General Overview

Toyota was presented with a challenged mainly related to very poor visibility and low quality
of a supplier, Chassis Co., for the Suprima model. The Japanese brand Toyota is mostly
known for its high-quality products and perfecting the “Just In Time” manufacturing process.
In 1997 Toyota was launching a model of Car called the Suprima and teamed up with a
company called ChassisCo, a notorious US automotive supplier of stamped metal
components. Having a had a good trustworthy partnership for the previous six years Toyota
greatly increased their usage of ChassisCo. Toyota is now giving ChassisCo all the supply
chain responsibility for a much more technologically advanced rear suspension cradle, but
problems would arise. One of first problems that occured in this case is that ChassisCo
failed to alert Toyota up front that they were experiencing production issues. Toyota heavily
miscalculated the ability of the supplier, butwhen ChassisCo realized they were at 60% of
the production they should have related this information. It would become obvious that
ChassisCo lacked the skills in engineering, sourcing, logistics, and overall project
management to produce the more complex rear suspension for the 2003 Toyota Suprima.

Case Study -
Toyota Supplier Relations:
Fixing the Suprima Chassis
In this assignment, you will read a case study and answer the following
questions:
1. What are the main contributors (causes) of the crisis at ChassisCo’s
Athens plant in late 2004 (14 months after SOP)?

ChassisCo’s responsibility?

Toyota’s responsibility?

2. Considering these causes:


What are ChassisCo’s options for resolving the crisis?

What would you do if you were in charge?
3. Considering these causes:

What are Toyota’s options for resolving the crisis?

What would you do if you were in charge?
The main contributors of the crisis at ChassisCo's Athens plants are listed below
Delegating full responsibility of Project Management to ChassisCo
After the successful launch of Toyota 1997 Suprima, ChassisCo adamantly took the
responsibility of project management of 2003 Suprima with only technological support
provided by Toyota. This was one of the core issue of the crisis. This is because the
independent model by which the Toyota manufactures requires much diligence, careful
planning, stringent supervision, regular inspection and sufficient book keeping. The success
of 1997 Suprima & Responsa led ChassisCo to believe that they fully understood Toyota's
model of TPS and JIT which was actually not true.
 
Untimely audit's by Toyota
As Toyota delegated responsibility of project management to ChassisCo, they also failed to
check up on the progress of the project time to time. TPS flows in a way where small
problems arises continuously and these are solved with efficiency. When Walt Bernstein
finally went to visit the supplier he found how far behind the project were. A routinely audit
could have saved them from these problems.
 
Toyota's "bad news first" communication policy
TPS has a policy of bad news first such that quick actions can be taken to mitigate
problems. ChassiCo failed to follow through and the problems kept adding up.
 
Active collaboration with Suppliers.
Toyota had a value chain of building long lasting relationship with suppliers and all other
stakeholders. They would actively collaborate with suppliers in order to attack any potential
quality risks before it took place. ChassicCo did not follow through rather they contracted
low bid suppliers that had never made auto parts before.
 
Not having enough experts on project
With the success of 1997 Suprima and 1999 Responsa ChassisCo had an unprecendented
number of new launchings with a wide customer base. They had to relocate their expert
employees elsewhere and this lowered the productivity, knowledge and team spirit of
Athen's branch.

ChassisCo's responsibility
 Does not have the capability in project management
 Silos mentality
 Company's global development decentralization
 Lack of understanding from management on insufficient manpower
 Lack of knowledge on Technical Instruction Sheet
 Failure to communicate with Toyota on unrealistic prices
 Failure to audit suppliers
 Did not practice standardised work

Toyota's responsibility
 Lack of supervision from Toyota as they outsourced everything (sourcing, incoming
logistics and inventory management) to ChassisCo
 Slow detention on potential problems
Step-by-Step explanation
2.) Considering these causes:
 
What are ChassisCo's options for resolving the crisis ?
 ChassisCo must shift its culture towards one more compatible with Toyota by means
to escalate risks in time. By doing this, it will help to solve risks swiftly and prevent
further stalling of operations.
 Evaluate for getting a new suppliers that could increase the quality and compatibility
for manufacturing process.
 Come out with the most experienced staff resources especially expertise and
engineers in the cradle production in order to tackle problem arises.
 Improve their quality concerns and fix their cost issues .
 
What would you do if you were in charge?
If I were in charge, I would identify and prioritize the problem, also develop the
activities checklist for the plant to work on. Next, followed all standard procedure for
overseeing a problematic suppliers as they had a greater responsibility to improve
operations. Other than that, planning the job design and human resources properly ,
the scheduling of the job and Total Quality Management (TQM) to prevent the further
critical issues arise.
 
 
 
 
_____
 
 
Additional considerations
 
What are Toyota's options for resolving the crisis?
 Toyota should stop assuming that their suppliers are perfectly fit for any increase in
responsibilities especially those supplier from different cultures.
 Toyota also should consider in getting new suppliers that could increase the quality
and compatibility of their manufacturing processes.
 Toyota should stay open and listen to the risks issued by the people working on the
supplier side. Particularly with those risks related to a constraint in capacity or
quality.
 
What would you do if you were in charge?
 My first recommendation to Toyota is too never assume that their suppliers are going
to be able to undertake a significant increase in responsibility, especially when they
do not fully know the Toyota way of doing things.
 In the future if they do attempt to make a similar partnership with a supplier that they
employ an experienced Toyota champion to oversee the entire operation for at least
a year until they are absolutely certain they are sufficient on their own.