Evolving Models of Supplier Involvement in Design: The Deterioration of the Japanese Model in U.S. Auto

Abstract

The U.S. auto industry in the 1990s was in a state of transition, driven by a rapidly changing environment and attempts to adopt best practices from other automakers. The Japanese supplier management system is regarded as extremely effective in delivering high-quality component systems integrated into the vehicle with short design lead times. American automakers dedicated themselves to reengineering their product development systems, benchmarking the Japanese model, and outsourcing increasing levels of vehicle content and design responsibility. This paper analyzes how these attempts at institutional imitation evolved new approaches to supplier involvement in design in the U.S. auto industry based on interviews conducted during 1998-2001. Although once copying the Japanese model, the United States has chosen a modified approach and developed models distinctively different from the original. The authors identify two dominant supplier management models emerging during this time and a newly emerging hybrid original equipment manufacturer/supplier relationship style. Concepts from organizational design and behavioral economic theories are used to explain observations across industries overtime. Evidence suggests that American automaker practices have not evolved to support the great responsibility being outsourced to suppliers. There are still barriers that create adversarial relationships when a partnership model is required for true integration of design efforts.