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MBN USA

July 14, 2023

Toyota's Young discusses automaker's mobility transformation

Robert Young, group vice president, purchasing supplier development, Toyota Motor North America Inc.

Q: Please tell us a bit about your background.

A: I have spent 34 years in the automotive industry working at two OEMs [original equipment manufacturer] and one Tier I supplier. For the last 28 years, I’ve worked at Toyota [Motor North America Inc.] purchasing supplier development. I started at Toyota in 1989, when we were producing three vehicles in North America and have been able to participate in our incredible growth. Today, we produce 13 models locally, including local powertrain production, and [we] have the capacity to produce over 2 million vehicles per year.

At Toyota, my whole career has been in various roles and functions within purchasing. My most memorable moments are the challenges we have overcome with our supplier partners. From the 2011 tragic earthquake and tsunami in Japan, to the Great Recession and, recently, the [COVID-19] pandemic, we have collaborated and made the best of very difficult times. These were great learning opportunities and have made our people and processes more efficient and resilient.

Q: How did you end up in supply chain procurement?

A: It really was by accident. It involves Saturday morning basketball in the intramural building, a plant president, a B-school student, a car wash job, and long hair and an earring. Long story short, I cut my hair, lost the earring, and joined a local industrial parts maker’s purchasing department. I worked 20-plus hours per week while in school and learned the ropes of supply chain management, strategic sourcing and supply base development. That led to a job in Michigan at a D3 automaker and eventually to my position at Toyota.

Q: What is your favorite thing about procurement and strategic sourcing?

A: Regarding procurement, I really like both the internal and external parts of the job. Internally, we collaborate with most other functions because our direct and indirect supplier partners are critical for them to achieve their mission. It really provides a good sense of how the cake is made and how we can leverage our supplier partners’ talents and expertise to achieve mutually successful outcomes.

On the external side, it is great to work collaboratively with our strategic partners. We are only as good as our supply base. Our partners represent over 70% of our total cost structure and develop over 50% of the innovation that goes into our vehicles. Therefore, we focus on working collaboratively with our partners to ensure mutual success.

We have been fortunate in North America that our parent in Japan has always put a strong focus on our relationships with supplier partners. They recognize that partners were instrumental in the Toyota family developing a car company and that our partners have been instrumental to our global success.

As our industry transforms and as we transition to a mobility company, these partnerships and collaboration will only become more important. We are committed to ensure that we and our partners successfully navigate this transformation.

Q: Diverse suppliers are making progress in the corporate supply chain. What do they have to do to continue to grow?

A: While diverse suppliers have seen tremendous growth, and the need to develop and build capacity remains strong. One of the pillars of the Toyota Way is Continuous Improvement, which means always looking for ways to gain efficiency and evolve, or in other words, we can always do and be better. Adopting this mindset can aid diverse suppliers in sustaining and growing their existing business, especially during times like these of rapid technology evolution.

Despite the need to continue looking forward, we all must reflect on and leverage the skills and capabilities that have gotten us to where we are today as the foundation for our future. Remember your competitive advantage and differentiators and communicate them clearly. Build relationships with all stakeholders so that you are considered for opportunity when it arises, even in new areas. You never know from where in your network your next prospect may come, so keep those connections strong!

To our diverse suppliers, I want to recognize your tremendous support and partnership over the years. You continue to be instrumental to our growth and success in the North American market, and you will be key to our future as we transform to a mobility company.

Q: What is the best way for a new diverse supplier to enter corporate supply chains? And, how important is certification?

A: Certification is an essential factor that corporates consider when evaluating a potential diverse supplier. Most corporates accept major certifications. Toyota, for example, recognizes NMSDC [National Minority Supplier Development Council Inc.], WBENC [Women Business Enterprise Council], NGLCC [National LGBT Chamber of Commerce], Disability:IN, NVDBC [National Veteran Business Development Council] in the U.S., and CAMSC [Canadian Aboriginal and Minority Supplier Council] and WBE Canada [Women Business Enterprises Canada Council].

Speaking for the automotive industry, specifically, new diverse suppliers should look to enter the automotive supply chain as a Tier II, Tier III or Tier IV supplier. Automotive supply chains are expansive, and there are exponentially more business opportunities with automotive suppliers than with OEMs directly. Working as a lower tier supplier first also gives suppliers an understanding of the expectations and pace of working with OEMs, and this experience can help suppliers develop and potentially pave a path up the supply chain.

Toyota holds a trade show event each year specifically focused on this sub-tier business development called Opportunity Exchange (OE). This year will be our 33rd year of hosting OE, and it is a great opportunity for diverse suppliers to connect with our Tier I suppliers, as over 300 [of them] will exhibit. This year’s event will be Nov. 2 in Novi, Michigan. Go to onetoyotasupplierdiversity.com to sign up to receive information about the event and be notified when registration opens.

Q: What is the biggest problem facing procurement today? Is the supply chain disruption easing in your industry?

A: The operational risks from inflation, labor challenges, even natural disasters are real for our supply base, and the impact can be devastating. We work very closely with our supplier partners to understand their specific risks and to help them respond. We address these challenges by using our Toyota Way of problem solving to fully grasp the situation, identify countermeasures and implement solutions. For any situation, collaboration with our supplier partners, Genichi Genbutsu (a core part of our philosophy that means “go to the source” to understand the problem), and respect for people brings us closer to our supplier partners and helps us fully understand and solve the challenges we face together.

The vulnerabilities in supply chains were exacerbated by COVID-19 but they weren’t caused by it. Our attention has been on our supplier partners, ensuring we understand and help them to address their needs. The semiconductor shortage is not just an automotive industry issue, and the solutions are global solutions.

At Toyota, we have worked to understand our current and future needs and engaged with our supplier partners to fully grasp their condition as we navigate this global situation. On the bright side, semiconductor supply has improved and is allowing us to ramp up production to meet normal market demand.

Q: What will the new normal for supply chains look like in 2024-2025?

A: In the ever-changing supply chain landscape, defining “normal” is certainly a challenge. The key to successful supply chains is increased flexibility and transparency to adapt to dynamic customer demand. We’re seeing customers are demanding new technologies and features in our vehicles at a very fast pace. We need to ensure our supply base can adjust to these demand shifts quickly to maintain supply, especially given complex global supply chain networks and their variable lead times.

Specifically, for the automotive industry, the impact of the move to electrification – over the next year, five years, 10 years – cannot be overstated. The technology involved, the financial investments, the transition required from our suppliers, a dynamic workforce; each of these will be challenging, especially with compressed schedules. To effectively support this transition, it is critical that supply chains are robust, resilient and flexible.

For more information about Toyota Motor North America Inc., visit Toyota.com.