate metrics with suppliers to receive
their input and understanding of purposeful measurements. Examples of these
metrics include rejected lots, perfect shipments and documentation errors. The
metrics selected should measure the total cost of ownership, as well as improve
performance toward the maximum finished product performance.
Achieving
Certification
As your supplier relationship grows stronger,
and both parties feel they are receiving positive performances, the supplier
may be able to achieve a certified status. This occurs when you establish a set
of selected criteria to be met by your suppliers. Certification must be
obtained with sustained successful performance and can be lost with poor
performance or a negative compliance outcome from an audit.
As the relationship continues to grow, the
supplier also will become more integrated into your manufacturing process.
Developing
Partnerships
Ultimately, the manufacturer/supplier
relationship is at its best when a strategic partnership is formed, allowing
full knowledge of the source of materials and ensuring high quality.
With a stronger business partnership, a supplier
is more likely to:
·
Anticipate what is needed from the manufacturer and begin to
take the leadership role in communication.
·
Notify the manufacturer if problems occur that limit
production availability, or a quality issue is identified.
·
Communicate production
delays when downtime or maintenance is required.
This type
of partnership allows for an increased understanding and mutual benefits for
both parties. It cultivates stronger commitments and encourages a greater
interest in success for the material and finished goods. This type of
relationship is your ultimate goal.
However, there are risks associated with forging
this kind of partnership. Trust in both parties becomes paramount, and both
entities must ensure no potential or real conflicts of interest occur. When
both parties become more reliant on each other, if there is a breakdown on
either side or the relationship dissolves, there is much more to lose.
Ensuring
Quality for Consumers
Depending on the number of materials and
ingredients needed, developing a supplier quality management program can be a
complex and upfront investment. However, once you choose to build strong
relationships with reliable suppliers, you will have peace of mind, knowing
you’re delivering high quality to your consumer.
