TOYOTA'S RAPID EXPANSION

The consequences of Toyota's rapid expansion and the impact of its “lean production” system, focused upon manufacturing and supply-chain management, upon the firm's competitiveness in the international automobile sector

The consequences of Toyota's rapid expansion and the impact of its “lean production” system, focused upon manufacturing and supply-chain management, upon the firm's competitiveness in the international automobile sector

Introduction

Toyota Motor Manufacturing UK Ltd is one among many Japanese automotive manufacturers which lays claim to be at the forefront of these new specific developments in customer-supplier relationships (Mair 1994, 8-14; Wickens 1987, 13-19). Toyota now has 210 suppliers in 11 European countries, of which 50 per cent (by value and number) are UK-based. As production moves up to the projected full capacity of 225,000 units per year, the value of the supply chain is estimated to reach £880 million by 1999. Toyota Motor Company, with its emphasis on lean production, efficiency and quality, is seen by many to be an exemplary model of best practice for other firms to follow. Firms joining the Toyota supply chain will fully expect to become converts to the Toyota production method and the social demands of obligational contracting ways (Winfield and Kerrin 1996, 49-56).

Customer influence examined

Toyota claims in particular to encourage close partnering with suppliers; extending even to encouraging suppliers to participate in parts design (Ohno, 1988). Toyota will even offer advice and financial assistance to its suppliers who need to upgrade their production to meet the demands of quality and the JIT manufacturing system. Help is also freely given with the design of training and with management development programmes. All this takes place within the social boundaries of frequent company visits, an atmosphere of long-term trust and of a partnership based on mutual prosperity.

In selecting suppliers, Toyota places emphasis not simply on product quality and future ability to meet the just-in-time production demands; but also it seems, on more subtle cognitive and social variables. These variables are notoriously difficult to capture by traditional industrial accounting methods, and are only likely to surface by close first hand scrutiny of a company. The qualities are emergent rather than defined, and can be discerned after frequent in-depth company visits by purchasing teams. Research into Toyota's selection policies revealed that one of the core qualities looked for is the professional and intellectual integrity of management. This determined the degree of trust that can be ascribed to them. The attribution of trust to business partners and how this quality is perceived by onlookers is a burgeoning research field and is adequately reviewed elsewhere (Corrigan and Waterson, 1996; Sako 1992). The scrutiny which Toyota employs in selecting suppliers is emphasized by the fact that of 2,000 UK applications to join the Toyota supply chain, over 400 were repeatedly visited by Toyota for selection purposes, and of these only 105 were eventually chosen. The sample of Toyota's suppliers surveyed in this research is only 10.5 per cent, but represents a sufficiently large sample for inferences to be ...