Vendors ‘will not lose out in cuts’

18 January 2010

19 January 2010 | Jake Kanter

Toyota’s landmark cost-cutting drive will be “sustainable” for suppliers, a senior buyer has said.

The Japanese car manufacturer told vendors it plans to cut the cost of car parts by between 30 and 40 per cent by 2013.

The savings target is thought to be one of the most ambitious in Toyota’s history. It is likely to test the company’s supplier relations, which have been praised by industry experts in recent years.

But Nic Massey, a senior buyer for Toyota Europe, insisted that vendors would not lose out in the savings drive. “We don’t accept the approach of just forcing down prices with our suppliers as we must always be able to understand the cost reduction and ensure it is sustainable,” he told SM.

Massey said the savings plans will become clearer as the company enters its annual round of vendor negotiations throughout this quarter. Cutbacks are likely to be driven through design changes and introducing new technology, he added.

“We are already involved in cost-reduction activities with our suppliers – we call it value engineering or value analysis – and we are putting more resources into studying technical cost reduction.”

 

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