You are on page 1of 4

CASE STUDY ON DENSO CORPORATION AND GLOBAL SUPPLIER RELATIONS 1.

How has DENSO's relationship with Toyota affected its international strategy? Prior to 1949, DENSO Company was a part of Toyota, but then it became a separate company remaining 25% of its issued stocks with Toyota. Thus DENSO is part of Toyota's keiretsu. DENSO is the major supplier to Toyota and when Toyota set up its plant overseas, DENSO initially expanded overseas to supply Toyota’s overseas plant. Thus, now it became supplier to other auto companies overseas as well starting with Toyota. Toyota paved the way for DENSO by being the first in many new markets, such as North America, and by supplying needed capital to DENSO. DENSO has attained market power and pricing autonomy by distributing better quality products at relatively lower price. So this economy scale of DENSO has freed DENSO from grapes of Toyota and became free distributor to so many auto companies including world’s third largest auto company, DaimlerChrysler.

2. What types of quality programs has DENSO adopted, and how do you think they will affect DENSO's future as a global supplier? Supplying the right quality of products and services will have a significant effect on whether the company can get future market advantage or not. The quality will affect the delivery speed and reliability. In order to have a better quality, Denso is encouraged to ensure that they take the responsibility themselves to provide a “right-first-time” level of quality. DENSO has to meet tough quality standards. So, it adopted TQM (Total Quality Management) to meet Toyota’s rigid quality standards. And also to make their product of a better quality, DENSO strives for zero defects. DENSO also complies with both ISO 9001 and QS9000 certification so that it can qualify for supplying parts to auto makers in Europe and North America. Besides adopting TQM to meet Toyota’s rigid quality standards, its product quality have meet with many other auto maker companies. So, it will become supplier to many other companies in foreign market which will decrease its dependency to Toyota Company. And, since ISO 9001 and QS9000 are quality standards certification, by compiling with these two certifications, DENSO can supply its products to Europe and North America where most of worlds developed countries are located. Thus, it will be supplying the auto parts to many automaker companies worldwide, by which it can definitely

Submitted By: Singye Samdrup. GC(2)/0900231 B.com. 5th Act. “B”

Page 1

They can produce parts for its own use as well as several different auto companies. But in case of MRP (Material Requirement Planning). DENSO can calculate demands for parts form production schedule of companies that uses parts. DENSO can supply auto parts to any other companies beyond Toyota if it is using MRP system and thus their production and supply becomes unlimited and free which makes DENSO an independent company. by following MRP system. Instead. So later in the future it will be the world’s leading auto parts suppliers 3.CASE STUDY ON DENSO CORPORATION AND GLOBAL SUPPLIER RELATIONS increase its sales and build product/brand image in the world market. 5th Act.com. What challenges will DENSO face as it diversifies its customers and its product lines? Submitted By: Singye Samdrup. the burden of keeping inventory is shifted to is customers. Following kanban limits it supply to Toyota only and could not supply to other automakers as it manufactures auto parts in JIT basis. So. GC(2)/0900231 B. “B” Page 2 . the work center further down the line (demand source) requests material from the preceding work center (supply source) only when it is required. When rest of the industry is moving away from the Kanban. Toyota Company is still based on Kanban. then no production. Thus DENSO is not truly the independent company they actually are as it should follow Toyota for its production and supplies. whether DENSO s using Kanban or MRP makes lot of differences. Thus Kanban is fully based on Just-inTime basis and if no Kanban signal is received. higher-level planning is used to control the material flow through production. 4. Thus. So. Why does it make a difference whether DENSO uses kanban or MRP? In KANBAN techniques no separate. it uses demand forecast by some of its customers and thus DENSO can produce auto parts well in advance where it is ready to supply as and when asked. There is no demand forecast in Kanban system and no proper inventory is kept.

CASE STUDY ON DENSO CORPORATION AND GLOBAL SUPPLIER RELATIONS The major challenges faced by DENSO is that though other auto companies are moving away from Kanban. so they can’t go in line with all customers with different products but can only produce standardized products which some of customers may not like it. but final production cycle is based on Kanban. If DENSO keeps on diversifying its customers and product line. References Submitted By: Singye Samdrup. To not let their workers get heavy task. This shows that DENSO fully cares its employee’s health and mental well-being. Coordination and control may prove troublesome too if they get involved in making too many different products. It want their employees to be strong and healthy enough to do their tasks. 5. 5th Act. DENSO also engages with lifetime employment and they did not want to lay off their employees. Toyota uses forecast to help DENSO plan its production. Employee performance is evaluated every six months with a bonus paid every six months. GC(2)/0900231 B. Workers are hired for life and they pay salaries which are based on mixture of age. Different customers has got their own taste and preferences. So thus DENSO treats its employees equally. the major revenue generator with 56% of DENSO still remains with Kanban system. Toyota Company. expertise and performance. it finds new product line to shift its workers. There is lot of fluctuation in demand than Toyota where Toyota schedules a relatively flat production. it retrains them for the job. DENSO will need better inventory control and communication systems to integrate all their production. DENSO is producing auto parts in line with Toyota. “B” Page 3 . To go with new customers and new product line. it may become bit of a challenge to distinguish themselves as an independent company and it would be difficult to satisfy all those customers effectively. So.com. There is only small wage gap among workers. What do you notice in the layout of the Takatana plant that demonstrates DENSO’s commitment to its employees? DENSO has created a “Green Belt” around the plant where their workers can look at green trees and not to the factories. And when DENSO assigns its worker with new task. they are usually kept in one division until they retire as working in most experience job will be much easier for them. Each plant has got on-site education facility which fully shows DENSO’s commitment to their workers. Honda and Mutsubishi requests products based on a forecast of demand and place their orders three days in advance. it would be difficult for them to meet all the quality parts which are desired by their different customers. a company should go for cost effective and unique products.

“B” Page 4 . http://www.CASE STUDY ON DENSO CORPORATION AND GLOBAL SUPPLIER RELATIONS 1.com/answers/business-operations/supply-chainmanagement/OPS_SCH/317158-30077660 2.com/en/newsreleases/101109-01. http://www. 5th Act.com.html Submitted By: Singye Samdrup.linkedin. GC(2)/0900231 B.com/en/ 3.globaldenso.globaldenso. http://www.