Toyota’s supplier association: a case study

So, what is this supplier association? Well, I'll read out the definition. The supplier association may be defined as a mutually benefiting group of a company's most important suppliers brought together on a regular basis, for the purpose of strategic alignment, planning, and operational improvement, designed to produce world-class standards of quality, cost, delivery, and innovation.

So, what's the logic? Well, the logic is we're working as a team, a team of a customer and the most important suppliers. We're working together to establish what are we trying to achieve as a supply chain. We're working on the strategy, the policy, the direction, and aligning everyone so that we're all going in the same direction. We're building trust, we're building relationships, we're sharing knowledge and expertise, we're sharing learning, we're finding ways to eliminate waste both between the companies and inside each person in the supply chain.

So, what are the goals? Well, frankly, the goals are whatever we decide in the strategy, but the typical sort of thing you see is 100% delivery, 100% quality, maybe if we're in a manufacturing sense, delivery to the point of use, continual cost reductions year-on-year, innovations in the process or the product, and generally trying to produce a lean supply system right along the supply chain, all the way from raw materials to final product.

So, in Toyota's case, using the classic Toyota production system, trying to share this thinking, the Toyota production system model that you see before you right along the supply chain; not only the basic areas like the philosophy, visual management, stability, and levelling, but the whole just-in-time system, the whole in station quality, right first-time quality, waste focus, continuous improvement, and working on the people in team work. Not just Toyota to their suppliers, but Toyota suppliers to their suppliers, and their suppliers to their's, so right down to these very small third, fourth, fifth-tier suppliers. So, basically, when you have any learning, innovation, improvement, method, tool, approach, very quickly over a few weeks or months, it gets spread right across the supply chain, so everyone's working on tomorrow better than today.