Denso Corporation and Global Supplier Relaions

DENSO Corporation and Global Supplier Relations

In 2002, DENSO Corpotation, the Japanese auto parts supplier formerly known as NIPPONDENSO was struggling to determine what strategy it should pursue to succeed and move forward into the twenty-first century. should it continue to be tightly linked to Toyota as its major parts supplier? Or, given that it makes products other than auto parts, should it become less dependent on the automotive industry in general and on Toyota in Particular? Should it continue to invest so many resources in Japan even though economic growth is next to zero and signs of recovery are minimal? And because the Demand also wondered how it could better manage its production and inventory levels. As the CEO stated, "Component suppliers are facing ever-tougher standards as automobile manufacturers fight a global battle for survival."

BACKGROUND ON DENSO

DENSO is the third-largest auto parts supplier in the world, just behind Delphi of the United States and Bosch of Germany. Prior to 1949, it was a part of Toyota, but then it spun off into a separate company even though Toyota still retains 25percent of DENSO's issued stock. Thus, DENSO is part of the Toyota keiretsu that includes companies in automotive parts, steel, precision machinery, automatic looms, textiles, household wares, office and housing units, and other products. As Map 18.2 shows, DENSO's world headquarters and most of its domestic manufacturing facilities are in Aichi prefecture on the east coast of Japan and close to Toyota City, the headquarters for Toyota Corporation. Toyota's domestic manufacturing plants are also located in Aichi prefecture, so there is a close proximity between DENSO and Toyota plants.