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Getting to Win-Win
How Toyota Creates and Sustains
Best-Practice Supplier Relationships
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Toyota.indd B 8/19/07 2:52:21 PM

 Getting to Win-Win
How Toyota Creates and Sustains
Best-Practice Supplier Relationships

M
uch has been written about “the they would most like to do more business. The
Toyota Way.” Why, then, add to reasons they cite for this preference are manifold:
that extensive body of publica- Toyota allows them acceptable returns on their in-
tions? The answer is that many vestments, is reliable in honoring its contract price
automotive executives we’ve agreements, supports suppliers in improving their
talked with have raised questions that the litera- operations, respects their capabilities and intellec-
ture doesn’t clearly answer. Executives at OEMs tual property, and provides an equitable split of
want to know how to emulate Toyota’s example any cost reductions they achieve. The fundamental
in creating a base of suppliers that are committed principle guiding all these behaviors is simple but
to continuous performance improvement, unshak- profound: treat all suppliers fairly.
ably loyal, integrated into an extended network,
and generating stable financial results. And ex- Little wonder, then, that in many of our interviews
ecutives at automotive supply companies want Toyota’s suppliers began by stating immediately
to know how to participate in such relationships. that the relationship is just very different from
What principles and techniques does Toyota em- the relationship with other OEMs. But how,
ploy to create such a supply base and leverage it so precisely, does Toyota go about cultivating
effectively? And how do Toyota’s suppliers, in turn, that unique relationship? The answer is not as
experience that unique relationship? simple as implementing a few clear-cut proc-
esses. It lies in something both subtler and deep-
We recently undertook a broad study to uncover er: the culture and mindset with which funda-
the factors that set Toyota apart from the rest of mental principles are practiced.
the industry. As part of that effort, we conducted
extensive interviews with OEMs, suppliers, and in- In addition to treating all suppliers fairly, Toyota’s
dustry experts around the globe. Their experience approach to supplier relations rests on three other
and insights are reflected in this report. principles: establish long-term supplier partner-
ships, retain critical new-product development
(NPD) and design knowledge in-house, and take
How Toyota’s Supplier responsibility for suppliers’ development and
Relationships Are Distinctive growth. In translating these principles into action,
Toyota’s example offers particularly valuable les-
sons in three broad areas: supplier selection, sup-
Many surveys have confirmed that Toyota ranks plier collaboration, and supplier development.
as suppliers’ preferred OEM—the one with which (See Exhibit 1, page 2.)

Beyond to
Getting theWin-Win
Boom 1

Toyota.indd Sec1:1 8/19/07 5:57:37 AM

 Supplier Selection: Toward ship is in place, Toyota can expend far less effort
and incur far lower transaction costs during actual
Long-Term Partnerships production than would otherwise have been the
case. This is because Toyota and the supplier have
Toyota is constantly searching for new suppliers already sorted out the kinds of challenges that typ-
that can provide industry leadership on cost, qual- ically arise during production, such as misunder-
ity, and technology. However, the company will se- standings and misalignments in expectations. Sup-
lect only those suppliers that are willing to estab- pliers describe this managerial approach not only
lish long-term partnerships with Toyota and that as highly conservative and risk averse but also as
have the ability to be successful in such relation- firmly focused on partnership and the long term.
ships. Toward that end, Toyota imposes very strin- Toyota’s approach can go as far as discussing every
gent selection criteria and undertakes a long and detail of a proposed workflow and machine setup
arduous selection process. The goal is to ensure before the supplier is even offered the opportunity
that every supplier meets Toyota’s requirements to bid on a contract. Several years of these detailed
in terms of cost, quality, and technology, and also discussions can precede a first contract, even for a
demonstrates a commitment to and a good philo- relatively simple, low-tech product, such as wheel
sophical fit with Toyota. weights. Toyota’s extraordinary attentiveness ex-
tends to all suppliers, regardless of the products
Toyota invests significant time and effort—often they provide.
three to five years—in exploring a relationship with
a supplier before signing a first contract. The goal To manage this lengthy supplier-selection process,
is to build a solid working relationship, addressing Toyota deploys a cross-functional team consisting
and resolving all critical issues before awarding a of representatives from purchasing, engineering,
contract. This investment pays off: once a relation- manufacturing, and management. Although these

Exhibit 1. Toyota’s Success with Suppliers Rests on Four Principles

1. Treat all suppliers fairly

Toyota’s 2. Enlist suppliers that value 3. Retain in-house all levels 4. Take responsibility for suppliers’
sourcing long-term partnerships of critical NPD and design development and growth
principles knowledge: components,
systems, and vehicle integration

Stringent The world-class Toyota Toyota Production

selection criteria NPD process System expertise

Key tactics • Long and meticulous • Full in-house capacity to • Extensive monitoring of
selection process perform vehicle systems suppliers’ performance,
• Engagement of a cross- integration, which reduces involving suppliers’ senior
functional Toyota team dependency on suppliers management
from the start • Streamlined NPD process • Thorough quality audits
• Insistence on suppliers’ that optimizes interactions every six months
commitment to and with suppliers during design, • Rapid problem resolution
philosophical fit with improving productivity for addressing root causes
Toyota both Toyota and its suppliers • Development of suppliers’
• Systematic leveraging of capabilities through
supplier expertise knowledge-sharing networks

Source: BCG analysis.

Toyota.indd Sec1:2 8/19/07 5:57:37 AM

 individuals work together very closely to qualify a analyze the root causes of all problems and take
supplier, each has a distinct role to play. Purchas- the necessary corrective actions? Is it prepared to
ing personnel identify new suppliers and are re- be permanently dissatisfied with the status quo
sponsible for assessing suppliers’ competitiveness and to always work on doing things better?
on cost, as well as their quality-assurance processes
and procedures. Engineering team members assess Consistent Reasoning. Does the supplier use fact-
suppliers’ technological capabilities and potential based decision-making processes? Does it have a
for innovation. Manufacturing team members as- deep understanding of the reasons behind each
sess suppliers’ production capabilities and potential product-design decision? Can it handle the fact that
for implementing the Toyota Production System. Toyota’s engineers constantly ask highly specific
and probing questions in their quest to understand
Management team members evaluate suppliers’ every detail of the supplier’s production processes,
strength and commitment in two areas: senior as well as the reasoning behind every product spec-
managers’ understanding of and involvement in ification?
operational details, and the company’s philosophi-
cal fit with Toyota. In evaluating a supplier’s phil- Cross-Functional Teaming. Does the supplier
osophical fit, Toyota looks for five key elements: have a team-based internal working culture? Is the
kaizen (or continuous improvement), consistent supplier’s management involved in all operational
reasoning, cross-functional teaming, sharing of matters? Does the supplier practice meticulous
information and knowledge, and responsiveness. cross-functional coordination on all issues, no mat-
(See Exhibit 2.) ter how narrow?

Kaizen. Is the supplier willing to improve its per- Sharing of Information and Knowledge. Is the
formance continuously? Does it have the ability to supplier willing to share details about its costs,

Exhibit 2. Suppliers’ Philosophy Must Fit with Toyota’s

“When working with “Toyota engineers are

Toyota, you can never be Kaizen Consistent reasoning very detail oriented, and
satisfied with the status • Commitment to • A factual basis for all they constantly ask very
quo—you need to continuously improving decisions specific questions. They
always work on doing performance • Deep understanding of want to understand the
things better.” • Willingness to analyze the reasons behind reasoning behind every
—a German root causes for all each product-design product specification.”
supplier in Japan problems and correct decision —a European supplier
them Cross-functional
teaming
• A team-based
working culture
• The involvement
“Toyota is very of management in “When Toyota has a
well coordinated all operational request for you, they
internally. Every function Sharing of information matters expect a response as
at Toyota is aware of all and knowledge Responsiveness soon as possible, even if
interactions with us, even • Willingness to share • Prompt replies to it is over the weekend.”
when it is only related to details on costs, quality, all requests —a German supplier
one particular topic. and technology • Reliable delivery
Toyota expects the same • Transparency and of whatever is
from us.” openness in all promised
—a Thai supplier discussions

Source: BCG interviews and analysis.

Getting to Win-Win 3

Toyota.indd Sec1:3 8/19/07 5:57:37 AM

 quality, and technology with Toyota? Is it willing to During the NPD process, Toyota maintains extraor-
engage in a highly transparent preapproval quality dinary control of design, all the suppliers in the
audit, opening its books and revealing all relevant supply base, and the NPD process itself.
information?
Control of Design. Toyota controls all critical NPD
Responsiveness. Does the supplier reply prompt- design knowledge across three levels: components,
ly to all requests and deliver exactly what it has systems, and vehicle integration. Thanks to this
promised? Can Toyota count on receiving a re- policy, Toyota is never too dependent on any one
sponse—even over a weekend? How much time supplier for critical capabilities. Furthermore, Toy-
does the supplier need to respond? ota typically controls system integration design for
all modules, outsourcing only the design of compo-
The whole selection process is based on Toyota’s nents to its suppliers.
belief that long-term partnerships create more
value than short-term ones. Working with familiar Despite Toyota’s insistence on control of design,
suppliers reduces transaction costs, and long-term the company respects suppliers as experts on the
suppliers can be integrated into longer-term prod- parts they produce. Toyota engages in a highly in-
uct-planning cycles. This capability, in turn, leads teractive process with its suppliers when it comes
to custom-made, robust solutions with optimized to how a part might be designed or produced at
specifications. lower cost or with better quality or functionality.
It encourages suppliers to think constantly about
ways they can improve product design or the NPD
Supplier Collaboration: process—and thus to contribute to Toyota’s relent-
Toward Flawless Design less search for continuous improvement.

Control of Suppliers. Because Toyota has tight, de-

Despite Toyota’s significant in-house competence tail-based relationships with multiple tiers of sup-
in design, the company is committed to expand- pliers, it is able to closely manage its supply base.
ing its capabilities by continuously leveraging For component design, Toyota deals not only with
its suppliers’ expertise. During the NPD proc- its tier-one suppliers but also with tier-two and tier-
ess, Toyota routinely solicits and exploits its three suppliers because they all provide direct in-
suppliers’ experience by means of engineering put into the system integration process. Only when
design changes. Typically, a supplier receives Toyota has thoroughly understood and mastered a
high-level product specifications and is asked process, technology, or solution will the company
to apply its design and manufacturing exper- consider spinning it off or outsourcing it to a sup-
tise to recommend changes to those specifica- plier. In many cases, Toyota itself specifies which
tions and to develop detailed design drawings. lower-tier supplier should contribute which com-
ponent and enters directly into the negotiations
A cross-functional team from Toyota then evalu- among the suppliers. Moreover, Toyota directly
ates this feedback for the impact the proposed manages relationships with all suppliers involved,
changes would have on manufacturing costs, qual- even the smallest ones. Although this process has
ity, global platform standardization, and complex- a significant impact on Toyota’s resources, it allows
ity, among other factors. Often Toyota’s design the company to know its supply base intimately—
engineers fly from Japan to a supplier’s site to at- and maintain tight control over it.
tend a day-long workshop in which they and the
supplier jointly address the proposed specifica- Contrary to commonly held industry belief, a sup-
tion changes and decide whether to approve or plier that Toyota refocuses on delivering a particu-
reject them. Typically, if the proposed changes are lar subcomponent rather than larger modular as-
deemed viable, they are implemented in the next semblies might actually experience increased sales
vehicle project. to Toyota. In contrast, a supplier that attempts

Toyota.indd Sec1:4 8/19/07 5:57:37 AM

 to sell Toyota its completely assembled modules, Supplier Development: Toward
rather than (or in addition to) the simpler com-
ponent that Toyota has agreed to buy, might find
World-Class Performance
its sales to Toyota curtailed—at least in the short
term, until Toyota decides that the supplier is suffi-
ciently experienced and knowledgeable to take on When Toyota has established an ongoing rela-
the responsibility of supplying the more complex tionship with a supplier, it takes responsibility for
module. helping that supplier develop its capabilities and
grow its business. The success of the supplier is a
Control of the NPD Process. Toyota’s streamlined reflection of Toyota’s success. Toyota expends con-
NPD process optimizes its interactions with suppli- siderable effort in helping its suppliers improve
ers, improving productivity for both. Toyota uses their performance. Toward this end, it employs a
its systematic just-in-time design process to create a few key tools. First, it monitors its suppliers’ perfor-
highly effective and intricately interleaved master mance extensively, insisting that senior managers
schedule for each of its products. and key executives of each supplier organization
be responsible for all quality and performance is-
Suppliers’ engineering requirements are based on sues. Second, it performs thorough quality audits
Toyota’s specific needs at different points in the every six months. Third, it employs proprietary proc-
design process. For example, let’s say that a sup- esses that facilitate the rapid resolution of prob-
plier is designing a headlamp unit that is to be in- lems; these processes ensure that whenever there
corporated into a side module designed by Toyota. is a quality defect, the supplier addresses the root
The supplier would be given a deadline for when cause to prevent quality problems from recurring.
it would have to provide Toyota with the exterior Fourth, Toyota makes available to its suppliers a ro-
dimensions of the headlamp. Toyota would not re- bust knowledge-sharing network, allowing them to
quest a complete design of the headlamp because learn from one another in order to enhance their
the headlamp’s interior specifications would likely capabilities.
change as the design process moved along. Toyota’s
precision in anticipating which information will be Monitoring Suppliers’ Performance. Toyota
needed by what date enables the company to use monitors its suppliers’ performance by means of
its own and its suppliers’ R&D capacity very effec- two key monthly reports: the quality report and
tively, reducing waste and contributing to a highly the kanban, or delivery, report. The quality report
efficient design process. This is in striking contrast sets forth details such as defects per million parts,
to the multiple iterations, delays, and wasted effort descriptions of defects, corrective actions, and re-
that typify many design processes. sponsiveness, along with the supplier’s overall
quality ranking vis-à-vis its peers and an analysis
Toyota’s NPD master schedule typically has many of trends in suppliers’ performance. By showing
more project milestones than do those of other the performance of all suppliers, this report al-
OEMs. The frequent milestone checkpoints reduce lows each supplier to understand exactly where
risk and increase Toyota’s ability to practice precise it stands relative to its competitors. The kanban
managerial control over its entire product-develop- report, in contrast, captures supply chain metrics
ment timeline. Suppliers that work with Toyota de- such as “short ship,” delays in delivery, incorrect
scribe its NPD master schedule as highly stringent quantities, countermeasures, and containment.
and its execution of requirements and milestones On-time delivery is expected and is tracked very
as far more consistent than that of any other OEM. closely. Although both instruments are well known
The result is an evening out of resource require- at other OEMs, Toyota’s versions are more detailed
ments during the NPD process—much as Toyota’s and more stringently applied.
approach to the production flow in a plant evens
out the costly peaks and valleys in the utilization of Performing Extensive Quality Audits. In addition
suppliers’ resources and performance. to generating the two monthly reports, Toyota per-

Getting to Win-Win 5

Toyota.indd Sec1:5 8/19/07 5:57:37 AM

 forms an extensive quality audit every six months. corrective actions in detail. What is most important
This audit focuses on helping suppliers solve prob- is that suppliers proactively develop systems that
lems rather than on blaming them for deficien- allow them to prevent similar problems from oc-
cies. Toyota expects all its suppliers to open their curring in the future.
books and seek support in solving any problems
they might have. During a quality audit, Toyota’s Promoting Knowledge-Sharing Networks. Toyo-
personnel spend less time looking at records and ta employs several forms of knowledge-sharing net-
documentation than they do on the shop floor in- works to enhance its suppliers’ capabilities. These
specting processes and products and talking to the networks include supplier associations, problem-
supplier’s employees. The goal is to understand the solving groups, and voluntary learning teams. The
supplier’s attitude toward quality and the way it type of network used varies with the maturity of
addresses quality issues. Suppliers describe Toyo- the relationships involved.
ta’s quality audits as particularly practical and ef-
fective. Toyota’s objective is to anticipate quality • In new markets, supplier associations share gen-
issues before they arise rather than to examine re- eral information such as Toyota’s policies and
ports, which are typically reactive. widely applicable best practices. Members meet
in bimonthly general assemblies to share produc-
In Toyota’s view, responsibility for quality does not tion plans, policies, and market trends. In addi-
stop at the quality manager. In fact, suppliers’ tion, topic committees meet monthly to address
senior managers are involved in the quality audits. specific areas such as cost, quality, and safety.
It is not unusual for the CEO or a board member
to attend monthly supplier meetings—and to be • Once the supplier base in a region is more es-
held personally responsible for discussing correc- tablished, Toyota forms focused problem-solving
tive actions and quality improvement initiatives groups. These groups can request and obtain on-
with Toyota’s management team. Plant managers, site assistance from Toyota’s experts in solving
similarly, are responsible for day-to-day quality problems, such as those related to implementing
performance, kanban performance, and the reso- the Toyota Production System. Such resources
lution of all quality issues. Toyota’s insistence on are typically available to all suppliers at no cost.
holding senior managers personally responsible
for resolving all issues tends to make those manag- • In markets where Toyota has highly mature and
ers very effective at promoting quality awareness integrated supply organizations, it promotes
across their entire organization. voluntary learning teams. These teams conduct
on-site sharing of deep know-how within small
Ensuring Rapid, Thorough Problem Resolution. groups, typically including 6 to 12 suppliers. Each
Toyota implements a swift and very strict process team determines the theme it wants to address
to handle any problems it experiences with suppli- and then spends up to three months focusing on
ers. The quest for understanding the root causes problems at members’ sites. Often these teams
of each problem calls for the deep and immediate are assisted by senior consultants from Toyota’s
involvement of the supplier of the part involved. supplier-support center, and Toyota transmits
Within hours of a problem’s being identified, a the lessons they learn to the rest of the supplier
quality assurance engineer from the supplier must network.
be on site to inspect the problem and work jointly
with Toyota’s manufacturing team to identify its One example typifies the way Toyota helps sup-
root cause. Within three days, Toyota expects to pliers improve their performance. Toyota invited
receive a report describing the corrective actions a tier-one supplier in Japan to conduct a perfor-
the supplier plans to take. If necessary, the supplier mance improvement program. The supplier first
must dedicate one or more staff members to focus came to an agreement with Toyota about which
on the problem until all new components are free area of the manufacturing process it would focus
of defects; these individuals must also monitor all on and then convinced its tier-two suppliers to sup-

Toyota.indd Sec1:6 8/19/07 5:57:37 AM

 port this initiative. A joint working team, consisting ers don’t make money, they can’t create value for
of a Toyota consultant and representatives from all Toyota.
the suppliers involved, was then formed. The team
assessed the supplier’s current manufacturing proc- However, Toyota never allows its suppliers to take
esses and developed recommendations to revise their relationship with the company for granted.
the layout of the manufacturing line and invest in Whereas suppliers that perform well are reward-
upgraded equipment to reduce defect rates and ed with increased business, those that disappoint
improve turnaround times. Toyota agreed to foot Toyota lose its business. In the latter case, Toyota is
the bill for the upgraded machines, with the guar- always clear about why it has severed its business
antee that the new machines would lead to lower ties with a supplier. For instance, a supplier might
prices for Toyota in the long term. introduce a new design with improved technology,
but at a significantly higher price, and fail to con-
Suppliers are willing to seek Toyota’s assistance in vince Toyota that the new technology justifies the
improving their performance because of the signif- price increase. Other actions that might prove fatal
icant value that Toyota provides. This value arises to renewal of supply contracts include bidding on
from three sources: Toyota’s deep knowledge of its a contract for a new model without putting suf-
products and all aspects of their design and manu- ficient effort into developing a competitive price,
facturing; the renowned and highly effective Toy- believing that supplying the previous model would
ota Production System, which addresses complex guarantee a new contract, and assuming that Toy-
process-redesign challenges; and Toyota’s ability to ota needs two suppliers to hedge its risk. In fact,
transfer best practices across the world. Important- Toyota might award 100 percent of a contract to a
ly, suppliers can take what they learn from Toyota single supplier if the potential second source fails
and apply it to their work with other customers. to demonstrate the necessary effort, commitment,
All performance-improvement programs are sup- and professionalism. In each case, Toyota provides
ported by highly qualified Toyota engineers who feedback that highlights the areas the supplier
work as consultants—often on fast-track manage- should work on to improve its cost, quality, and
ment career paths. Significantly, any cost savings support of Toyota.
that suppliers achieve do not transfer directly into
lower prices to Toyota. And Toyota typically shares Toyota also ensures that its suppliers earn reason-
cost savings with the supplier during the next an- able returns. Armed with a deep understanding of
nual cost review. suppliers’ costs, Toyota defines a target price that
discourages suppliers from providing unreasonable
Year-end reviews complete the supplier develop- cost estimates. For example, when one supplier
ment program. Suppliers that rank highest in year- put in a bid for a particular component at a price
end reviews are rewarded, whereas senior manag- that Toyota considered too high, Toyota rejected
ers of suppliers at the bottom of the ranking are the bid. The supplier, determined to win Toyota’s
required to meet with Toyota’s senior management business, responded by cutting the original price
to explain why their performance is lagging. by more than 10 percent. The supplier’s managers
were confident that this concession would secure
the contract. But when Toyota asked what changes
Treating Suppliers Fairly the supplier had made in its production process to
reduce its costs by more than 10 percent, the sup-
plier could not provide a satisfactory response. Toy-
Suppliers report that the most important difference ota awarded the contract to a competitor.
between Toyota and other OEMs is that Toyota
is respectful, fair, and trustworthy in its dealings Similarly, Toyota rejects suppliers that provide un-
with them. Although it is very tough in negotia- reasonably low prices, which in Toyota’s view are
tions and insists that suppliers share virtually all not sustainable. Unreasonably low prices could
their data, Toyota also understands that if suppli- ultimately affect quality, delivery schedules, or

Getting to Win-Win 7

Toyota.indd Sec1:7 8/19/07 5:57:37 AM

 overall support from those suppliers—factors that Adopting Toyota’s Supplier-
could eventually lead to higher costs for Toyota.
Relationship Principles
Notably, Toyota has repeatedly gone out of its way
to support its suppliers through difficult times. Dur-
ing the financial crisis in Thailand in 1997, Toyota How can other OEMs emulate Toyota’s example?
helped its suppliers by making large up-front pay- How can they create a base of suppliers that are
ments rather than amortizing its payments over committed to continuous performance improve-
time, thus greatly reducing its suppliers’ financial ment, unshakably loyal, integrated into an ex-
burdens. When one supplier was on the verge of tended network, and generating stable financial
bankruptcy and thinking of exiting its automo- results?
tive-parts business, Toyota sent its top managers to
meet with the supplier’s leaders, convinced them The answer, although not easy to implement, is
to remain in the business, and supported them so relatively straightforward. To establish and main-
that the company survived the crisis. tain exceptionally effective supplier relations, a
company must first adopt an overall corporate phi-
Toyota also gave its suppliers in Thailand automatic losophy of treating all stakeholders fairly—and ap-
price increases when they needed cash desperately. proach its suppliers in that spirit.
Immediately after the crisis, suppliers were unable
to meet their cash-flow requirements because of This philosophy of fair and respectful treatment
low utilization and reductions in volume. Toyota needs to be evident in all the company’s interac-
proactively increased its prices by 8 percent—and tions and efforts. With that foundation in place,
then increased them again by an additional 5 per- other principles also shape the company’s relation-
cent half a year later. Suppliers in Thailand told ships with suppliers. When the company selects
us that Toyota was the only OEM that supported suppliers, it should choose only companies that are
its suppliers during the crisis. Some suppliers had committed to building long-term partnerships and
requested similar assistance from other OEMs, that share a high-level work ethic. The NPD proc-
but to no avail. Toyota’s assistance enabled some ess should be based on leveraging suppliers’ ex-
suppliers to stay in business, and they will always pertise and sharing relevant technical knowledge
remain grateful and loyal to Toyota. (See the side- at all levels: components, systems, and vehicle in-
bar below.) tegration. Finally, both the company and its sup-

Suppliers Report That Toyota’s Fair Treatment of Them Leads to Trust and Mutual Benefit

• “Toyota is professional in all their interactions with sup- • “Toyota is tough as hell in negotiations, and we have to
pliers. They have proved time and time again that they share every detail of our data with them—but they are
are trustworthy and that they will treat us fairly.” fair, and they know that if we don’t make money, we can’t
innovate for them.”
• “Toyota helped us dramatically improve our production
system. We started by making one component, and as • “Toyota accepts the fact that mistakes do happen. What
we improved, Toyota rewarded us with orders for more we need to show is that we have learned from our mis-
components. Toyota is our best customer.” takes and that we will not make the same mistake a sec-
ond time. Toyota rewards you for that.”
• “We are willing to share our cost structure with Toyota
because we trust that they will not use the information
against us but instead help us get more competitive.”

Toyota.indd Sec1:8 8/19/07 5:57:37 AM

 pliers should understand that the close monitoring
of suppliers’ performance arises not from mistrust
but from a sincere desire to identify potential per-
formance gaps and support one another in clos-
ing them.

These are the basic principles on which executives

should base a serious review and redesign of their
supplier relationships. The ideal approach for each
company will not be a “copycat” version of Toy-
ota’s unique system, but a tailor-made adaptation
designed to reflect each company’s unique circum-
stances and existing relationships.

Moving from adversarial relationships to win-win

relationships is not easy. Often companies must
challenge and revise many established practices.
But making that change can create extraordinary
value, as illustrated by the widely admired exam-
ple of Toyota.

Getting to Win-Win 9

Toyota.indd Sec1:9 8/19/07 5:57:37 AM

 About the Authors Acknowledgments For Further Contact
Malte Kalkoffen is a consultant The authors would like to express For information about BCG’s Indus-
in the Hamburg office of The their grateful appreciation to the trial Goods practice, which sponsored
Boston Consulting Group. You many senior executives and managers this report, please contact the prac-
may contact him by e-mail at at leading automotive OEMs and sup- tice’s global leader:
[email protected]. pliers around the world who gener-
ously shared their time, experience, Josef Rick
Zafar Momin is a former partner and insights. The authors are also Senior Partner and Managing Director
and managing director in the firm’s indebted to their colleague Methit Düsseldorf
Singapore and Dubai offices. Mukdasiri for valuable contributions [email protected]
to this report. Finally, the authors wish
Xavier Mosquet is a senior to acknowledge the contributions of To discuss this report or related topics,
partner and managing director several members of the BCG editorial please contact any of the following:
in BCG’s Detroit office. You may and production team: Katherine An-
contact him by e-mail at drews, Gary Callahan, Kim Friedman, The Americas
[email protected]. and Kathleen Lancaster. Xavier Mosquet
Senior Partner and Managing Director
Jagjit Singh is a former principal Detroit
in BCG’s Singapore office. [email protected]

Georg Sticher is a senior Asia-Pacific

partner and managing director Naoki Shigetake
in BCG’s Munich office. You may Partner and Managing Director
contact him by e-mail at Tokyo
[email protected]. [email protected]

Europe
Georg Sticher
Senior Partner and Managing Director
Munich
[email protected]

10

Toyota.indd Sec1:10 8/22/07 1:06:33 PM

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