Case: Toyota, Ford, Gm, and Volkswagen Вђ“ Some Differing Opinions

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 and preferences.

This will give them the ability to provide quality products within the desired time frames. At

the end of the day a win-win situation exists. While there are definite benefits to be gained

from the AutoX-change, the feeling that your supplier really has your best interest at heart

and vice-versa, is not easily fostered by this medium.

3. A major reason for the differences in opinions may be the difference

in what Toyota considers “competitive”