BMW's attractiveness as a partner has declined in some key areas since the last BMW supplier satisfaction survey conducted in October 2003.

The latest survey concludes that suppliers are less happy with BMW and that the quality of communication between BMW and its suppliers has eased.

The major area of contention is cost pressure, with some suppliers indicating tighter piece pricing and an unwillingness to compensate for recent steep commodity price rises. Declining communication between BMW and its supply base is also flagged as an issue.

Given BMW's recent initiatives to improve communication, mutual trust and transparency with its supply base, this is of concern. BMW introduced its 'quality and cost initiative' in January 2004 with the intention of improving insight into suppliers' operations to identify the substance of cost reduction potential. This approach is summarised by Klaus Richter, head of materials purchasing, BMW group in an interview with "You need to get a better insight into the operations of a supplier, to identify the substance of the cost reduction potential". Clearly, some suppliers remain less than convinced.

BMW has invested considerable resources to improve transparency with suppliers in order to generate innovations and competitive costs. The survey, while confirming many of the previous relationship strengths with suppliers, suggests BMW must make sure its initiatives are truly reaching all levels of its supply base. The advantage gap over other OEMs is closing.