Toyota vs DENSO Automotive industry Example

How has DENSO’s relationship with Toyota affected its international strategy? DENSO was/is part of Toyota’s keiretsu. Toyota has a vertically integrated supply chain, which DENSO is part of. Toyota accounts for over half of DENSO’s business. When Toyota expanded internationally, DENSO had to follow to supply Toyota’s overseas plants. So Toyota initially set DENSO’s international strategy However, DENSO started supplying other automakers with parts. Economies of scale are equally important for parts suppliers and assemblers. Toyota has also benefited from Denso’s scale economy, which translates into lower costs, yet better quality products.

The contradiction is that Denso has attained market power and pricing autonomy by becoming an oligopoly, which has freed it from Toyota’s grasp somewhat. It attains this bargaining power through customer diversification, with Toyota’s consent. But, Toyota paved the way for DENSO by being the first in many new markets, such as North America, and by supplying needed capital to DENSO.

2. What types of quality programs has DENSO adopted, and how do you think they will affect DENSO’s future as a global supplier? It has adopted TQM, and is striving for zero defects to satisfy Toyota. DENSO also has ISO 9001 and QS9000 certification so it can supply parts to auto makers in Europe and North America. I think by adapting to various quality programs, besides just TQM for Toyota, has enabled DENSO to become a supplier for many other auto companies. Being able to meet many automakers quality standards can only help DENSO grow its foreign sales and make it less dependent on Toyota.

3.Why does it make a difference whether DENSO uses kanban or MRP? It matters because DENSO, if it can use MRP, can accommodate not only Toyota, but many other companies who require many different parts. If they only use kanban, they limit their potential and lose improvements they can make in efficiency and cost saving measures. Using only kanban also sort of says they “belong” to Toyota, and are not truly the independent company they actually are.

4.What challenges will DENSO face as it diversifies its customers and its product lines? DENSO may find it has to adjust its’ production strategy and its global sourcing strategy. For instance, it may have to move some of it’s’ production closer to their new customers to reduce costs and

improve efficiency. DENSO will need better inventory control and communication systems to integrate all their production. Coordination and control may prove troublesome too if they get involved in making too many products. Finally, I think it will be difficult for DENSO to maintain the quality of it’s’ core competency, electrical auto parts, if they focus too much on diversification. It would be hard to satisfy all those different customers effectively. Although they cannot totally separate themselves from their co-dependent Toyota as yet, it may bea bit of a challenge to distinguish themselves as an independent company that is not one of Toyota’s “children.”

5. What do you notice in the layout of the Takatana plant that demonstrates DENSO’s commitment to its employees? The trees around the plant shows That DENSO cares about the employees and their mental well-being as well as their job satisfaction. It is much nicer to look at trees, knowing one’s company is environmentally conscious, than it is to look at concrete factory buildings. DENSO is clearly committed to their employees not only through providing nice landscaping, but by offering lifetime employment, little wage gaps, bonuses, and it’s reluctance to layoff workers. They also provide training for employees switching to different jobs.