Toyota views suppliers as extensions of its capabilities, but also as independent
agents. At first glance this claim may appear paradoxical, but it actually is not. On
the one hand, Toyota will not impose its own way or production system on its sup-
pliers. If a supplier can use a different production system effectively to achieve the
objectives required for cost, quality, and delivery, that’s fine. On the other hand, the
suppliers share a common philosophy of product development and manufacturing,
and many specific practices. In the codevelopment of products, it’s necessary to be
completely synchronized on timing, testing methods, metrics to specify product per-
formance, and even technical vocabulary. The result has been the evolution of com-
mon philosophies, language, and approaches between Toyota and its suppliers.
In the United States, suppliers quickly realize that to achieve Toyota’s
demanding performance requirements they must learn lean manufacturing
methods. Through various supplier development activities, they end up learn-
ing from their customers, and thus a standard emerges. Many of the actions of
Toyota that appear to be short-term cost-cutting initiatives are also investments
in learning. Toyota thinks of CCC21 as not just a price reduction program, but
a way to create a challenging environment so its suppliers will grow:
If we go to supplier and say we want you to reduce your price by 5 percent, they
will say okay and will lower the price and take a hit on profit. However, there is
no way to reduce price by 30 percent and stay in business. He has to go in and
revolutionize every part of the business. We will work with the supplier to make
the 30 percent. We will not leave them high and dry. In some cases you cannot get 30
percent out. If it is a simple part and very little labor, you cannot get 30 percent out.
Did you make a strong effort? Did you look at every step from raw material to
shipping out the door? Can you get a penny here and there? Maybe we only get
20 percent out, so we are both winners. Purchasing understands the cost for every
step of manufacturing from raw material on out.
Developing all of the individual suppliers to fill the North American needs for
Toyota was the first step in the puzzle of creating an extended lean enterprise. Once
the individual parts are in place comes the tough job of connecting these independ-
ent suppliers into a true supplier network. We call this a “lean learning enterprise.”
Long ago in Japan Toyota developed jishuken^4 ,or study group, as a means of
learning with its suppliers. Now they organize top suppliers into study groups. In
Toyota style, these are all “learning by doing” processes. Toyota believes in keeping
classroom training to a minimum. The important learning happens through real
projects on the shop floor, and suppliers must take ownership of their learning.
They have set up similar jishukenactivities with American suppliers (called
Plant Development Activities) trying various configurations. They found they
had to group suppliers by skill level with TPS since there was such a wide
range. These Plant Development Activities afford a chance for suppliers to get
Chapter 12. Develop Suppliers and Partners 289(^4) Translated as: Ji (myself), shu (autonomous), ken (study). In other words, suppliers are respon-
sible for taking the opportunity to learn for themselves, with mentoring from Toyota.