In 2010, a sticky accelerator pedal tarnished the once-vaunted reputation of the Toyota Motor Corporation. These authors, who have written two widely acclaimed books on Toyota, argue that the pedal’s stickiness was caused not by relaxed manufacturing standards, as was commonly believed, but rather by failing to reconcile the means with the ends in trying to meet a corporate goal. Readers who hope to create a culture of excellence will learn why that particular reconciliation is important and how to achieve it.

More and more, businesses are counting on their suppliers to lower costs, improve quality, and develop innovations faster than their competitors' suppliers can. To this end, many experts agree that American firms, like their Japanese rivals, should build supplier keiretsu: networks of vendors that learn, improve, and prosper in sync with their parent companies. As history has shown, however, that's easier said than done. Some U.S. corporations created supply chains that superficially resembled those of their Japanese competitors, but they didn't alter the nature of their relationships with suppliers. As a result, relations between U.S. manufacturers and their suppliers have sunk to the lowest levels in decades. But reports of keiretsu's demise are overblown. The Japanese supplier-partnering model is alive and well--in North America as well as Japan. During the past 10 years, automakers Toyota and Honda have struck successful partnerships with some of the same suppliers that are at odds with the Big Three and created effective keiretsu across Canada, the United States, and Mexico. So how do Toyota and Honda do it? The authors, who have studied the American and Japanese automobile industries for more than 20 years, found that Toyota and Honda have built great supplier relationships by consistently following six steps: they understand how their suppliers work, turn supplier rivalry into opportunity, monitor vendors closely, develop those vendors' capabilities, share information intensively but selectively, and help their vendors continually improve their processes.

Challenged by world-class competitors, manufacturing companies in the United States have greatly improved their product development efforts as well as their factory operations. Today, however, U.S. companies are beginning to see the effectiveness of their product development systems plateau. More important, that effectiveness seems to have leveled off far short of the best Japanese companies. The authors, Durward Sobek, assistant professor of engineering at Montana State University, Jeffrey Liker, associate professor of engineering at the University of Michigan, and Allen Ward, head consultant at Ward Systems, explore how one of those companies, Toyota, manages its vehicle development process. Toyota's managerial practices can be grouped into six organizational mechanisms. Three of them are primarily social processes: mutual adjustment, mentoring supervision, and integrative leadership from product heads. The other three are forms of standardization: standard skills, standard work processes, and design standards. Alone, each mechanism would accomplish little, but every piece has its own role and at the same time reinforces the others, unlike many of the sophisticated tools and practices at U.S. companies that tend to be implemented independently. Together, the mechanisms give Toyota a tightly linked product-development system that relies on training and standardization to achieve cross-functional coordination while still building functional expertise. Toyota has added a number of twists to ensure that each project has the flexibility it needs and still benefits from what other projects have learned. This balance allows Toyota to achieve integration across projects and over time, as well as within projects.

Many companies throughout the world, seeking ways to develop products more efficiently, are recasting their relationships with suppliers--often modeling their efforts on approaches used by world-class Japanese manufacturers like Toyota and Nissan. The favored Japanese practices include using fewer suppliers and forging longer-term relationships with them, prodding suppliers to improve continually, and involving suppliers in design and development. But many managers who adopt Japanese-style practices have an incomplete understanding of them and, as a result, may be unable to gain all the benefits Japanese manufacturers enjoy. Successful partnerships depend on the balance among a supplier's technological capabilities, a customer's willingness to share information, and both companies' strategic requirements. Using the Japanese approach as a model, the authors describe four roles that suppliers can play in a long-term cooperative relationship. Each role carries different responsibilities during product development, and the relationships between supplier and customer vary considerably in closeness and intensity.