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8/8/2019 B2B Group2 Section B
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Knowledge Management &Building Relationships in B2BNetworkToyota Case
Project Report - Business to
Business
Group 2, Section B
Debanik Basu
Gaurav Gupta
Julie Pages
Nitin Gupta
Santosh Matala
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Toyotas Value chain (source : 100ventures.com)
In the Kaizen strategy which is followed by the company, it tries to
empower employee through mechanisms such as the system and qualitycontrol (QC) circles. Toyota's management philosophy has been reflected
in the terms like "Lean Manufacturing" and "Just In Time", which has
been adopted world over.
Overcoming the knowledge Sharing Dilemmas: Toyota
Way
There is a big challenge to any value chain for an auto maker. Challenge
for the company lies in knowledge sharing with suppliers and other
players in the value chain. But it has been seen that knowledge diffusion
occurring at Toyota Motors has been much more successful than its
competing auto makers. Toyotas has been able to effectively create and
manage network-level knowledge-sharing processes at least partially
explains the relative productivity advantages enjoyed by Toyota and its
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suppliers. The evidence is there that suppliers do learn more quickly
after participating in Toyotas knowledge-sharing network.
Lets analyse how Toyota managed its knowledge sharing dilemmas.
Encouraging Suppliers
Toyota encouraged suppliers to openly participate in sharing knowledge,
as it believed collective learning is superior. And to encourage suppliers
to participate and openly share knowledge, Toyota has heavily
subsidized the network (with knowledge and resources) during the early
stages of formation to ensure that suppliers realize substantial benefits
from participation. Suppliers are motivated to participate because theyquickly learn that participating in the collective learning processes is
vastly superior to trying to isolate their proprietary knowledge. Toyota
has also introduced a number of network-level knowledge sharing
processes that have, over time, helped create a strong identity for the
network.
Addressing free-rider problems
Network rules were setup so that suppliers can access knowledge once
they agree to share their knowledge. In such network rules, company
also included severe consequences for violating the rules, so to reduce
such violations and bring in more discipline. Finally, to ensure that the
network is efficient at tacit knowledge transfers, Toyota has created a
highly interconnected, strong tie network with a variety of processes that
facilitate knowledge transfers. The network has multiple pathways
among members (effectively eliminating most structural holes). Toyotas
strong tie network is well suited for the diffusion (exploitation) of
Toyotas production know-how (e.g., the Toyota production system) as
well as the existing know-how that resides within its suppliers.
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Creation of network identity
Toyota realized that if a network can create a shared identity among
members, then that shared identity can lower the costs of sharing
knowledge within the network. Also, the diversity of knowledge that
resides within a network is much greater than that which resides in a
single firm. Company realized that if the network can get its members to
cooperate in a social community it will create learning opportunities far
superior to firms that do not reside within such a network. Toyotas
network is effective at knowledge sharing, in part, because a strong
network identity has emerged and the network has established rules
(network norms) that support coordination, communication, and learning.
In Japan, Toyotas network is known as the Toyota Group and Toyota
openly promotes a philosophy within the Toyota Group called
coexistence and co prosperity (Kyoson kyoei in Japanese). Toyota has
also promoted this philosophy as a core value held by Toyota in a
manual (called Selling to Toyota) that they created to help U.S.
suppliers learn how to best work with Toyota.
Kyohokai / Suppliers Association
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Philosophy and Belief - Toyota promotes philosophy in network
coexistence and co-prosperity (Kyoson kyoei in Japanese) US context.
Quality Cars require Quality Suppliers.
Kyohokai Kyohokai is the suppliers region. It was first established
in 1943 to promote mutual friendship and exchange of technical
information. Later it was extended to Mutual development and training
among its members. Kyohokai is divided into 3 regional associations
based on geographical proximity. This association conducts general
meetings every month Sharing explicit knowledge on topics (cost,
quality, safety etc).
Quality Committee - Number of initiatives are taken to increase the
amount of knowledge in the network to promote product quality. Regular
Committee is set up, which picks up a theme (based on Suppliers inputs)
for the year. These committees then meet six times and and discussions
are based on the theme.
Apart from the above points, more programs are held to enhance the
transfer of both explicit and implicit knowledge. Basic quality Trainingprograms are held for suppliers. These also include excellent plant tours.
Annual quality management conference are also held which includes
lectures and case discussions- 2 plant managers cases, 2 supervisors
cases, and 2 quality circles cases.
Toyotas replicated kyohokai in the USA in 1989 - Setup Bluegrass
Automotive Manufacturers Association (BAMA)
Consulting Teams / Problem Solving Teams
Toyota established its Operations Management Consulting Division
(OMCD) in the mid- 1960s. Main objective for this division is solve
operational problems (Toyota & suppliers). OMCD is the organizational
unit within Toyota with responsibility to acquire, store, and diffuse
valuable production knowledge that resides within Toyotas production
network. This provides direct on-site free assistance to all memberssuppliers to sort out problems. Average No of visits 4.2 per year. The
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U.S. version of OMCD is setup in 1992 (TSSC Toyota Supplier Support
Center). Problems faced in transferring tacit knowledge can be the cultural
and management issues and consultancy projects are time consuming
and resource intensive.
Benefits through TSSC
Supplier started learning faster after TSSC
Inventory reduction of 75%
Productivity improvement by 124%
Problem solving teams from TSSC / QAD from Toyota
Fix quality problems and enable supplier-supplier KS
Jishuken
OMCD organized key suppliers into voluntary study groups (a.k.ajishuken). Each group had similar production processes. Members in
each group to assist each other with productivity and quality
improvements. Group formation is based on geographic proximity,
competition and relations with Toyota. Groups usually reorganized every
3 years to maintain diversity of ideas.
Activities of Jishuken :
Determine central theme for the year
Visit each others plants as consultants along with an OMCD
member
Consulting Phases
Preliminary inspection
Diagnosis and experimentation
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Presentation
Follow up/evaluation
Annual meeting of all jishuken groups to share knowledge
Plant Development Activity (PDA)
Plant development Activity or PDA was established in 1994 to replicate
jishuken model in US. Initially it was formed with 3 groups with 11
suppliers in each group, but later on 15 more suppliers were added to it.
Although , it led to problems with experienced suppliers getting frustratedwith lacking skill and knowledge base of inexperienced suppliers. To
manage that, Toyota then had to reorganize them into 4 groups based on
skill set : -
Orange (High skills; high experience)
Blue (High skill; medium experience)
Green (Medium skill; medium experience)
Purple (Low skill; low experience)
There were a certain criteria to which suppliers must meet in order to be
eligble for membership of PDA. Supplier must be member of Bluegrass
Automotive Manufacturers Association (BAMA) for atleast 1 year. This is
to ensure that suppliers are assimilated into BAMA. It would also ensure a
commitment from top management. Primary aim was to create more of a
learning team rather than jishuken which are consulting teams.
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Shukko
Shukko is the inter-firm employee transfers practice followed by Toyota
and many Japanese firms. There are number of reasons because of which
Toyota favours employing Shukko. Some of them are : -
Helping assemblers maintain control of suppliers
Opportunity to shed unwanted employees
Creating network identity
Transferring knowledge from Toyota to suppliers
Understand supplier perspective
Transfers can be permanent or temporary
Network System
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Such a network system creates a social community among suppliers. It
facilitates face-to-face interaction, while encouraging knowledge sharing;
also it enables a lower cost of participation and increases value of
participation.
Maximizing Efficiency of Knowledge Transfer
As had been discussed, Toyota employs variety of processes available for
knowledge transfer - Jishuken, Suppliers Association etc. Each type of
knowledge (tacit, explicit) is matched with the process (bilateral,
multilateral) for highest efficiency.
Toyotas US Knowledge Sharing Network
Toyota successfully replicated its knowledge sharing network in US as well
in a course of time. The following steps were taken by it for the same :
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Phase 1: Developing Weak Ties:
Relationships of suppliers with Toyota were new
No interaction b/w suppliers
Knowledge Sharing Non-Existent
Initiated Knowledge Sharing
Established Suppliers Association expl. Knowldg.
Created weak social ties among suppliers
Supplier Motivation Show commitment to get more business
Phase 2: Developing strong bilateral ties:
Consultants at Suppliers Facilities
Transferred tacit know-how
Reciprocal Knowledge Sharing
Feeling of indebtness and openness within suppliers network
Comfortable with knowledge transfer activities
Supplier Motivation Receive Knowledge Transfer from Toyota
Phase 3: Developing strong ties among suppliers
Divided Suppliers into Small learning teams Maximize learning
Subnetworks within network
Toyotas control over network Leadership position
Supplier Motivation Rapid knowledge acquisition to be more
competitive
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Evolution of knowledge sharing network
Toyotas knowledge sharing model who has implementation has been
time consumeing and resource intensive has been highly successful. Main
reasons for its success are :
Top management commitment
Nurturing Sharing culture
Flexibility in decision making
Building and maintaining high levels of trust
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Conclusion
Toyotas knowledge sharing models successfully solves three dilemmas of
value chain, which are, motivated members to participate and openly
share knowledge, prevented members from free riding and efficiently
transferred both explicit and implicit knowledge. It also shows that firms
can achieve competitive advantage by building strong relationships with
the suppliers and among the suppliers. The shared identity lowers the
costs of communication and establishes explicit and tacit rules of
coordination. Network can be more effective than a firm at the generation,
transfer, and recombination of knowledge due to greater diversity of
knowledge within a network.
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References
The knowledge value chain: a pragmatic knowledge
implementation network, Catherine L. Wang & Pervaiz K. Ahmed,
Emraldinsight
Creating and managing a highperformance knowledge-sharing
network: the Toyota case, Jeffrey H. Dyer and Kentaro Nobeoka,
Strategic Management Journal
http://en.wikipedia.org/wiki/Toyota
http://www.1000ventures.com/business_guide/im_value_chain_main.
html
History of the TPS, Toyota Motor Manufacturing Kentucky Site,
http://www.toyotageorgetown.com
http://en.wikipedia.org/wiki/Toyotahttp://www.toyotageorgetown.com/http://www.toyotageorgetown.com/http://en.wikipedia.org/wiki/ToyotaRecommended