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Supplier Development Mexico


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Presentation for Oct 6 Saltillo, Mexico manufactureres conference

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Supplier Development Mexico

  1. 1. Supplier Development<br />A company’s undertaking to improve its supplier capability.<br />
  2. 2. Two Concerns<br />Companies’ organizational capabilities to develop their suppliers<br />Organizational capability as a subject taught to suppliers<br />
  3. 3. Key questions<br />What factors facilitate and a constrain a company’s attempt to replicate its organizational capabilities at suppliers?<br />How to prevent leakage to competitors?<br />
  4. 4. 3 Levels of Capability<br />Maintenance<br />Improvement capability<br />Evolutionary capability<br />
  5. 5. Scope of activity<br />Model-specific components<br />Whole factory<br />Whole company<br />
  6. 6. Evolutionary<br />Key suppliers<br />Consistent set of incentives to learn<br />Suppliers benefit<br />Relational<br />Obligational<br />Trust-based<br />Voice-based<br />
  7. 7. Long term relationship<br />Joint problem-solving in developing “Black Box”<br />Clear rule for sharing gains between customer and supplier<br />Customer requirements<br />Resources<br />Organizational support structure<br />
  8. 8. Obstacles<br />3 obstacles to the replication of organizational capability by suppliers<br />Tacit nature of knowledge<br />Class room training<br />Expensive<br />“We know more than we can tell.”<br />It may take other groups than Supplier Development<br />Supplier corporate governance<br />
  9. 9. Toyota Case Study<br />Toyota’s Production System and Toyota Quality Control are taught by two groups<br />Capability for capability building<br />Lower level of capability<br />Jishuken (Self study groups)<br />Lateral learning between suppliers<br />
  10. 10. Origen of Supplier Development<br />Toyota 1939 Purchasing rules<br />“once nominated as Toyota suppliers, they should be treated as part of Toyota (as branch plants); Toyota shall carry out business with these suppliers without switching to others and shall make every effort to raise the performance of these suppliers.”<br />
  11. 11. Keiretsu Shindan<br />Post WWII<br />Suppliers evaluated by:<br />Existence of management policy<br />Productivity improvement<br />Quality Improvement<br />Fulfillment of production plans<br />
  12. 12. Supplier Development Structure<br />Diffuse Total Quality thru:<br /><ul><li>Toyota QC Award
  13. 13. Management Kaizen plan
  14. 14. Supplier association</li></ul>Diffuse Toyota Production System thru:<br /><ul><li>Individual Assistance
  15. 15. Jishuken</li></li></ul><li>TPS<br />Relentlessly focused on the elimination of waste, exposes quality problems through line stoppages and forces management to fix the root cause of the problem.<br />Teaching of TPS to suppliers<br />Maintenance capability<br />Improvement capability <br />
  16. 16. TQC<br />Quality control techniques<br />HoshinKanri (policy deployment)<br />Links shopfloorprocesses to policies of higher level management<br />Evolutionary capability<br />
  17. 17. Operations Management Consulting Division (OMCD)<br />Charged to implement TPS<br />Within Toyota<br />Core suppliers<br />Same training<br />Same procedures<br />Same engineers<br />
  18. 18. KojoJishuken<br />Autonomous study group<br />Culmination of education and training <br />Middle Managers<br />First-Line Supervisors<br />Most important repository of Kaizen<br />
  19. 19. Jishuken Groups<br />Helping suppliers improve their shopfloors<br />Refining applications of TPS<br />56 factories apart of 52 enterprises<br />80% of Toyota’s spend<br />Suppliers are cascading TPS to their sub tiers<br />Annual supplier selection<br />2 month critical focus <br />
  20. 20. If and When Necessary<br />Individual assistance given<br />Quick results<br />Drivers<br />Suppliers profits plummet rapidly<br />Not meeting launch targets<br />
  21. 21. TQC<br />Purchasing depart diffuses<br />Responsible for Kyuohokai (Supplier Association)<br />Forum for sharing information<br />Regular seminars<br />Study group meetings<br />Training courses<br />Exhibitions<br />Member achievement <br />Cost, quality, delivery and development<br />
  22. 22. Toyota QC Award<br />Motivate suppliers to adopt TQC<br />Purchasing Dept. offers hands-on quidance<br />HoshinKanri<br />Quality Assurance<br />Cost Control<br />Genbakanri<br />Delivery management<br />
  23. 23. TaishitsuKyuoka<br /> “Strengthening of one’s constitution”<br />Long-term <br />Marketing<br />Cost and investment planning<br />Cost control<br />Process improvements<br />Quality improvements<br />
  24. 24. Kaizen<br />To address major suppliers declining revenues and profits.<br />Major task to help suppliers secure profits in the short term<br />Short term recovery of loss making suppliers<br />Longer term capability enhancement<br />
  25. 25. Removing fear<br />OMCD does share with Purchasing Planning Department <br />All productivity gains between OMCD and Suppliers is kept confidential<br />Suppliers would not participate in Kaizen <br />Suppliers keep all gains <br />Toyota expect benefits from improved supplier performance<br />
  26. 26. Summary<br />OMCD separate existence from Purchasing<br />Facilitate know-how between internal factories and supplier factories<br />Suppliers have incentive to enhance their evolutionary capability<br />Short term fixing of problem and long term capability enhancement<br />Suppliers taught TPS & TQC at the same time.<br />