sessions. The preferred approach to teaching TPS is to do a project at the sup-
plier’s plant. In the 1990s, for instance, Toyota established the Toyota’s Supplier
Support Center (TSSC), which was set up as a separate, wholly owned corpo-
ration to teach TPS. The approach was to work with the supplier to set up TPS
on one product line, create a model by working with a few supplier engineers
and managers, and let them discover TPS firsthand by doing it and experienc-
ing it. After the model was implemented, it was up to the supplier to keep it
going, with occasional coaching. It’s interesting that Toyota separated TSSC
from the purchasing relationship, even making it a separate corporation owned
as a subsidiary of Toyota. TSSC’s goal was to teach through doing and demon-
stration, and Toyota did not want the suppliers looking over their shoulder,
fearing they would be asked for extra price reductions. The process took six to
nine months of intense tutelage, focusing on one product family. Typical results
were a spectacular doubling of productivity, increases in quality, and dramatic
reductions in inventory and lead time.
More recently, TSSC has shifted its focus from free consulting to fee-based
consulting, focusing exclusively outside of auto. Also, part of the old TSSC was
shifted to an internal Operations Management Development Division that focuses
on internal training of American Toyota employees in TPS. Interestingly, one
way OMDD trains internal Toyota associates in TPS is to send them to suppliers
to work on a project. They say if they do the project at Toyota and their mentor
criticizes them, it will embarrass them in front of peers, so they would rather do
the training at a supplier where they are not among peers. Obviously, suppliers
also benefit from this training.
Toyota purchasing is now responsible for supplier development, but has
still separated TPS teaching from the business relationships. There are no 50-50
splits of cost savings. A Toyota purchasing executive explained:
We separate the cost challenge that all suppliers have anyway to reduce price from
some improvement or support activity. We are likely to send a TPS expert to work
with the suppliers two days a month on long-term development, and we do not
ask the supplier to share savings based on specific improvements. Instead, that is
part of our annual cost reduction targets for the suppliers. My engineers do not
understand how that improvement relates to a purchasing commercial arrange-
ment, and it is not a productive use of their time.
An example of a strategic supplier relationship comes from Delphi, the
largest automotive parts supplier. They have the size to support Toyota techni-
cally and globally, so Toyota decided to invest in training them. Delphi, set up
its own supplier development program for second- and third-tier suppliers mod-
eled after Honda and Toyota and asked for a Toyota TPS expert to be assigned
full-time to them for three years. Toyota would not agree to three years but did
agree to assign one of their most senior experts full-time for two years. Delphi
Chapter 12. Develop Suppliers and Partners 287