US: GM dramatically improves supplier relations
GM has dramatically improved its relations with suppliers over the last year, according to a recently published US survey. Toyota and Honda are the preferred US vehicle manufacturers with which suppliers want to do business. Ford is the least favoured by suppliers.
These are the results of the 7th Annual North American OEM-Tier 1 Supplier Working Relations Study, produced by Planning Perspectives, Inc.
"The improvement is very good news for GM," says John W. Henke, Jr., Ph.D., president and CEO, of Planning Perspectives, Inc. "In late 2005, Bo Andersson (GM's Group Vice President, Global Purchasing and Supply Chain) announced a GM programme to improve relations with its suppliers. It is now apparent that the programme is working. In fact, in the 15 years we've been doing studies of this type in the automotive and other industries worldwide, we have never seen such a dramatic improvement."
Henke added that Ford announced a similar programme at about the same time as GM but this has been a 'disappointing failure'. He said: "This is unfortunate because Ford more than ever is dependent on the support of its suppliers to help in its turn around, as was Chrysler in early 1990s. A key to Chrysler's success then was building strong relations with suppliers on its way to a decade of strong profits."
Nevertheless, both companies are far behind Toyota and Honda, which rank 1 and 2, respectively, on the study's Working Relations Index (WRI). Nissan is ranked number 3, with DaimlerChrysler number 4. GM and Ford are ranked 5 and 6, respectively.
The WRI rates these six major North American OEMs in 17 key areas that impact their supplier working relations. These include such things as degree of trust, open and honest communication, amount of help given to suppliers to reduce costs and the supplier's profit opportunity at the OEM.
Of the six automakers, the domestic OEMs have been on the bottom half of the scale since the WRI's inception in 2002. Until this year GM has always been last. The foreign domestic automakers have continually been on the top half with Toyota having the highest rating, followed closely by Honda.