1. GM and Ford have quickly pushed the development of large Internet
sites to create an environment where suppliers must compete for
business. Ford and GM argue that these Internet sites should reduce
cost because the negotiations are streamlined. How do you think the
suppliers view these sites?
Some suppliers, depending on their size might not have the technological infrastructure to
participate in the AutoX-change. This will obviously limit their ability to work with theses
automakers. Suppliers who have established relationships and contracts with automakers
will question the long-term viability of these relationships. The larger suppliers that supply
multiple components will view this as a positive. This might provide them with opportunities
to expand their business. One critical question, which will be asked by every supplier, is how
will the e-procurement system affect prices. The AutoX-change will obviously encourage and
attract more suppliers. This might result in drastic reduction in the prices of parts, especially
if the automakers adopt a “bully“ stance where prices are concerned. One of the main
criticism of large oligopolistic firms like Wal-Mart and Target is that because of their market
power they have the ability to drive suppliers into providing very low prices. Toyota clearly
has subscribed to the fourth leg of the “three legged stool“approach. This “three legged
stool” supports the benefits of strong relationships with Customers, Employees and Owners.
The fourth leg is Suppliers.
2. Rather than having vendors compete against one another, Toyota is
interest in treating suppliers as partners. Is Toyota just being old-
fashioned in its views?
Toyota is not being old fashioned by treating suppliers as partners. Toyota has recognized
the benefits of good supplier relationships. In establishing a partnership with suppliers, they
have a vested interest to thoroughly understand your environment, needs.