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The Japanese model of long-term collaborative partnerships between firms and their suppliers has attracted much attention from business researchers and practitioners. Several U.S. and European auto-makers have attempted to establish similar partnerships of their own, seeking to reduce their supplier base and cultivate relationships with their best suppliers.1 As a result, the early involvement of suppliers in product-development and cost-reduction efforts is becoming standard practice in the automotive industry and beyond.2A recent crisis involving Toyota and its supplier network suggests, however, that the Japanese model — or at least the Toyota model — involves more than a set of long-term relationships between a firm and a few select suppliers. As the Toyota group’s collaborative response to the sudden destruction of a key supplier’s plant suggests, the relationships among a firm’s suppliers are equally important. More generally, a complex mix of institutions permits self-organization during times of crisis with little need for a leader’s direct control.3 These strong relationships among many firms along with the steady but largely invisible control of a leader promote flexible and coordinated responses to crises. In addition, they foster long-term competitiveness through decentral- ized, groupwide efforts to solve day-to-day problems and improve performance.On February 1, 1997, a fire at one of Aisin Seiki’s plants threatened to halt Toyota-group operations for weeks. Aisin Seiki, one of Toyota’s most trusted suppliers, was the sole source for proportioning valves (or P-valves, in the industry parlance), a small but crucial brake-related part used in all Toyota vehicles.4 Because of Toyota’s and Aisin’s dedication to the principles of just-in-time (JIT) production, only two or three days’ worth of stock was on hand. A shutdown of Toyota-group plants (including those of several hundred suppliers) seemed unavoidable.The timing could not have been worse. Toyota plants were operating at full capacity with levels of overtime and use of temporary workers unheard of in years, in anticipation of a last-minute boom in automobile sales prior to the 2 percent consumption sales tax increase slated for April 1. Every day lost meant potentially huge and irretrievable losses in sales and profits for Toyota and related firms.5Yet, remarkably, disaster was averted, and assembly plants were reopened after only two days of shutdown. The recovery was accomplished through an immediate and largely self-organized effort by firms, mostly from within but also from outside the Toyota group, to set up alternative production sites outside of Aisin.6 Within days, firms with little experience with P-valves were manufacturing and delivering the parts to Aisin, where they were assembled and inspected before being sent to Toyota’s and other clients’ assembly plants. The collaborative effort, which which involved more than 200 firms (of which approximately sixty-two took direct responsibility for P-valve production), was orchestrated with very limited direct control from Toyota and with no haggling over technical proprietary rights or financial compensation.The Toyota group demonstrated its cohesion and resiliency at a time when many observers were discussing the weakening of traditional ties among group members. Based on data collected through in-depth interviews with key players in the incident, we describe what took place during the Aisin Seiki crisis and how individual firms came together to orchestrate the recovery effort.7 We believe that the episode holds lessons for businesses adopting the Japanese model of long-term supplier partnerships as well as for businesses moving away from that model. Of course, competition for future contracts and the pressure to maintain their reputations motivated the suppliers to cooperate with each other. Nevertheless, we argue, it was the various capabilities developed through institutionalized problem-solving activities within the Toyota group that ensured the effectiveness and rapidity of the suppliers’ collaborative effort. For businesses of many kinds, the capabilities developed through committed partnerships can enhance competitiveness, driving participants to respond effectively to emergencies and to pursue continuous improvement on a daily basis.8
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