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Liker and Choi Theory

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Liker & Choi theory

Building good relationship with the supplier.

* How to become close with suppliers to:

* Reduce costs * Increase quality * Improve speed and efficiency

* The spirit of the supplier partnership model
The spirit of supplier partnership model is for companies to build long lasting mutually beneficial relationships with suppliers based on * Collaboration, * Co- prosperity * Healthy competition. The underlying values are Trust, Fairness, Empathy and Discipline.

* The 6 principles of the supplier-partnering hierarchy

6. Conduct joint improvement activities 5. Share information intensively but selectively 4. Develop suppliers’ technical capabilities 3. Supervise your suppliers 2. Turn supplier rivalry into opportunity 1. Understand how your suppliers work

1. Understand how your suppliers work

Learn about suppliers’ business
Go see how suppliers work
Respect suppliers capabilities
Commit to Co- Prosperity

Example: Honda engineer spent 12 months ATD-implemented changes ATD showed Honda their financials  Honda referred ATD to its other suppliers
 ATD’s business rose steadily

2. Turn suppliers rivalry to opportunity Source each component from two or three vendors. Create compatible production philosophies and systems
Set up joint ventures with existing suppliers to transfer knowledge and maintain control
Example: Johnson Controls 40%, Toyota 20%, == Joint venture between car seat suppliers Araco auto parts 40%

3. Supervise your suppliers

Send monthly report cards to core suppliers. Provide

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