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The investigation of the buyer-supplier relationship within Toyota’s global supply chain management

Chin-Huang Sun Department of Industrial Management, Leader University 188, An-Chung Road, Sec. 5, Tainan city 70901, Taiwan chsun@mail.leader.edu.tw Ya-Ling Tsai, Department of Marketing, University of Stirling Stirling FK9 4LA Scotland UK Yt1@stir.ac.uk Abstract The effects of firms seeking globalisation are growing. Managing the buyer and supplier relationship has become a key focus as international operations must be able to source equivalent suppliers anywhere in the world. Global supply chain management (GSCM) involves thinking about the principles of relationships with trust and commitment. The Toyota way is a model for making the buyer and supplier relationship efficient within GSCM. This study starts from a “win-win” condition to discuss the relationship based on trust and commitment with strategic key suppliers. Dyadic firms are learning new skills and rewards based on geographic and cultural borders. Toyota’s trust and commitment to the growth of the community and the development of the individual is expressed in many different languages. The Toyota case study explores how the management scheme is moving towards successful GSCM. Toyota in different countries has adjusted their management method to suit the local market. The Toyota vision for their suppliers is to generate new Toyota GSCM. Keywords: Buy-supplier relationship, Global supply chain management, Toyota supply chain management Introduction The business strategies have dramatically transformed the way in which products are moved around the world. These develop a new framework; that is to say, a global supply chain which takes advantage of differing countries (Prasad & Sounderpandian 2003), producing a network which includes material sourcing over the world (Klassen and Whybark, 1994). Global supply chain management (GSCM) is based on corporations exploiting the competitive advantage surrounded by the international background which is different from the local supply chain. Globalization trade activities are inspired by the increased benefits, materials, lower labour costs, and collaborations with local suppliers. For example, there is the transfer of manufacturing “know-how” and lower local taxes for global business firms who invest in other countries (Motwani et al. 1998). Strictly speaking, the global supply chain achieves a competitive advantage

according to Christopher et al. when GSCM runs a well-organized within the supply chain then grasps the competitive opportunities to extend their business territory worldwide. Then. solving problems. supply chain members’ coordination . Toyota has developed a unique. In recent years. information sharing. Furthermore. long-term relationships. Supply chain management (SCM) involves many organisations in the integration of raw materials. firms like to move to or invest in China. The rise of global sourcing researched by Christopher et al. highly integrated and balanced management practice that influences the ability of the key suppliers to extend their global business (Emilliani. the transformation of goods and the delivery of final products to customers in order to support all sections of the industry to create an efficient supply chain channel (Stonebraker & Liao. 2003). East-West trade has benefited from low transport costs through being underpinned by steady oil prices for many years. distributors and customers. This study seeks to explore the primary source of conflict between the buyer and supplier relationship within Toyota’s GSCM. Youngdahl and Loomba (2000) stated that to understand the global competition is a complex production. The global supply chain is also capable of transferring the material and information between the suppliers. (2006). and . trust and communication.“Today’s market place is characterised by heightened global competition often against a backdrop of an excess of supply over demand”. the effects of business firms in their search for globalization. This study attempts to investigate the firm by connecting the theoretical argument and case study realities. transportation sources. Literature Review Global supply chain management Globalisation is a strategy for amalgamating geographically widespread businesses to defend global compositeness and a multifaceted environment (Stonehouse. Therefore.which produces lower costs and efficient supply chain processes and keeps up a correspondence between the suppliers and buyers. Indeed. Furthermore. joint planning. since the suppliers have been involved in product development and required to produce not only separate components but also whole modules. for instance: supply chain cost efficiency.Cooper and Ellram (1993) referred to the characteristics of effective SCM. the oil price rose to express the global supply chain channel transport cost and lead time problem in the long-term relationship. due to the oil market before and after the US-led invasion of Iraq in 2003. Johanson and Medbo (2004) commented that“the suppliers are also increasingly acting on a global market”. (2006) referred to the old firms’ style of “local of local” having being changed to the development of a “global village”. The objective of this study is to survey Toyota’s GSCM in different countries in order to discuss their buyer and supplier relationship. and sharing profits and risks. 2001). and the “supply chain” are a significant key in universal operation (McAdam & McCormack. Kwon and Suh (2004) referred to the fact that few empirical studies have examined the relationship between trust and commitment within supply chain management. 2004). In their analysis. 2000).

(1998. cultural variations. and management of supply chains (markets. p. searching and planning. Doubtless. arbitrage and leverage. The fourth step is to recognize and implement the purpose of global supply chain management. selecting. Prasad and Sounderpandian (2003) conclude that the factors that influence the global supply chains can be divided into country (endowment issue. technology. 2001). Source: Motani et al. with the priority of creating awareness and commitment. organization behaviour and human resources) characteristics. industry (the type of industries). managing a good buyer-supplier relationship is capable of appending the competitive ability within supply chain management. Motwani et al. Secondly. implementing. evaluating in five steps (see Figure 1). (1998) indicated the GSCM model. financial.353) From the literature review. First. In the third step. the supply chain partners can redesign or modify the products or processes together to face the completive globe business environment. the supply chain partners need to make the decision agreement together. the supply chain channel must establish effective procedures and standard operations to achieve competitive benchmarking. the firms have to define the target market and map the processes to accomplish it. The Buyer-supplier relationship The buyer-supplier relationship is a growing significant part in international business. .always use seasonal shipping instead of freight in order to reduce the transport costs (Johnson. as can be seen. the model of GSCM provides the direction to run the global supply chain operations and influencing factors of global supply chain efficiency. transportation. In addition. In the final step. government incentives and regulations). It is also necessary to analyse the development of GSCM contained by the firms’ organization respondents.

. in the follow context (Figure 2). the market and hierarchies.According to Youngdahl et al. the buyer and supplier have a very close relationship based on TCE consideration in order to run an effective supply chain. This kind of advantageous relationship is one that the buyer-supplier can recognize and use to collaborate with each other. As the economics of observation. industrial and relationship marking. White and Daniel (2004) referred to two types of transaction cost economics (TCE). industrial economics. Williamson (1985.45) said “Transaction cost economics assumes that human agents are subject to bounded rationally. the buyer looks for many suppliers who can provide lower price products to their desire or change their current suppliers. which is a condition of self-interest seeking with guile”. The disadvantage is how they can enter the local market efficiently or who can support them to solve the local communication problems. The more detailed discussion is focused on the balance between the relationship’s critical examination to build up the trust and commitment on both sides of buyer and suppliers. firms would like to keep their relationships with a small firms’ supplier but not decide the lower cost of the products’ suppliers. The reason for this is that the firms can reduce the transition costs from their suppliers. even though the production costs are high. but only limited so. purchasing and strategic development files. After that. this original partnering between manufacturing and engineering must be extended well beyond the boundaries of a given company to include global new produce development teams and even research collaborations among different global enterprises”. That is why Ellegaard et al (2003) said that “If the competitive advantage of the company depends on its network of suppliers. . even though they said that the buyersupplier relationships have been discussed by some researchers in different ways: organizational studies. and are given to opportunism. The buyer-supplier relationship plays a vital role. strategic supply chain management. especially in choosing the key suppliers within the GSCM. then it is crucial for the company to be able to influence these suppliers”.“to extend to global supply chains. Besides. However. the buyer may well collaborate with their local suppliers to obtain more benefits from the local regulations or quickly become acquainted with local culture and market. p. the degree of influence is dissimilar from the different buyer-supplier relationships. p336). In other words. From the hierarchies’ view. this is to be a value network to extend the buyer-supplier relationship all over the world. (2000. whence behaviour is intended rational. in the market. In contrast.

how 〝the cake 〞 should be divided is still an issue.. Nevertheless. The query is not only how to bake whatever size of cake but also monitor the cutting of the cake between the buyer and supplier. the 〝 ideal 〞 value outcomes for a buyer and supplier remain the same.Global Buyer Trust inwin elatio Commitment nship Strategic Supplier Figure 2: Buyer and supplier relationship within GSCM The predictable argument by means of 〝win-win〞in dyadic relations “Win-win.means. even though either. or both. the value of business technology specifications of products culture already have a good relationship . 35-6). p. even as it grows.) stated that the motivations for the buyers were to have a closer relationship with their suppliers. Second. 2.pp.. 3. The argument is how to identify how the exchange transaction engages products and procedures between the buyer and supplier bargain. whatever the size of 〝 the cake〞”. From this viewpoint. 5. the dyadic relationship builds up deals with buyer desiring goods or services and to exchange their currency with their suppliers. namely: 1. a situation in which each issue requiring resolution has been settled in a way which meets the needs of both parties. The 〝win-win 〞 position also explains the competition among the buyer-supplier relationship. (1996 cited in Doran 2005.413) pointed out that there are two critical problems here: “First. Furthermore. 4. Sinclair et al.. Cox (2004. Spekman (1988) pointed out that it is important to develop the buyer-supplier relationship relying on short-term contracts. Basically. the value of the exchange relations not only talks about the money or may come from the suppliers’ services.. price driven negotiations and the implicit threat of future supply allocation adjustments then to gain the competitive advantage.1989. In other words. may have been hoping for more ”( Carlisle and Parker.

Svensson (2004) defined five elements that influence trust within business relationships: reliability. the buyer and supplier relationship builds up the value of business organizations. The supply chain starts from suppliers providing products or services to their buyer. The commitment also can be a formal agreement to identify the authority and duty between firms. in particular.. 2002).Olorunniwo and Hartfield.At least. Sahay.28) said “Without commitment.Lambert et al. especially engaging the buyer-supplier. 2004). within supply chain management (see Handfield and Nichols 1999. competence. business relationship and subsequent transactions become fragile and vulnerable”. and shared risks and benefits. 2002) Without doubt. Morgan and Hunt (1994) identify commitment as “an exchange partner believing that an ongoing relationship with another is so important as to warrant maximum efforts at maintaining it. and a temporal dimension.1995. lower prices and more transfer behaviour in positive word of mouth in order to get more loyalty and commitment (Sahay.Doney&Cannon. The openness of the management and fairness are checking the honesty during the relationship. The partnership brings benefits in sharing information between parties. expertise and integrity. Competence includes ability. Trust and commitment during the buyer-supplier relationship Trust and commitment is a foundation for building up the supply chain management (Lee and Bilington . Biois(1999) indicated that“trust refers to when the other party makes its self vulnerable to the other party’s behaviour”. even though they have an agreement. It is significant to become aware of definitions. buyer orientation and friendliness.2001).1992). 2003. (1995 cited in Abdul-Muhmin.Cowles. Kwon and Suh (2005. The reason for this is the business transactions among buyer and suppliers and the need to have a commitment from more than two parties. the external features have been discovered but what about the internal factors of the buyer-supplier relationship? The effective internal factors are focused on trust and commitment in supply chain relationships (Kwon & Suh 2004). commitment includes trust. p. the committed party believes the relationship endures indefinitely”.1997. and cultural influences in order to develop the buyer-supplier relationship. 2003). If the buyer does not trust their supplier. trust involves managing the business activities. Reliability is based on loyalty and respect in order to have a good co-ordination in the buyer and supplier relationship. Furthermore. an attitudinal component. honesty. that trust is the central feature of buyer-supplier relationships (Handfield and Bechtel. In other words. Svensson. respect. they need to monitor their supplier all the time. From their investigation into the buyer and suppliers’ relationship.1997. some researchers have demonstrated that buyer and supplier relationships count on a high level of trust (Richards. the transfer of technology and products. and then also states the power . which are significant components in developing and maintaining long-term relationships between buyer-suppliers (Abdul-Muhmin. then they can accomplish their goals within the supply chain. Gundlach et al. 2002) referred to three component of commitment: an input component.1999. Won & Suh (2004) stated that “Successful supply chain performance is based on a high level of trust and strong commitment among supply chain partners”. that is.

For this reason. This factor is more important and has to consider the best measurement of supplying a base relative to the buyer base (Olorunniwo & Hartfiled. Next. The organization purchaser hopes that the suppliers can continue to improve their supply all the time (Dwyer et al. In particular. setting up trust is not simple but losing it is very easy from a little dirty spot existing in the buyer and supplier relationship..contained by the buyer and supplier relationship. Kannan and Tan (2002) suggested several features that should be considered when choosing a strategic supplier. and the descending product . The quality of the suppliers has constantly been a main point in choosing a strategic supplier. Nevertheless. commitment. In short. as can be seen. 1997). the suppliers’ selection is to be a strategic decision within supply chain management. According to the above researchers’ observations. 1993). capacity of resource. and then can decide and control the relationship. buyers would like to trust one party that they could pay premium prices to their suppliers to acquire high quality materials. The establishment of trust is needed to be involved in the process of the organization and analyse the costs among firms’ relationships (Williamson. The critical question is why the suppliers choose to let buyer firms gain a competitive advantage and how they have the ability to support their value creation efforts. The supply quality includes supplier capability. Prahalad and Hamel (1990) described how manufacturing firms are moving from vertical integration to build up their core competencies on leaner and smaller firms. Strategic supplier selection within GSCM Hsu et al. For example. the suppliers must lose their reputation to gain feature business by word of mouth from their buyers (Rao and Bergain 1992). This power can affect the buyer and supplier relationship whereby one side is more powerful. supplier’s process ability. and improving the produce and process skill (Churchill. quick response to demands. the buyer’s choice is another important issue within the buyer and supplier relationship. 1995). shorter product life cycles. This also emphasises the importance of supplier responsiveness to know buyer’s demand. 2001). which only have a mutually beneficial relationship with their deliberately vital suppliers. The firms only focus on their strategic suppliers who have more efficient leverage capability and technologies (Tully. one firm trusts the other parties when they believe not be cheated and they can obtain more benefits from the relationship. technology. industry professional knowledge. especially while the costs are reduced within the long-term. and price. Therefore. such as quality.1979). the buyer and supplier motivation and friendship are the most important factors to influence the trust within the buyer and supplier relationship. On the other hand. Copacino (1996) pointed out that this is different from the traditional buyer and supplier relationship. the quick response to demand is the ability to face buyer needs immediately. when buyers pay a higher buying price and are then cheated by their suppliers. contained by GSCM. (2006) said that “Supplier selection is a crucial process that addresses how organizations select strategic suppliers to enhance their competitive advantage”. expertise.

the advantage of GSCM allows diversity in the international situation by distinguishing and using local differences. Subsequently.. effective supplier selection plays a critical role in completive surroundings within global supply chain management. but there is no evidence about expanding a supplier selection regulation (Hsu et al. What kind of suppliers’ variation lets the buyers decide a key supplier based on satisfying the delivery. Furthermore. Research questions The research questions drawn from the literature review start with the key supplier’s selection in maintaining a buyer-supplier relationship in order to drive efficient global supply chain management. Has the firm developed a management programme tied with a world-class manufacturer. The other reliable factor is the price of materials and services also needed to consider. and better services from their suppliers but most buyers presume that they are losers. 2006). how can the buyer’s non-local supplier maintain the relationship and become adversaries to their local suppliers. how can the buyers change their business behaviour to retain a relationship within their suppliers all over the world? Thirdly. and the ability of local suppliers to adapt to buyer requirements (Millington et al. In contrast. such as shorter lead time. The reason for this is that the suppliers think they can provide those benefits without forming an agreement or partnership with their buyer. there is evidence from the literature as researchers provide the evidence of supplier selection for definition. Methodology .lead time. The supplier expecting to establish a long term relationship with their buyer must improve their service in response to buyer needs changing. ready and willing to defend the globe competition? Firstly. quality and prices requirements? 2. On the one hand. The second question also judges the environmental conditions with the considerable institutional and cultural differences. and local tax rates (Cohen and Maillik. such as: product and process technology 〝know-how”. 1997). How have firms changed their business behaviour to manage the buyersupplier relationship in an integrated global supply chain environment? 3. The research questions are: 1. Beyond any manner of doubt. Olorunniwo and Hartfiled (2001) pointed out that the critical issue is that most buyers have the same opinion that partnership can provide benefits. The firm used the GSCM system to build itself into a world-class manufacturer in order to organize GSCM to manage it in a global supply chain management. That is why Akakum and Dale (1995) supposed that it is extremely difficult for very small firms to increase their partnership with their suppliers who are large organizations and famous brands without further power than them. there has been concentration on supplier selection both by practitioners and academics. labour capability. more investment. 2006).

The secondary resources. the buyer and supplier relationship was not participating extensively before the 1990s. by contrast. according to Donnelly et al... the second wave was in South-East Asia. during World War Two. analysis and conclusion. The secondary source reproduction. However. Donnelly et al. US firms faced competition from their Japanese counterparts. and then compare the different countries and a period of phenomena for Toyota and their suppliers. This study explores how Toyota and their global suppliers work together and manage GSCM in different countries. the case study is an empirical investigation that examines a current phenomenon within the actual business background. It was a start to build up the supplier network between Toyota and their suppliers. discuss the period studied but are behind in time and some are removed from the actual events. and then decide their key suppliers in order to maintain their relationship to develop the global business. when Toyota invested in their local markets. A key feature of GSCM in Toyota. (2002) .49) indicated that Toyota developed their global market from the 1960s to the 1970s as the first step in Toyota’s inner investment in manufacturing in both Europe and the UK. Nevertheless. 1996). p. 2001).Yin (1994) referred to the case studies relevant for investigative research when answering a 〝how〞question. . is that it is not only high quality and lower cost but also the time taken to build them was far shorter than in Europe or the USA. Winfiled and Kerrin (1996. In this study. interpretation or critical material is established by the primary sources (Sapsford & Jupp. This agrees with Wagner (2006). The data collection also considers the documentary sources and how researchers collect and analyse the evidence from the‘primary’and ‘secondary’sources. Case study: Toyota The background of Toyota According to Donnelly et al. It is a case study that uses secondary data from the primary researchers’ data to analyse the relationship between Toyota and their suppliers. (2002) found that Toyota plants’ build time was about half the time taken in America. includes data collection. the question is how the firms run their GSCM with their suppliers. The research object is to investigate the GSCM operations between the buyer and supplier. Toyota. Toyota has a good relationship with their suppliers to develop a streamlined supply chain. especially in the automobile industry. From the 1980s to the 1990s. However. utilized JIT delivery to achieve efficient inventory management (Mount and Caulfield. in the late 1970s and 1980s. where the Japanese car manufacturer. according to Yin (1994). At the beginning. Toyota connected a supplier association (renamed thereafter kyoho Kai) to collaborate with their subcontractor suppliers in the Toaki area to improve their products together. The case study design. (2002) Toyota’s development history is as follows: In 1943. who said the firms in the automotive industry were required further to advance the supply chain presentation after the 1990s in Western industries.

held more regular of team meetings and training for the suppliers in key identifies interpersonal skills. 1988). They also made a successful point that Toyota was enthusiastic about modifying their technology to acclimatize to the local cultural. Toyota in Europe has constructed a collaborative relationship with their suppliers. Toyota in Europe Toyota set up their branches overseas. To encourage a close relationship with their suppliers and also invite their suppliers to contribute ideas towards product design (Ohno. It is attractive to share expertise and knowledge between firms compared with the traditional buyer and suppliers’ relationship whose only focal point was on . Winfield and Kerrin (1996) indicated that. when firms join the Toyota supply chain. reportedly. China has developed into a “workshop to the world” and also had become the most important area in the world for Toyota to increase their market share in order to extend their GSCM there. the Toyota suppliers not took on the “whole package” of change. However. Toyota’s supplier also support this point to be a global standard level in order to gain a significant market share through their buyer and supplier relationship (Fabbe-Costes et al. social and industrial environment of the UK. perhaps requesting detailed contingency plans and knowing how to take advantage of “learn as you go”especially the buyer and supplier relationship. In other words. The critical point is how the firms in Toyota’s UK supply chain have changed their working attitudes towards management and have broadened this into the suppliers’ organizations. 1996). That is why European suppliers would like to cooperate with Toyota and become accustomed to Toyota model management. 1997). but also supports their suppliers in terms of economic and various suggestions. according to Liu and Brookfiled (2006).2006). but also changed the effect on the manufacturing progress within the supply channel in support of Toyota (Winfield and Hay.. Winfield and Hay (1997) said that there was a generation gap between Toyota and their suppliers when the latter were arranging training courses in interpersonal communication and problem solving.1997. Toyota continued to modify their programmes and. In contrast. through their suppliers’ relationship. Toyota. Consequently. and they frequently keep their own standard as a world-class manufacturer. Winfield and Hay (1997) stated that Toyota also choose their key suppliers who had preventative behaviours about the way to adjust. not only builds up an efficient supply channel in terms of their products design or expertise transfer and training.p. involving Just in time (JIT) manufacturing systems (Winfield &Hay . their aim was for Toyota (UK) to be a world-class manufacturer. when Toyota moved to the UK set up their plant and joined the UK suppliers. and provides an exemplary model of best practice for other firms.458). efficiency and quality. It emphasizes lean production. The Toyota UK Company is one among many Japanese automotive manufacturers which claim new specific developments in customer-supplier relationships (Wickens. Toyota had 210 suppliers in 11 European countries. In addition. of which 50 percent were UKbased in 1996 (Winfield and Kerrin. they need to adapt to the Toyota production method and the social demands. Furthermore. 1987).Recently.

5. J&B contribute an exterior capability to Toyota’s cost effective and competitive care production. Performance judgment images in Toyota’s modernistic organization stress continuance. The impact of these elements on Toyota and the J&B supply chain members’ development is focused on the quantities of the products and connected accessories. Australia. then transfer and train professional knowledge in order to make judgements and solve problems together. we back that up with reliable services – and if there are problems. a total of over 100 items to Toyota regularly. attend meetings and solve problems together. quick responses. As a result. If they ask us for something. someone is there straight away. 6. they referred and explained six aspects of the Toyota management model as follows: 1. provided by computer knowledge and know-how that complements Toyota’s own internal efforts. who have a relationship with Toyota in Australia. Further. Toyota in Australia (Toyota and J&B relationship) Awuah (2001) studied the Australian supplier John and Bryce (J&B). the J&B managers always visit Toyota four times per week. 2. Nevertheless. For example. Toyota in the USA Wakabayshi and Graen (1991cited in Cheng 1996) investigated Toyota in the USA in terms of the organization’s operation and cultural collision. J&B is a supplier who sells pneumatic air tools to Toyota in Melbourne.the trade processes in Europe. This is a step by step way to build up and maintain the buyer/supplier relationship. selection and placement organization growth stages performance appraisal promotions rewards adopted Japanese management practices The first issue is to choose the key suppliers. the Toyota management model is focused on the organization development between the buyer and suppliers. Toyota is famous for insisting on product quality. they are pretty sure that they are going to get what they want. The rewards must be very fair among Toyota’s suppliers in order to adopt a Japanese management reproduction in the USA. . technological support and a management system. If something is wrong at Toyota. This is not only critical in terms of cultural difference but also Toyota management methods in Europe. We supply goods. but the manger contacts Toyota every single day. a lengthy and steady’s buyer and supplier relationship in order to know equally the firm’s needs and how to exploit each other’s balancing ability in meetings is required. Awuah (2001) reported that J&B said “They know us. In addition. These elements are common directions for J&B in doing business with Toyota. In other words. 4. aggressive prices. which is required to avoid poor performance. 3. The Toyota and J&B relationship offers a basis for how a firm can represent its exterior capability. we will help solve them”. good performance is needed to do promotional activities in the new business marketing in the USA. they trust us.

In contrast. on which they can draw for help in accomplishing some tasks”. The significant issues are how Toyota operates the partnership with the local suppliers and whether this is different than in other countries.. in Chain. The reason is similar to the points in the second one. Toyota set up their branch plant in China. transitional Japanese subcontracting compares with subcontracting in China (Table 1). The difference is from whole channel to the spot. Substantial delegation of authority(e. Toyota and J&B “have developed trust for each other and have also come to see each other and its interconnected relationship as an important asset. the buyer and supplier relationship has developed very well in Australia. so. According to Liu and Brookifeld (2006). A vertical group composed of a large manufacturer and its associated suppliers 2. Liu and Brookifeld (2006) stated that subcontracting in Toyota has been judged to have three features: the allocation of managerial authority. deeper details for observing the specific supply chain.Strategy of moving away from exclusive. and the police force protects the local market competition. it seems that these are further. Development competitions between a small Japanese-affiliated firms in China 1. previous to applying a JIT and TQM scheme to control and monitor each other throughout the supply chain management. Looking at the recent East Asian economy. Currently. development competitions and the retention of key suppliers within the buyer/supplier relationship. Toyota takes the lower labour and material advantage. Local orientation Characteristics . From the inter firm relations. without hesitation. Toyota employs short-term acts in response to the localization requirements and confirming the production methods and material suited to the local situation. drawing approval) 2. Toyota in China Toyota’s GSCM development also influenced East Asia economic history. even though they cross different countries (Yoshiaki et al. the traditional group is more focused on the large manufactures within the whole supply channel.g. Chain is to be a world manufacturer. in China. they have the strategy to focus on both the part assemblers and markers. insular subcontracting relationships on the part of both assemblers and parts makers 1. Table 1: A comparison of traditional Japanese subcontracting with the subcontracting systems associated with Japanese-affiliated firms in China Item Interfirm relations Traditional Japanese subcontracting 1. The interaction is between the buyer and supplier relationship.As Awuah (2001) said. They found that Toyota also encourage the key foreign suppliers to invest in Chain to decrease the unsteadiness in its supply chain. and then collaborates with their local suppliers in order to attract the local market. Without doubt. Close relations between assembler and parts makers 1. Market competition 2. But. as can be seen. 2000).

202) stated that“Suppliers want to work for Toyota because they know they will get better and develop respect among their peers and other customers”. to teach and train their suppliers about Toyota products in order to solve the problems together. From this case study. Introduction of Japanesestyle production methods. the Toyota way is to train and respect their suppliers more than the other industrial firms. and Toyota in Australia. In China.000 suppliers in the west are moving away from multi-sourced. for instance. Previously. 2. becoming a world-class manufacturer is not a dream of Toyota. 2. p. 3.000-2. Toyota in the UK. The suppliers have to provide their sincerity and commitment to Toyota’s high performance standards for quality.202). cost and delivery (Liker 2004. namely. Nevertheless. Detailed technical guidance. the relationship is only with some of the assemblers and parts markets. proximity to local markets. and short-term supervision with their suppliers. Liker (2004. combined with not operating multiple plants below their full capacity. Short-term guidance corresponding to localization needs. To be more definite. J&B has already a key supplier in Australia. Toyota and their global suppliers have a strategy management style. and manufacturing in numerous countries. That is why Toyota and their suppliers can trust each other. Toyota’s commitment means “gaining. and expanding market share around the world through the use of product innovation strategies” (Coe. 1. the Toyota way. while ensuring that materials match the local situation and use is made of cheap local labour. p. adversarial trading towards a closer relationship with the key suppliers all over the world (Wilding & Humphries. Long-term relations 1. maintaining. the advantage of a GSCM strategy is to achieve the goal of integrating the global network resources. . from Toyota in the USA. In this case.Interaction number of parts makers. (Resource: Liu and Brookifeld 2006. 1990. Toyota in the UK and Australia. expect for China. p. Toyota offers their suppliers high expectations and treats them fairly as well as respectfully. This is a kind of global supply chain management to ensure the Toyota way to secure that they can use the local direction to defend against the global market competition. p.22). Toyota has controlled the quality of the automotive components by buying mainly from their own suppliers. The long term relationship requires trust and commitment between Toyota and their suppliers.103) Discussion and Conclusion Toyota has normally 300 suppliers and 1. That is because Toyota trains their suppliers in order to get advances towards achieving the goal of GSCM. Production synchronization and sustained quality improvement through JIT manufacturing and TQM. 2006). access to low cost material supports. the benefits include reducing both firms’ transportation costs. In contrast.

further research is needed to understand the extent of the integration GSCM within the buyer and supplier relationship in order to achieve more successful GSCM. That is why Toyota was the first automatic company which occupies around 4% of the car market in 2007 all over the world. .Toyota selects the key suppliers who operate their global business in direct line replenishment agreements and fast response policies. They benefited from the commitment and trust in the long-term relationship. In conclusion. The reason for this is that they can save the oil consuming of cars to reduce the customers’ cost.

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