Page 320 - The Toyota Way Fieldbook

Chapter 12. Develop Suppliers and Partners 295

Philosophy
Low piece price

Performance measures Principle
Piece price, quality, Suppliers must be
delivery pressured to get
Buyers as
best price
hunter-gathers

Strategy
Evaluate best piece
price job by job

Tools Method
Bidding, Quality tools, Open market bidding
balanced scorecard & price downs

Reason
Lowest global material
cost
Unintended Results
Parts shortages, quality
Controls Effect
problems, customer-
Piece price, deliver to Short-term cost
supplier conflict, no
schedule, quality reductions boost profit
innovation, increased
metrics
waste = higher total
system cost
Figure 12-2. Traditional vendor management

The goal is to eliminate waste not only in Toyota plants but in the supplier
plants and in the connecting processes in between (e.g., the logistics system).
Suppliers are extensions of the learning enterprise participating in kaizen. For key
components, Toyota selectively chooses two to three strategic partners for each
component and encourages competition between them. Each will typically get an
exclusive contract for that part for one car model but knows they can lose Toyota
market share in the future if they do not perform. There are many tools for manag-
ing cost and improving the product, process, and supplier’s capability. By investing
in the partnering characteristics in the supplier partnering hierarchy, Toyota over
the long term is getting the annual price reductions from suppliers that are neces-
sary to be globally competitive, but without sacrificing quality or innovation.