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....
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