hands-on activity with TPS in different supplier environments. They also begin
to create a bond across Toyota suppliers, almost like a club.
These activities are conducted within the context of BAMA (Bluegrass
Automotive Manufacturing Association), Toyota’s supplier association. It started
in Kentucky when Toyota opened its first assembly plant there, but is now
throughout North America. These are core Toyota suppliers who meet during the
year, sharing practices, information, and concerns. There are committees that work
on specific things, including joint projects. The meetings are important and allow
Toyota to provide key information to suppliers. But the networking is even more
important.
In sum, to be successful, a lean extended enterprise must have strong leader-
ship from the final assembler, partnering between the final assembler and its
suppliers, an established culture of continuous improvement, and joint learning
among the partners. At the very least this requires a stable set of suppliers who
have learned a common philosophy of operations and are part of a broader
supplier network.
Building a Lean Extended Enterprise
Companies working to learn from Toyota to build high performance supply
systems seem to want to skip over the hard work of developing effective sup-
plier partnerships, looking for easy solutions through supply chain software
and aggressive price reduction approaches. Toyota’s approach in North America
provides a model for building a successful lean learning enterprise from the
ground up. The process can be summarized by the following steps.
- Become a Role Model Lean Customer
You can’t teach suppliers what you yourself have not yet mastered.
Toyota worked hard to develop the Toyota Way of management in North
America, teaching American managers the philosophy. A common complaint
we hear from suppliers who work for U.S. auto assemblers is that they’re asked
to do things that the assemblers themselves do not do or are unable to do. The
complaints range from a particular way of documenting the processes to ineffi-
cient processes within the customer that drive their costs higher. For example:
Our product development costs as a supplier are included in the piece price. But
[American Auto] is redesigning themes for the vehicle two to three times after the
program is officially launched, and we will spend $3 million in engineering time
when we budgeted $1 million in the piece price. No one at American Auto seems
to understand there is a budget out there. It can escalate. It seems free to them.
It is difficult to change fundamental operational practices and to improve. It’s
seductive to simply push demanding requests onto suppliers and avoid internal
change. But asking suppliers to do what the customer cannot will undoubtedly