Toyota Supplier Relations: Fixing the Suprima Chassis

Both ChassieCo and Toyota were to blame for the crisis at ChassieCo’s Athens plant in
late 2004. To begin, after the 1997 Suprima launch both parties seemed confident in their ability
to meet manufacturing needs much better and more efficiently. However, the downfall with this
launch is that only the Toyota engineers held the key knowledge for this process to work and it
seems as though engineers at ChassieCo were left to their own devices when things went astray.
With the new-found confidence from the success of the 1997 launch and then the Responsa
Success in 1999, Toyota mistakenly gave ChassieCo full responsibility of project management
for the 2003 Suprima launch with Toyota only providing technical support. This was a main
contributor to the crisis because Toyota should have required much stricter regulations, more
frequent check-ins, and routine inspections to ensure things were running smoothly and that
ChassieCo would be able to meet all specified deadlines.

As previously mentioned, the need for more frequent inspections from Toyota was
another large contributor to the crisis that occurred in late 2004. As stated by Walt Bernstein,
they had failed to realize how much more TMMGA was needed to make ChassieCo Athens
successful and by the time they realized, it was too late, and the launch date was months away.
While Toyota is to blame for not making more frequent audits on ChassieCo Athens, they failed
to mention how stretched thin their engineers were with multiple launches happening around the
globe after their successes in 1997 and 1999.

However, the responsibility does not solely fall on Toyota. As implemented by Toyota,
the TPS system held the value of visiting the source in person to gain a good understanding of
what is happening with the suppliers. ChassieCo failed to follow this practice and the “bad news
first” policy, which was instated to identify and correct problems early in the process instead of
too late, which is exactly what Bernstein discovered in 2003. Ultimately, the problems kept
piling up for ChassieCo and without the support they should have asked for this ended up being
another cause of the crisis at ChassieCo’s Athens plant and severely damaged Toyota and
ChassieCo’s relationship.

After the success of the 1997 and 1999 Suprima launches, Toyota and ChassieCo were
under the impression that they could handle more customers around the globe and larger
launches, which turned out not to be true. ChassieCo had hands in three different geographic
groups which stretched them so thin to the point of not having enough engineers, materials,
maintenance, or supplier management within their company. As stated by Bob Curtis, program
manager of ChassieCo for the 2003 launch, no matter how hard he tried to put attention on the
limitations and struggles they were facing, it seemed like nobody was listening and without
knowing this Toyota thought they were progressing as they should be, but this was far from the
truth.

For ChassieCo to meet Toyota’s target prices they accepted lower bids from parts
suppliers and chose suppliers that had never made structural auto parts before. They did not
realize that this would affect the product quality, delivery frequency and the replacement that
they had to endure after ridding of their chosen supplier. All in all, ChassieCo should have
communicated that Toyota’s target price was unrealistic for them to meet in the time allotted and
the outcome could have been different.
 Toyota Supplier Relations: Fixing the Suprima Chassis

Considering the multiple causes of the crisis, I believe that ChassieCo’s options for
resolving the crisis begin at bettering their communication amongst each other and their
suppliers. First off, ChassieCo needs to attempt to change their individual mentality to a more
integrated mentality with Toyota. What I mean by this is to follow Toyota’s structure and policies
such as the TPS and the Technical Instruction Sheet (TIS), and instead of not mentioning the
struggles they are facing, they could make it known and Toyota would be able to take over or
help them out in slowing the progression of the crisis.

ChassieCo could also find better and trustworthy suppliers to manufacture their structural
auto parts. This would increase the quality and efficiency of the manufacturing process and
would allow things to run smoother. The choice to invest in suppliers that have never created
structural auto parts is a risk that should have never been taken.

Another option for ChassieCo to resolve the crisis would be to invest in highly skilled
engineers and more experienced staff like the Toyota engineers who were the only ones who held
the knowledge for tuning, maintenance, and the process all together. This way they do not have
to depend on Toyota to fix the problems that are sure to arise within their plant.

Identifying and solving the cost issues are also an option for ChassieCo to resolve the
crisis. As said by ChassieCo, they made errors during cost estimation, which resulted in their
logistics costs being underestimated and them not wanting to increase costs by adding staff for
the 2003 launch since it was two years out, however building an adequate staff and solving their
issues with costs would be an important contribution to resolving the crisis.

If I was in charge, I would begin identifying the issues taking place, develop a checklist
of activities to complete, and follow standard procedure for a problematic supplier situation in
which the supplier is supposed to have an increasing amount of responsibility in operations and
management, as Bernstein had previously attempted to do for ChassieCo in late 2004. Beyond
this, being extremely attentive to the manufacturing process, the resources needed and ensuring
that I have a quality staff that can solve problems quickly, efficiently, and is familiar with all
policies and processes would be of utter importance.

On the other hand, Toyota’s options for resolving the crisis could include verifying that
their supplier’s culture and mentality meshes with their own, instead of going into business with
a supplier that was not prepared for such large launches and did not ask for help when they
clearly needed it, which is a clearly stated policy of Toyota’s, also known as the “bad news
policy”. From what I read, it seems as though both parties are at fault, but Toyota should not
assume that ChassieCo could handle such large responsibility, including handling all aspects of
project management, sourcing, logistics, and inventory management.

As previously stated, it was difficult for ChassieCo’s management to get people to listen
to the struggles they were facing, specifically pertaining to the amount responsibility that they
held and the manufacturing process. Toyota could listen to these complaints and develop a plan
to send their highly qualified engineers to ChassieCo and continue to hold their hand throughout
the process, as they did in the beginning, then working up to delegating a good amount of
responsibility to ChassieCo instead of overloading them which seems like the case here.
 Toyota Supplier Relations: Fixing the Suprima Chassis

If I were in charge, I would not have assumed that ChassieCo could take on this amount
of responsibility based on the outcomes of previous launches. Every launch is different, and they
come with an abundant amount of responsibility that as a leading company, you should consider
as your own instead of pawning it off to suppliers just because it may seem as though they can
handle it. Along the same lines, I would have Toyota stay a part of the manufacturing process for
at least a year or two before handing off such large responsibility in all areas to a plant that was
too small and not efficient enough in their operations to be able to handle the aggressive
demands of efficient project management.