Page 87 - Toyota Under Fire

TOYOT A UNDER FIRE

that can meet the quality and productivity standards of its plants.
Parts made by outside suppliers account for about 70 percent of
a Toyota vehicle, so restricting kaizen to the Toyota plants would
affect only 30 percent of a car.
When the recession hit, the concern wasn’t just about how
Toyota was faring, but about how its suppliers were faring as well.
If any of the company’s larger suppliers were to hit major finan-
cial trouble because of dropping volumes and the credit crunch,
Toyota’s plants would encounter major difficulties. To address the
situation and the needs of suppliers, the purchasing department
of TEMA had begun an effort to track suppliers’ financial status
back in 2006, but this required a more intensive effort. The pur-
chasing team set up a war room to begin tracking the financial
position of every one of Toyota’s suppliers in North America at
a finer level of detail. According to Jason Reid, a general man-
ager in Purchasing, “We tried to move very quickly from a reac-
tive assessment model to a more predictive model because we
were worried about what was going to happen to suppliers if one
or more of the ‘Big Three’ declared bankruptcy. We were also
worried about which suppliers had more exposure to SUVs and
trucks versus passenger cars. So based on those predictive models,
we started developing contingency plans.”
How the company reacted to suppliers that were suffering
substantial ill effects is a great illustration of Toyota’s aim of im-
proving long-term profitability, not just cutting costs (see Never
Bully Suppliers, Your Partners, page 58). Robert Young, a vice
president in Purchasing at TEMA, notes that Toyota wasn’t inter-
ested only in the financial situation of its suppliers, but also in the
causes of any problems so that it could assess what, if any, assis-
tance Toyota could provide. “If [their difficulties were] a result of
manufacturing inefficiency—something that our team members

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