Case study on Toyota and its suppliers: Japanese automotive industry, Component suppliers of toyota, Quality assurance, purchasing poilcy, contract between toyota and component suppliers, toyota quality control rewards - parameters and outcomes, mutual development amongs component suppliers, commendation system, Subcontacting - comparison between indian and japanese subcontracting

1. TOYOTA AND ITS
COMPONENT
SUPPLIERS
CASE STUDY – QUALITY
ASSURANCE
Presenters
PRN074_Tejaswini Beliraya K
PRN099_Harender Singh
PRN124_ Pravin
PRN049_Yash Bathvi
PRN024_Harish Subramanian
PRN079_ Tanat Mohapatra

2. JAPANESE AUTO INDUSTRY
PRINCIPLE
“Quality First” to respond to the expectations of the users
HISTORY
Japanese auto industry was founded during the 1930s at the same time
as industrialization made a sudden development
AUTO INDUSTRY AND COMPONENT SUPPLIERS
The component industries, which had little experience and no stable
basis, had to be brought up by the auto industry itself.
TOYOTA IN THE HISTORY
Two of the largest component suppliers, Nippon Denso Co. Ltd., and Aisin
Seiki Co. Ltd., were at first developed in Toyota and became independent
later.

3. Toyota purchases components
from as many as 200 component
suppliers
• About 2 Billion units are purchased by
Toyota annually.
• About 150 thousand kinds are purchased
monthly
• Around 300 million Dollars are spent
per month by Toyota for auto
components
• Toyota District: 119
• Tokyo District: 66
• Osaka District: 25
• US
• Canada
• France
• UK
• Sweden etc.
OUTLINE OF TOYOTA’S
COMPONENT SUPPLIER
NUMBER OF
SUPPLIERS
DISTRIBUTION OF
DOMESTIC
SUPPLIERS
DISTRIBUTION OF
INTERNATIONAL
SUPPLIERS
NUMBER OF
COMPONENTS
VALUES OF
PURCHASED
COMPONENT
COMPONENT SUPPLIERS OF
TOYOTA

4. “Quality first ”
Motto of
Japanese automobile manufacturers
QUALITY ASSURANCE
T O Y O T A
Suppliers
Toyota purchases components from as
many as 200 suppliers
Difficulty in Inspection
Very difficult to conduct detailed
acceptance inspection for 200
suppliers.
Quality audit
But Necessary actions to help suppliers
maintain excellent process capability.
Toyota’s way of Assurance
Toyota expects the suppliers to have excellent
planning and maintenance of process
capability.

5. Toyota expects
the
components
suppliers to…..
PURCHASING POLICY
T o y o t a M o n r o e
D o c t r i n e
Doesn’t accept Inexpensive Component
Does not accept an inexpensive component unless it
confirms that such price is based on the actual cost
Excellency of Supplier Management
Supplier management itself should maintain
quality as well as cost.
Long-term Business Relationship
Looks for a mutually beneficial transaction
with any vendor whose technology and
management
are excellent regardless of its nationality
Strong Supplier Administration
Demands stronger administrative systems of the
suppliers. Long lasting transactions

6. CONTRACT BETWEEN TOYOTA
AND COMPONENT SUPPLIERS
BASIC RULES
QUALITY
ASSURANCE
LONG TERM
STABLE
TRANSACTION

7. UPBRINGING OF
COMPONENT SUPPLIERS
TOYOTA QUALITY CONTROL REWARD
With the aim of having TQC activities take root even among Toyota
suppliers
GUIDANCE OF TOYOTA PRODUCTION SYSTEM
Toyota production system is based on 2 concepts – “Jidoka” and “Just in
Time”
MUTUAL DEVELOPMENT BY SUPPLIERS' ORGANIZATION
Focuses on developing mutually beneficial relationship with suppliers ,
especially those deemed as most strategic to the brand.
ASSISTANCE IN IMPROVING QUALITY CONTROL
A smart quality control strategy involves reducing risk, enhancing training,
creating better processes, and making the workplace safer and cleaner for
everyone who spends time within it

8. Toyota Quality Control Reward
1
2
3
4
Established in 1969, to strengthen the management
control system of component suppliers.
Excellence Reward which evaluates control
improvement activities in workshops.( 1st Reward)
Superiority Reward which examines total
managerial system.( 2st Reward)
As a rule suppliers try the Superiority Reward
after winning the Excellence Reward.

9. Is everything put in order in workshop?
Set in order
Are the ideal intermediate stocks of half a day
kept properly?
Intermediate stocks
Are the necessary actions for these taken?
Check
Are the rules such as operation standard or condition
control observed?
Control variable
Are the activities for maintaining and improving
quality and cost done actively in the shops?
Quality check
Are the activities for maintaining and improving
cost done actively in the shops?
Cost improvement
PARAMETERS
01 04
02 05
03 06

10. Company policies or ideas have become extensively documented across the
sector.
Communication with top management, cooperation with top management,
cooperation with the union, and human relations have all improved.
Such self confidence has been grown that great achievement can be done if
all the members of a company work together aiming at one target.
Short comings of suppliers own companies have been clearly identified and it
has come possible to take counter measures more quickly than before.
Reward system can improve the managerial system.
Toyota Quality Control Reward
Outcome

11. MUTUAL DEVELOPMENT
AMONG COMPONENT
SUPPLIERS
Request to Toyota for informing and explaining the policies of the company and of its
purchasing departments.
Holding a meeting for mutual presentation of activities in defective reduction or
quality improvement.
Lectures and contests on proper techniques (measuring techniques, selection method by
spark, I.e. igniting spirit of enthusiasm).

12. MANAGER
QC Manager Course
Reliability Manager Course
STAFF
QC Basic Course
Reliability Basic Course
Design Of Experiment Course
FOREMAN
QC Circle Promoter Course
Problem Solving Course For Foreman
COMMENDATION SYSTEM

13. CO-OPERATIVE ORGANISATION

14. Subcontractor Relationship & Development in
Indian Manufacturing
The incidence of subcontracting in the Indian manufacturing sector is low, that informal manufacturing growth is
concentrated in the traditional component that growth of the traditional component of the informal sector is not due to
subcontracting relations with the formal sector and that there is a significant positive relationship between
subcontracting and the expansion of the modern segment of the informal sector
FORMAL
SECTOR
INFORMAL
SECTOR
Different views of the
impact of subcontracting
on the Sector

15. Comparison between Indian and Japanese
Subcontracting System
Priority
Supplier
Management
Supplier
Administration
Quality Control
Standard of
Operation
Communication
Gap
Vendor Risk
Management
Needs
Contract Safety
Management

16. Conclusion
Large firms prefer to subcontract to the relatively more dynamic and modern, as opposed
to stagnant and traditional, portions of the informal sector. Using the viewpoint it’s evident
that firms in subcontracting relationships should be more productive than their non-
subcontracted counterparts.
To improve collaboration between main contractors and subcontractors
• Integrated project delivery (IPD)
• Last planner system (LPS)

17. Thank You