Toyota suppliers will join an online purchasing network being launched by Toyota Motor Manufacturing North America Inc. over the next 90 days.
Toyota purchasing executives in Erlanger, Kentucky, say they have the system running internally and are conducting a pilot program with five of Toyota's North American suppliers.
The company expects to have all of its approximately 500 North American suppliers online by the second quarter of 2001.
The Toyota system, called Worldwide Automotive Real-time Purchasing, or WARP, is unrelated to Covisint, the Internet procurement system being launched by DaimlerChrysler, Ford Motor Co., General Motors and other automakers. Toyota Motor Corp. has expressed interest in a limited participation in Covisint, but WARP appears to be designed to do much of the same thing.
Both systems let auto company purchasing managers take bids from qualified suppliers on a secure, buyer-controlled website.
But Gene Tabor, Toyota's general manager of purchasing, emphasized that Toyota's Worldwide Automotive Real-time Purchasing system will be a closed system, limited to suppliers with which Toyota has agreed to work.
'This is not an open bidding system,' Tabor said. 'We are not changing the way Toyota selects suppliers. We will still decide upfront who will be a Toyota supplier, and we wouldn't go to them for a sourcing quote until we have had discussions with them, and they've understood our strategies and philosophies.'
Toyota's system will keep suppliers separate and maintain data for each supplier on each project. Tabor said he believes the records will be helpful as parts and components evolve, project quotations change and employees change jobs.
'Those kinds of records are important when you want point of reference,' he said.
Initially, the web system will be used only for purchasing and communications, although Toyota expects to broaden its capabilities as suppliers grow accustomed to it. One possible expansion will be into factory production needs. In the future, Toyota's plants could use the system to request part shipments and track work on a real-time basis.
'We can direct this wherever we want to,' Tabor said. 'There are a lot of possibilities.'
Toyota has not quantified the savings it believes online purchasing will net. But Tabor estimated that productivity in some areas could improve 20 percent to 25 percent with the system. Other areas may see gains of 15 percent.
Toyota expects to reduce project costs by eliminating non-value-added work, such as the labor involved in searching for mistakes in paperwork, data re-entry and delays in communications. Ultimately, Toyota believes the move to the Internet will help it cut lead time of new vehicle projects.