SMEs and their Negotiated Positions in the Toyota Supply Chain

Abstract:

SMEs in the automotive industry are considered as actors at the bottom of the subcontracting pyramid. This is explained largely by internal characteristics (size, technological knowledge, social networks, etc.), the co-production and perception of these characteristics by the carmakers and OEMs and the modularization of automotive supply system since the 1990s. This modularization results in a parallel evolution: on the one hand the concentration of major players around carmakers with various kinds of relationships, and on the other hand the marginalization of some suppliers that could not get an access to these positions. The corollary of this widely shared conception of the subcontracting pyramid lays in the unequal distribution of resources among them.
In contrast with these recent evolutions, the case of the Japanese automotive industry highlights a very early process of both externalization of production (itaku) and integration of suppliers in supplier cooperation associations (kyôryokukaï), whose organizations are based on systems of information and technology sharing and transfers controlled by the carmakers. However, strong and clear contrasts characterize cooperation associations among the seven main Japanese carmakers (Sako, 1996). Productive and financial integration within the Toyota Group is assumed to be the most typical Japanese supply system.
In this paper, starting from some historical data about the establishment and evolution of the Toyota Group – mainly the tools implemented to enhance cooperation and suppliers’ integration – we will address the question of tasks and positions distribution within this supply chain in the region of Nagoya. Thus, based on a field survey of 27 suppliers of Toyota in the Aichi Prefecture (toolmakers, suppliers of various ranks and sectors), we propose an analysis of the instruments developed to facilitate resources allocation and suppliers’ election process (Mariotti, 2005) within Toyota group. By analysing some case studies taking into account the firms’ historical trajectories, we focus more specifically on the patterns of accession for SMEs to higher ranks in the supply pyramid. We will see how – based on what kinds of resources and under what constraints – SMEs manage to access high positions in the supply chain while others remain as peripheral actors. In that perspective, we will mainly go through three clues of the trajectories – technology developments, organizational capabilities and social networks – considered as indicators and determinants of the negotiated positions.