FUTURISTIC GROOVES

Building Deep Supplier Relationships
Two Japanese automakers have had stunning success building relationships with North American suppliers - often the same companies that have contentious dealings with Detroit’s Big Three. What are Toyota and Honda doing right?

The Supplier-Partnering Hierarchy

Conduct joint improvement activities.

• Exchange best practices with suppliers.
• Initiate kaizen projects at suppliers’ facilities.
• Set up supplier study groups

Share information intensively but selectively.

• Set specific times, places, and agendas for meetings.
• Use rigid formats for sharing information.
• Insist on accurate data collection.
• Share information in a structutred fashion.

Develop suppliers’ technical capabilities.

• Build suppliers’ problem-solving skills.
• Develop a common lexicon.
• Hone core suppliers’ innovation capabilities.

Supervise your suppliers.

• Send monthly report cards to core suppliers.
• Provide immediate and constant feedback.
• Get senior managers involved in solving problems.

Turn supplier rivalry into opportunity.

• Source each component from two or three vendors.
• Create compatible production philosophies and systems.
• Set up joint ventures with existing suppliers to transfer knowledge and maintain control.

Understand how your suppliers work.

• Learn about suppliers’ business.
• Go see how suppliers work.
• Respect suppliers’ capabilities.
• Commit to coprosperity.