Toyota on Supplier Relations, An Illustration of Many Toyota Way Principles
This article features Jim Press,
Principle 1: Base Your Management Decisions on a Long-Term Philosophy, Even at the Expense of Short-Term Financial Goals.
Toyota could easily have been criticized early in Hybrid vehicle development for working on a vehicle that was “too expensive” or hurt short-term financial targets. While publicly traded, Toyota isn’t a slave to short-term Wall St. pressures as other companies are.
Principle 11: Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve.
That network also seems include competitors, in this and other cases where Toyota has shared hybrid technology (with Ford).
In italics are the comments from Press. My comments are in bold.
The one challenge I would make when reading this… think about your “lean” efforts. No matter where you are on the journey, are you patting yourself on the back and satisfied that you’re doing all that you can? If you are just implementing a few lean tools, look at the number of Toyota Way philosophies and principles that can be seen in just one speech. Strive to adopt the Toyota Way, all of it, and you’ll go much further than you would with lean tools.
“Our business has always thrived on good relationships…and they are even more vital as we face the challenges of tomorrow. Unfortunately… we’ve let them slip a bit over the past decade or so…and it’s time to put our house back into order.
Take supplier/factory relationships, for instance. There was a time when suppliers and automakers were fiercely loyal to one another and trusted each other.
Today, we see almost continuous headlines about automakers leaning on suppliers to cut costs…at all costs.
In the end, that doesn’t make good sense. We’re in this boat together and we need each other over the long haul. When we rob Peter to pay Paul, we both get poorer.
You know…people often ask me why Toyota is highly rated by suppliers. And I tell them the secret lies in our Toyota Way philosophy of respect for people. (Principles 9 & 10)
We respect our supplier partners by listening to them, sharing our plans for the future and fostering long-term relationships. In other words, we focus on their success as much as our own. (Principle 11)
We know that…if they have stable production (Principle 4: Level Out the Workload) and are making money…they will be able to grow and develop better products that…in turn…will help us be more successful.
We watch costs as much as anyone, but we also work hand-in-hand with our suppliers to help them reduce their costs, often teaching them key lessons we’ve learned in more than 50 years of perfecting the Toyota Production System. (Principle 10: Develop Exceptional People and Teams Who Follow Your Company’s Philosophy)
For instance, we recently sent a team of our people to a chrome emblem supplier to work with their in-house kaizen team on efficiency and cost reductions. Our hands-on approach (Principle 12: Go and See for Yourself to Thoroughly Understand the Situation) helped them to identify key changes in production that led to less waste and higher productivity.
There’s no rocket science to our methods…just the strong desire to respect and help suppliers help themselves so everyone is successful. Anyone can do it…and those who do it well…will advance tremendously in the Golden Era.“