How Toyota Buys Molds

How Toyota buys molds
By Clare Goldsberry
Published: June 8th, 2011
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Being a supplier to Toyota is a coveted position, and the Japanese car company is dedicated to helping ensure that its U.S. mold suppliers for the company's U.S. manufacturing operations provide the best molds at a globally competitive price.
Toyota Motor Engineering & Manufacturing North America Inc. (Erlanger,KY) has a better way to deal with tool and mold suppliers. Recently PlasticsToday was invited to attend a Tooling and Mold Suppliers training seminar that helps these suppliers understand the Toyota way, and what they need to do to be a good supplier to Toyota and its Tier Ones.
Through its Purchasing Tooling Cost Analysis Group (PTCAG), Toyota has determined the cost of molds based on the typesof molds and the various components used, in all regions around the world. The purpose of this is to make sure that the company is paying the "right" price for the mold, not necessarily the "cheapest" price or the "highest" price.
More than a decade ago, when Jeffrey Lucas joined Toyota as Project Assistant Manager for TEMA's Purchasing - Tooling at the Toyota Operation Center in Erlanger, KY,Toyota wanted to know if it was paying too much for their molds. At the time, Lucas noted that Toyota believed it was paying about 20% too much. In reality, when Lucas began delving into the matter, they were paying 80% too much. Thus was born the PTCAG.
Lucas, who spent four years in China sourcing tooling for Dell Computer, knows molds and moldmaking. A job offer from Toyota brought him back tothe U.S. where he has been working to improve Toyota's mold-buying process and creating better relationships between moldmakers and the Tier One suppliers who work with those moldmakers.
"Tier One suppliers should have the same relationship with their tool builders as Toyota has with the Tier One suppliers," Lucas said to a group in attendance at the seminar that Lucas conducts several times ayear. Toyota makes sure its Tier One suppliers not only pay the appropriate price for the mold as determined by the company's extensive global costing analysis, but that they pay the moldmaker on time. "It's my job to see that the moldmaker gets paid and gets paid the appropriate price," Lucas explained.
Toyota's goal is to have its suppliers be globally competitive through the PTCAG, and thus"flatten the playing field," Lucas explained to the group. "Toyota's target is to procure tooling at a globally competitive cost."
Because Toyota has all of the cost benchmarks in place, the company knows what the appropriate price should be for molds coming from various regions of the world. For example, the labor rate Toyota uses for tool builders in the U.S. is $60 an hour, which is much higherthan for a mold coming from China.
Build it where you sell it
However, Lucas told the group that if they are getting a mold built in China, there had better be a good reason for that. Toyota's "build it where you sell it" philosophy is one key element to global cost competitiveness, and the company is fairly rigid about that philosophy. Currently, Toyota's vehicles built in North America have 75%North American content and they are trying to increase that all the time. Only Chrysler's North American content is more at 80%, Lucas told the group. The Detroit Three has only 35% North American content, said Lucas.
Keys to being a good mold supplier for Toyota include:
* Open communications! Provide the Tier One with factual information so it knows it's paying the appropriate amount forthe tool.
* Metrics are key! How did you get that number? At Toyota, the Tier One molders buy the tools and deal with the moldmakers. "Buy the tool you need - the right tool at the right price. We'll help you deal with the moldbuilders to determine that," said Lucas. "We'll help you build your own analysis tool to help you analyze your quotes." Out of 800 mold manufacturers that Toyota deals...