TOYOTA SUPPLIER SUPPORT CENTER TO OPEN IN KENTUCKY

Toyota City―TOYOTA MOTOR CORPORATION announced today that it will open a supplier-support center in Lexington, Kentucky, in September to work with North American manufacturers of automotive parts who request assistance in raising productivity and quality. The concept of the center first became public during President George Bush's visit to Japan in January, and today's announcement culminated several months of surveys and feasibility studies. According to today's announcement, the supplier-support center will operate in Lexington until spring 1994, when it will move to a facility that Toyota plans to build for it at the Toyota plant in Georgetown, Kentucky.

The supplier-support center is Toyota's latest addition to a local organization in North America that represents $5 billion of investment and employs 18,000 Americans and Canadians.

That organization includes wholly owned plants that produce passenger cars in Kentucky and in Ontario, Canada; a joint venture with General Motors that makes passenger cars and pickup trucks in California; R&D facilities in Michigan and California; a design center in California; a proving ground under construction in Arizona; and sales and service facilities throughout the United States and Canada.

Toyota, which sells more than 1,000,000 vehicles annually in North America, has committed itself to producing a large portion of those cars and trucks locally and to maximizing the local content of those vehicles. By 1994, Toyota management expects to be purchasing as much as $3.82 billion in parts and materials a year from local suppliers at its U.S. operations and to be importing parts and materials from U.S. suppliers worth an additional $1.46 billion annually.

North American autoparts suppliers thus view Toyota as a potentially huge customer for their products, and they have been stepping up their efforts to cultivate or expand business with the automaker. At a growing number of suppliers, those efforts include measures for raising quality and cost competitiveness, which have emerged as the most decisive factors in the suppliers' business negotiations with Toyota and other Japanese automakers.

Engineers at Toyota plants in North America work with local suppliers to resolve specific issues in connection with individual items. More and more North American suppliers, however, are expressing an active interest in redesigning entire manufacturing systems to achieve the kinds of quality and productivity associated with the "lean" production system that Toyota has refined.

In response, Toyota has dispatched engineers to work with some of those suppliers for periods of up to several months. Those engineers have helped the suppliers streamline production flows, improve processes, and implement systems that motivate line employees to take part actively in making improvements in quality, productivity, and working conditions on a continuing basis.

The results in test cases to date have been spectacular, with the participating suppliers enjoying multifold gains in efficiency and sharp declines in defects. That success has captured the attention of other parts makers, many of whom have requested similar assistance. Their requests prompted Toyota to make support available to an expanded range of parts makers by opening the supplier-support center near its Kentucky plant.

Toyota will staff the center initially with 13 people―10 Americans and 3 Japanese―including 8 engineers. The engineers will work in three teams, and plans call for them to work with a total of seven or eight parts suppliers a year to help the suppliers adapt elements of the Toyota Production System to their needs and circumstances.

Heading the supplier-support center will be Hajime Ohba, a production engineer who has supervised the implementation of the Toyota Production System at a number of automotive plants around the world. Says Ohba, "We will be demonstrating that the Toyota Production System is not just for Toyota―that every supplier who participates in the system conscientiously can enjoy the same gains in quality and productivity over the long term that we have achieved in our operations."

Ohba cautions, however, that those gains are predicated on implementing the system comprehensively. "A lot of companies have tried using one element of the system or another―like just-in-time production, for example―and have failed to accomplish as much as they hoped. People need to understand that the Toyota Production System is a highly integrated framework in which every element supports every other element. We will be working with suppliers to implement systems in a thorough manner that will support lasting lean production."

Management at Toyota is confident that its production system is adaptable to values and practices that differ greatly between North America and Japan. "The American and Canadian members of our team have proved that they can build their own versions of the Toyota Production System that accommodate local circumstances," emphasizes Toshimi Onishi, a Toyota senior managing director responsible for production.

"The key to our success," adds Onishi, "has been to earn the trust of employees by displaying trust in them. That means involving employees in designing and managing their own jobs. It worked for us in California and later in Kentucky and Ontario, and it also is working for North American suppliers who participate in the Toyota Production System."

Besides dispatching engineers to suppliers' plants, the supplier-support center will hold seminars and conduct other activities to explain Toyota's approach to manufacturing. The center will undertake those activities in cooperation with Toyota's manufacturing companies in North America and also with its principal marketing company there.

To oversee long-range activities in North American supplier support, Toyota will establish an advisory committee for the center comprising representatives from each of Toyota's principal manufacturing and marketing operations in North America. Onishi will serve as senior advisor to the committee, which will be chaired by Fujio Cho, president of Toyota's production subsidiary in Kentucky. Toyota will administer the supplier-support center through its New York-based corporate services operation, Toyota Motor Corporate Services of North America, Inc.