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Toyota Global Sourcing Perspective
& Journey in India
Mr. Atsushi ToyoshimaManaging Director
Toyota Kirloskar Motor Private Limited
ACMA ANNUAL SESSION AND CONFERENCE
September 2, 2003
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Content
1. Introduction
2.Toyota Global Sourcing Policy
3. Toyota Journey in India
4. Sourcing from India – Toyota initiative
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Content
1. Introduction
2.Toyota Global Sourcing Policy
3. Toyota Journey in India
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Overview of ToyotaTOYOTA MOTOR CORPORATION:
• Establishment August 28, 1937 • Employees 247,000 (TMC Japan:65,000)• Sales volume (2002) 6.16 million Vehicles in 160 countries• Net Revenues (2002) US $ 107,443 million • Overseas Operations 46 Manufacturing Units in 26 countries Plus 12 Plants & 11 mfg subsidiaries in Japan
3rd Largest Auto Mfr in the World
TOYOTA KIRLOSKAR MOTOR:
• Establishment October 6, 1997 • Investment Rs. 9 billion• Employees 2,300 (Two shifts)• Sales volume (02-03) 30,000 (Qualis, Corolla & Camry)• Vendors 82 Tier I Suppliers • Group Co’s Investment Rs. 3 billion (11 New Units)
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Growth of Toyota In India• Start of Volume Prodn : Dec 1999• Current Capacity : 50,000 units / annum• Sales Plan (03-04) : 44,400 (all models)• Current Models : Qualis, Corolla, Camry (CBU)
3519
25361 2500629836
44400
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
TOTA
L SA
LES
APR - MAR' 00 APR- MAR ' 01 APR- MAR ' 02 APR- MAR ' 03 APR- MAR ' 04(PROJECTED)
FINANCIAL YEAR
YEAR ON YEAR SALES FIGURES
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Content
1. Introduction
2.Toyota Global Sourcing Policy
3. Toyota Journey in India
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Equal partnerSharing target for mutual Prosperity through Mutual trust
Supplier for Toyota is Basic Purchasing Philosophy
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1. Open & Fair
2. Mutual Trust & Mutual benefit
3. Contribution to local economy through localization
Basic Purchasing Policy
Toyota`s approach to purchasing
Global Optimum Purchasing Programme
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1. Global Cost comparison
2. Add New Supplier, New Technology
3. Enhance current suppliers global competitiveness
Optimum Global Purchasing programme
Application in India……..
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Content
1. Introduction
2.Toyota Global Sourcing Policy
3. Toyota Journey in India
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55 59
82
100+
1999 2001 2003 2005
TKM Component Supplier base Expansion
< No.of Suppliers >
Localization efforts Corolla launchExport Projects
StartupSetupSmooth startLocalization drive
Enhance (Transition) Quickly Enhance CompetitivenessBenchmark, Overall improve
ExpansionDomesticExports
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Import Reduction (Qualis)2000 to 2003
Import
Local
At TKM At Supplier
Import
Local
30% Down 50% Down
TKM Parts Supplier base Expansion
55 59
82
100+
1999 2001 2003 2005
< No.of Suppliers >
Localization effortsCorolla launch
Export Projects
StartupSetupSmooth startLocalization drive
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TKM Parts Supplier base Expansion
55 59
82
100+
1999 2001 2003 2005
< No.of Suppliers >
Localization effortsCorolla launch
Export Projects
StartupSetupSmooth startLocalization drive
Enhance (Transition) Quickly Enhance CompetitivenessBenchmark, Overall improve
ExpansionDomesticExports
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Application of Global Policy in India
Supplier Base Study Technology, capability mapping
SE Activity Supplier participation from Concept stage
Startup & Enhance phase
Supplier Parts Tracking Team Formation(SPTT) Close interaction during development
Target Value System For Continuous improvement
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Target Value System For Continuous improvement
Based on Performance,TKM to fix Challenging butAchievable New Targets
Year 1 Year 2 Year 3
Target 1
Target 2
Target 3
Suppliers to achieve targetsgradually by continuousimprovement
Performance
<Need based support from TKM>
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3 Pillars of Target Value System• Delivery – Timely Supply <TKM Support> - Unique Milk run system ensures effectiveness, -TPS implementation in Supply chain Concerns Points: Transport Strike, infrastructure
• Cost- Best Cost + Continuous improvement activity ongoing through out Supply chain
Concern points: Productivity, Tax Barriers, Raw Material- not cost based
• Quality- Incoming quality (PPM) Big Gap…..needed special focused activity
Quality Case….
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Big GapTraining, continuous education focusing quality
Top Management Involvement
Awareness Involvement
Prioritization Education
Supplier Company Wide awareness of Quality importance & necessity
Quality to be prioritized from Top to Last member
Approach adopted…
Incoming Parts Quality..6.86.8
1 0.5 0.8
Thailand Indonesia Australia IndiaTaiwan
1.8
Index(Thailand)
Toyota Experience
2001India
2003
1.1
3.73.7
2002
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55 59
82
100+
1999 2001 2003 2005
TKM Parts Supplier base Expansion
< No.of Suppliers >
Localization effortsCorolla launch
Export Projects
StartupSetupSmooth startLocalization drive
TransitionQuickly Enhance CompetitivenessBenchmark, Overall improve
ExpansionDomesticExports
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Expansion & Exports
Govt policies Aligning Global Trend
Suppliers Participation Efforts towards Target achieve
Export Initiatives
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Increasing environmental awareness
Intense Competition among economies
Emergence of economic blocks & WTO
Business EnvironmentGlobal
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Regional Trade Blocks
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Increasing environmental awareness
Emergence of economic blocks
Competition among emerging economies
Business Environment
Aligning towards rest of the world – WTO Encouraging Government Policies- Duty Reductions -Tax reforms- Increased spending on infrastructure
Barriers coming down - Tariff - Non Tariff
Global
Local
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Cost Comparision (Ex: T/M Parts)
100 109132
020406080100120140
India South East Asian Countries Japan
Countries
Cost
Inde
x
Strengths WeaknessStrong Supplier Base Volume Internal Resources Material PricingTechnology & Engineering Skills Consistent Quality
Tarrif
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New Transmission Project- EOU
TOYOTA KIRLOSKAR AUTO PARTS:
• Establishment April 2002 • Investment Rs. 4.8 billion • Product Automobile Transmission• Volume 168,000 units / annum• SVP June 2004 • Nature of operation 100% EOU • Exports Destination Asia, Africa & South America
Aluminum Die-casting and machining in Kirloskar Toyoda Textile Machinery Ltd – another new EOU
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Additional to Transmission EOUPart Exports..
82
0
100+
10%
2003 2005
Total Supp
Part Export
By 2005 10% of Suppliers to Export Parts
•Unique Model to Global Models
•Direct Global comparison
•Direct Opportunities
Toyota as a Global company Can be Platform to jump for Global Business It is up to Suppliers to Challenge…..
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For Export competitivenessIssues to be addressed…..<Internal>
Benchmark Globally: Cost,Quality, Delivery, Quick catch up
Technology is Key Eco & Safety
Govt Initiatives Infrastructure, Tax Reduction
<External>WTO and Intl Trade
Trade Blocks, WTO commitments, Harmonization of standards, etc
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CONCLUSION:
• Toyota Global Sourcing is purely based on merits of Quality, Cost and Delivery
• Toyota believes in equal partnership concept with Suppliers
• Regional trade blocks & WTO will have an impact on global sourcing policy
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Thank You