Page 304 - The Toyota Way Fieldbook

Chapter 12. Develop Suppliers and Partners 279

Controls plant. But Toyota’s policy is to never sole source. They always want at
least two to three potential sources for every component. They do not want 10,
but do want intense competition between suppliers to help motivate improve-
ment. The suppliers each get the business for a product, and they keep that
business over the life of that model until a new version is introduced. At that
point the next model is bid again. The incumbent may have a big advantage,
unless other conditions warrant switching products around. It is possible for a
poor performer to lose some share of Toyota’s business and for an excellent sup-
plier to increase its share over time.
Toyota had invested heavily in teaching the Toyota Production System to
Johnson Controls and would not add a supplier of a critical component like a
seat without a similar level of capability to build and deliver almost perfect
quality, just-in-time, and in sequence. So they asked JCI to enter into a joint ven-
ture with Araco, Toyota’s premier seat supplier in Japan, 70 percent of which is
owned by Toyota. The joint venture, called Trim Masters, Inc. (TMI), was formed
in 1994. Johnson Controls is the single largest shareholder, with 40 percent, but
Toyota and Araco together have controlling interest.
This example and many more tell a story of interlocking structures with
supplier partners. It is more like a marriage than casual dating. Technical sys-
tems, social systems, and cultural systems are all tightly intertwined. It goes
beyond manufacturing to product development systems. It is not enough to be
a good supplier. The supplier must act as a seamless extension of the refined
lean systems of Toyota. The interlocking structure was reinforced in the case of
TMI by Toyota’s ownership and control. For Johnson Controls, a condition of get-
ting the business was that they had to invest in a separate Toyota business unit
with strong firewalls between it and the rest of JCI. The structure reinforces the
interdependent processes with Toyota.
Investing in interdependent processes means more than a customer issuing
a set of requirements to a supplier. It means the way they work fits together. If
the customer is asking for just-in-time delivery of material, the supplier should
have the capability to build just-in-time, not ship from inventory. If the customer
has the flexibility to quickly change to a different product mix, the supplier
must have that capability. If the customer picks up product in tight time windows,
the supplier must have the structure in place to get the product reliably on the
dock, preinspected within those time windows. In other words, the processes
used to design, make, test, and deliver a product should be seamless, as if each
partner is an extension of the other.
Control Systems

Partnering gives the impression of a relationship among equals. “Trust” suggests
that Toyota lets suppliers do their own thing. Nothing could be further from the