targets for sourcing in China, as if that is an accomplishment in and of itself. In
the near–term, at least, this is not an option for Toyota. Toyota is well known for
excellence in engineering and manufacturing, and views suppliers as exten-
sions of its technical capabilities. It is not enough to be able to make parts to
specs. Suppliers must be able to innovate in the product design and process and
work closely with Toyota through the product development process. While there
are different roles in product development, ranging from being given general
(black box) specifications to being asked to design the part to being given a blue-
print and asked to make it, in all cases suppliers must be capable of working
seamlessly with Toyota engineers.
For Toyota in Japan, close partners like Denso and Aisin can work independ-
ently on the component design, generally anticipating Toyota’s needs before even
receiving specifications. However, in the United States this type of approach
would be considered unusual, largely because the U.S. suppliers may not have
the intimate knowledge of their customers that Denso and Aisin have of Toyota,
and also because they lack the specific technical capabilities. The U.S. suppliers
often find that working with Toyota engineers is novel and very different from
working with the Big Three. As an executive at the Toyota Technical Center in
Ann Arbor, Michigan, put it:
Some people in Japan have grown through the parent company and then moved
to jobs at various suppliers, so they already know the culture. Toyota in Japan and
their suppliers know each other’s capability. Delphi and other large companies are
going to top management in Japan and saying, “Here is what we would like to do
in the U.S. with TTC,” and salesmen from the suppliers will go over to Japan and
tell Japanese management of Toyota what they want to hear. But the American
suppliers often cannot deliver on the salesmen’s promise. There is a problem of
capability among American suppliers compared to what Toyota has come to
expect in Japan.
It’s not a matter of the American suppliers being weak technically or inca-
pable in general, but that they do not understand the Toyota Way of product
development and preparing a product for production. For example, Toyota sup-
pliers say that Toyota often, makes things vague on specifications, especially at
the beginning of a new model development. They might not spell out the exact
level of drag/resistance/looseness of a hinge as it closes and opens but say
something like, “This has to do with the ‘feel,’ and thus is hard to quantify”—it
will get adjusted as they go along. Toyota in Japan is also used to giving vague
specifications to suppliers. In fact, this is expected in the “guest engineer” system.
First-tier suppliers typically have a significant number of design engineers who
spend about three years living in Toyota’s engineering offices full-time. They
work alongside the parent-company engineers, learning the product develop-
ment process in detail. At some point they understand the process and language
Chapter 12. Develop Suppliers and Partners 283