Saee Study

Working with Suppliers.

Tadaaki Jagawa, a Toyota executive vice president said the number one Japanese automaker

“received an invitation” from Ford to join the Ford Internet-based marketplace, tentatively

called AutoXchange, where automakers & their suppliers hope to do business more efficiently

& cut costs. Ford & GM are in a race to build the largest online marketplace to achieve greater

economies of scale, & both are trying to woo other automakers. The two companies have urged

that creating a marketplace in which hundreds of billions of dollars in goods & service are

traded would give their suppliers access to more business globally, allowing suppliers &

manufacturers to slash costs.

Toyota considers the internet marketplace only a means to efficiency & not an end in itself,

Jagawa said. Because the procurement process involves not only the price but also the quality,

lead time, & delivery of components, Jagawa said Toyota doesn’t want to put competitive

components on the open market, such as GM TradeXchange; it would go against Toyota’s

philosophy of treating suppliers as partners. “We help suppliers cut costs through a guarantee

of a long-term contract; putting those parts on the open market pits us against suppliers in an

adversary relationship.”

Jagawa stressed that Toyota is in discussions with GM “with open mind.” Although it may mean

Toyota would trade only raw material & commonly used parts on either GM or Ford system,

Toyota is interested in making its buying more efficient, he said.

Standardizing Auto Parts

Some of Toyota’s talks with GM also involve standardizing components. That would allow the

two companies & GM’s other participants to share a common electronic procurement

infrastructure & maximize the online network’s effectiveness.

Toyota & Volkswagen are also trying to hammer out an agreement to standardize select

components for vehicles sold in Europe. Jagawa said the two companies’s launched the...