you have a capable network of suppliers who can truly collaborate on product
development and manufacturing improvement, you do not want to contami-
nate the network with inferior suppliers. When you introduce a new supplier,
you can start to train them in the lean way from the start, beginning with a small
order. Test them on a less critical component and let them earn their way into
the network.
At the Toyota Technical Center they gave the example of headlamps for
vehicles. They would not source an entire headlight to a brand new supplier
but instead started with fog lights. Valio, a French supplier with operations
in North America, was first given a fog lamp and was trying to get head-
lights. At first, Toyota did not think they were ready for it. But Valio started
performing well and being considered for headlamps for the next new model
introduction.
An example of a failed Toyota project was a rear headlamp given to an
American company selected by purchasing because of its low bid. As it turned
out, it could bid that low because it intended to build the part at a Mexican plant
to take advantage of the low labor rates. This Mexican plant had never been
tested to make Toyota parts. Once they got manufacturing in place, they expe-
rienced off-the-chart scrap rates for the parts. The Toyota engineers who had
recommended a different supplier based on engineering and manufacturing
capability were furious. Even though Toyota was not paying for the repair costs,
and the supplier still wanted the business and was willing to continue at the
low price point, Toyota decided to give the business to someone else. It cost a
bit more, but it was worth it to get a reliable flow of quality headlamps to the
assembly plant. To Toyota, this became an object lesson in the folly of chasing
low prices across national borders.
- Develop Mechanisms for Joint Enterprise Learning
Learn together and capture learning in standardized routines.
The highest level of the lean enterprise occurs when partners in the enterprise
are learning together and capturing the learning in standardized processes.
You don’t get to this level overnight. You can imitate Toyota’s supplier asso-
ciation and find it’s just one more meeting or one more visit between the
customer and the supplier. In fact, this was often what Toyota’s supplier asso-
ciation in America looked like in the early days. It was only when Toyota started
to show it could add value to suppliers through improvement programs that
the supplier association began to be viewed as a true source of learning and
improvement.
A better structure to imitate at first than the supplier association is the
jishukenactivities of Toyota. Take three to five of your top suppliers that are not
in a competitive relationship and form a kind of user group that works on proj-
ects in a plant from each company. Everyone learns and the plants get better.
Chapter 12. Develop Suppliers and Partners 293