Using Supplier Networks to Learn Faster

Abstract Last year, Toyota Motor Corp. posted profits that exceeded the combined earnings of its three largest competitors. In today’s world of hyper competition, how did Toyota accomplish this? In searching for the answer, many business gurus and researchers have overlooked-or have not fully understood-the importance of knowledge-sharing networks. Certainly, knowledge management has become a hot topic. But how exactly do firms learn, and why do some companies learn faster than others? Furthermore, does learning go beyond the boundaries of the organization? Many companies keep their suppliers and partners at arm’s length, zealously guarding their internal knowledge. In sharp contrast, Toyota embraces its suppliers and encourages knowledge sharing with them by establishing networks that facilitate the exchange of information.