Not known for complacency, Toyota Motor Corp. is convinced its bond with suppliers could be stronger.
So in yet another groundbreaking move sure to draw snickers in Detroit, Toyota Motor Mfg. North America Inc. (TMMNA) is taking a unique step to solidify a supplier relations model that already is considered the industry's best.
Rather than focusing primarily on evaluating its suppliers' performance, Toyota is turning the tables: Suppliers now get to evaluate Toyota, make suggestions and file complaints, without fear of reprisal.
Osamu “Simon” Nagata, vice president-purchasing for TMMNA, says he encouraged the Bluegrass Automotive Mfg. Assn. (BAMA — a group of 94 Toyota suppliers) to develop a system for suppliers to give feedback about Toyota procurement.
BAMA since has formed the Voice of the Supplier Committee, which already has raised several issues with the auto maker.
“We are not evaluating ourselves by ourselves. We are asking our internal divisions and our suppliers for their feedback,” Nagata says. “We recognize we have many things to do to improve our performance.”
The committee urged Toyota to improve its Internet-based Worldwide Automotive Real-Time Purchasing (WARP) network, which launched several years ago.
“There are some concerns among suppliers that this system does not dramatically improve their process,” Nagata says. “We've decided to put more money into WARP.”
Nagata also established this year a Supplier Relations division within TMMNA purchasing as “an internal system to eliminate unnecessary burdens (on suppliers) caused by Toyota.”
Heading the division is Sig Huber, assistant general manager-purchasing. Huber's office already has addressed some problems, with the help of the Supplier Representative Quality Committee, which consists of Toyota staffers and 18 parts makers.
For example, different plants within Toyota North America have different methods for counting defective parts per million, causing conflict and hard feelings.
“This committee created a standard PPM methodology that should result in PPM reduction,” Huber says.
Another problem was shipping containers. “Toyota was not always perfect on returning packaging back to suppliers,” Huber says. “Sometimes they would get boxes with no lids, or vice versa.”
While some auto makers worry about getting parts from bankrupt suppliers, Toyota worries about its imperfect handling of shipping containers.
Toyota purchasing — by the numbers
500 suppliers, $1.8 billion purchased in North America for Japanese plants
$25 billion purchased from NA suppliers in 2004, up from $22.7 billion in 2003
2004 budget includes $17.5 billion in parts for NA auto plants
