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Toyota tops NA OEM-supplier relations survey 

By Dave Leggett | 25 June 2020

The results of the 20th annual North American Automotive OEM - Supplier Working Relations Index (WRI) Study released by consultants Plante Moran show that of the six major US and Japanese automakers, only Toyota and FCA made any significant improvement in their scores this year.

Toyota gained nine points over its 2019 score and was the top performer in all 22 variables on the Working Relations Index. FCA gained 10 points, but is still in a distant fifth place overall. Ford held steady with only a two-point gain. Honda dropped 18 points, GM fell 14 points, and Nissan was off by 8 points and fell to last place.

"With the unprecedented challenges now facing the automotive industry, the OEMs will be leaning more heavily than ever on their suppliers. The study shows that Toyota knows how to work most collaboratively with its suppliers, is well trusted, and therefore is well prepared to face these challenges," said Dave Andrea, Principal in Plante Moran's Strategy and Automotive & Mobility Consulting Practice, which conducted the study.

An eight-year comparison of the OEMs' performance provides additional insight. Toyota's practice of "continuous improvement" has paid off with a 49-point gain since its low point in 2012, while GM improved by 18 points, and Honda, 17 points. But, over the same eight-year period, Ford dropped three points, FCA fell 50 points, and Nissan was down by 66 points.

Since the Working Relations Index was launched in 2002, Toyota has held first place every year except two – 2009, 2010 – when Honda temporarily took over first place.

The annual Study is conducted by Plante Moran and this year ran from mid-February to mid-April. Respondents represented 841 salespersons from 503 Tier-1 suppliers, representing about 60% of the six OEMs' annual buy.

"So far this year, the OEMs and their suppliers have gone through some of the toughest economic times in their history," said Andrea. "Operational and financial recovery will be a challenge for everyone. The OEMs' and auto suppliers' finances are stretched to the limit by the cost of restarting production and further threatened by slow sales and fluctuating market demands.

"This means that the OEMs will have to rely even more heavily on their suppliers, and trust, combined with open and honest communication and strong relationships, will be critical to their success. I think it's safe to say that those automakers who already have good relations will have an advantage over those with poor relations."

"Focusing on improving supplier relations across purchasing, engineering and product development, is critical for the automakers right now," added Andrea. "Suppliers contribute 60-70 percent of the value of the vehicle, so it is clearly in the OEMs' best interest to set the goal of becoming the most preferred automaker to do business with – as Toyota obviously has."