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.