Self-Organization and Clustered Control in the Toyota Group: Lessons from the Aisin Fire

Abstract

Japanese supplier management practices have in past years attracted much attention in the US and Europe. Several aspects of these practices still remain relatively neglected, however, such as collaborative relationships between suppliers themselves. In this paper we argue that a recent incident involving Toyota and its supplier network reveals the importance of these relationships and their implications for firm competitiveness. We describe how Toyota suppliers effectively and rapidly organized a group-wide effort to restore production of a key brake-related part, whose supply was suddenly interrupted as a result of a fire at a supplier's plant. We conclude that this remarkable group-wide effort was a function of shared capabilities within Toyota's supplier network. These capabilities lead to effective responses to major crises like this one, and in normal times to decentralized and group-wide problemsolving permitting continuous improvements in firm and group performance, under the omnipresent yet largely invisible leadership of Toyota.