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Marginal: The Summer of Toyota

During this summer's Management Briefing Seminar in Traverse City, directed by the Center for Automotive Research, more of the buzz was centered on the sale of the two Detroit dailies than on the plight of many of the OEMs and, by extension, their suppliers.

During this summer's Management Briefing Seminar in Traverse City, directed by the Center for Automotive Research, more of the buzz was centered on the sale of the two Detroit dailies than on the plight of many of the OEMs and, by extension, their suppliers. Plenty of people were wondering where the notable presentations were. Two stood out for me, both from Toyota.

Simon Nagata, vp, Purchasing, Toyota Motor Manufacturing North America, admitted that they're not doing everything right-"We are experiencing growing pains"-but also said that the basis of supplier relations throughout the history of Toyota has been long-term, stable relationships characterized by mutual benefit and prosperity, trust and effort. Nagata suggested that the OEM and its suppliers "should work as a team for common goals." What's more, he said that they are aware of the fact that relationships don't always run smoothly and that there must be a feedback mechanism such that suppliers need not fear "retribution" for surfacing problems. This brings to mind the difference between andon cords in Toyota plants and those of some other vehicle manufacturers: At Toyota, those cords are there to be pulled so that any issues can be resolved ASAP; at other plants, there is boasting about how infrequently they're yanked, not recognizing that early identification of problems is to be praised, not avoided. Nagata acknowledged that there are expectations that Toyota has of its suppliers-such as a commitment to kaizen, a willingness to invest in technology that benefits such things as the environment, safety, and cost reduction-and that once targets are set and understood, there will be no compromise. In other words, Toyota may be a good customer, but at the end of the day it is still the customer. But one thing that Nagata said undoubtedly set many suppliers who don't have contracts with Toyota back on their heels: "Purchasing's primary role is to help suppliers to become stronger." That came after he noted that they want suppliers to be "happy, motivated and self-reliant." Think of that: They're acknowledging that people who feel as though they are valued are likely to do a better job and that the people in the Purchasing Dept. are not there to squeeze, squeeze, squeeze but to help.

The second exception came during the remarks of Jim Press, president and COO, Toyota Motor Sales, USA. Press complemented GM, Ford, and Chrysler on what they've been doing in the areas of marketing and design, and went on to say, "Make no mistake about it. Detroit automakers are rebuilding and preparing for a new era of prosperity. They will force all of us to get up on our toes, bring out our best, and inspire new customers." Toyota isn't leading the market in sales (except the Camry continues to sell more than any other car), but it surely has more money in the bank than the other three combined. Those compliments are an example of gracefulness. Then he went on to propose that there be a positive move by the auto industry to help define work-out strategies for the benefit of industry and society: "I propose we put together a meeting of top automotive leaders in a neutral location where we all leave our company name badges at the door. That way we can engage in candid dialogue, unify, and come out with a positive direction. Think of what we could do with issues like CAFE and global warming if we join hands and develop our own vision for the future, rather than waiting for regulators to do it for us. Let's drive the process and not get run over by it." 

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