SCORE.Suppliers work with Toyota to improve quality and reduce the chances for defects in making parts. Toyota pays for companies to do LEAN manufacturing events so costs go down and processes improve. They agree to split the savings. If there is a warranty claim, Toyota works to determine if it is their design (they swallow the costs) or if the supplier did not hold to the design (supplier pays).
It is the difference between collaboration with suppliers (like Chrysler did in the 1990s) and abusing suppliers (like FCA has done for the past decade).
Involving the supplier in the initial design of the vehicle, knowing they were going to get the business and that any savings up front were going to be shared equally with the supplier, turned the supplier into a Chrysler design, engineering, and manufacturing partner by default, with as much to lose as Chrysler if a mistake was made or subquality parts were used.” —Bob Sheaves