Respect your Partners and Suppliers

The eleventh principle of the Toyota Way is:

Respect your extended network of partners and suppliers by challenging them and helping them improve.

Toyota outsources a lot, about 70% of the components of the vehicle. But it still wants to maintain internal competency even in components it outsources. Toyota has a clear image of its core competency, but seems to look at it quite broadly.

Even when Toyota chooses to outsource a key component, the company does not want to lose internal capability. If a new technology is core to the vehicle, Toyota wants to be an expert and best in the world at mastering it. They want to learn with suppliers, but never transfer all the core knowledge and responsibility in any key area to suppliers. Toyota wants to know what is inside the “black box.”

Toyota is very careful when deciding what to outsource and what to do in house. Once they had that internal expertise, they could selectively outsource.

Toyota always views new suppliers with caution, giving very small orders. However, once the supplier earns the trust of the company, and proves that they are sincere in their commitment to meet Toyota’s standards for cost, quality and delivery, Toyota will adopt them into the company and teach them the Toyota way. Supplier relationships and partnerships are usually long term and it is seldom that a supplier is replaced except for the most egregious behavior.

Suppliers will want to work with the company because they know that they will improve themselves and develop respect among their peers and other customers. Challenge your outside business partners to grow and develop. It shows that you value them. Set challenging targets and assist your partners in achieving them.

Summing-up: Have respect for your partners and suppliers and treat them as an extension of your business.

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