Toyota and Honda still have a commanding lead in good working relations with their suppliers and are by far the preferred US automakers with whom suppliers want to do business, but efforts by General Motors to improve relations with its suppliers have had a significant, positive impact in how its suppliers view working with the company, according to results of a new survey.
According to Detrot-based Planning Perspectives, annual survey of relations between North American automakers and their Tier 1 suppliers, Ford is now in last place – the position held by GM for the past 15 years – and now has the worst supplier relations of any North American automaker.
“The improvement is very good news for GM,” said Planning Perspective president and CEO John Henke. “In late 2005, Bo Andersson (GM’s group vice president, global purchasing and supply chain) announced a programme to improve relations with its suppliers. It is now apparent that the program is working.”
He added it was the most dramatic improvement in the 15 years his company had been conducting such surveys.
“On the other hand,” added Henke, “Ford announced a similar programme about the same time as GM, but our study shows the Ford program has been a disappointing failure. 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 DCX number 4, and GM and Ford are ranked 5 and 6, respectively.
The WRI rates 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 with GM the lowest – except this year – since the survey’s inception in 2002. The foreign domestic automakers have continually been on the top half with Toyota having the highest rating, followed closely by Honda.
This year Ford ranks at the bottom of the six North American OEMs with a ranking of 162, a 12 point drop from last year. GM moved up to 174 from 131, and Chrysler fell to 199 from 218 after a steady four-year gain. Chrysler’s drop is corroborated by a decrease of 50% in the number of suppliers who consider DCX a “most preferred or very preferred” OEM to work with. Nearly 50% of Ford’s suppliers would rather not work with Ford or are ambivalent about doing so.
Toyota scored 415 (out of 500) followed by Honda (380) and Nissan (289). The industry mean was 270.
Planing Perspectives said a ranking of zero to 249 indicates very poor to poor supplier working relations.