If automakers hope to keep their assembly lines moving, shoring up the relationships they have with their suppliers is the first order of business.
Despite a long-history of mutual antagonism, General Motors has succeeded in improving its relations with suppliers, while Nissan and Fiat Chrysler Automobiles NV have seen their relations with suppliers worsen over the past years.
The improvement in GM’s relations with suppliers is one of the highlights of the North American OEM- Supplier Working Relations Index prepared annually by Planning Perspectives.
The 16th edition of the annual study showed that of the six major automakers building vehicles in the United States only General Motors posted “significant improvement,” adding 26 points to its score and moving up to fourth place overall as Nissan slipped to fifth.
Ford also showed some slight improvement of six points, while Toyota and Honda relations with supplier declined slightly during the past year. Both of the Japanese carmakers had shown significant improvement during the previous two years, according to research firm.
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John Henke, president of Planning Perspectives, also noted that despite the growing complexity of vehicles and carmakers dependence on suppliers for technical innovation and cost savings, the various automakers have not made an effort to bolster relations with suppliers.
GM improved its relationships with its suppliers, according to a new study. The company typically doesn't fare well in these metrics.
“Going forward automakers will have to invest heavily in new resources and training programs to improve their working relations with suppliers because suppliers have a significant impact on an automaker’s profits,” Henke said.
However, this doesn’t seem to be much of a focus for the six automakers studied, he said. During the years, firm found that automakers must tend to the relations their purchasing organizations maintain with suppliers in order to build collaborative partnerships. Henke said the spirit of collaboration actually has declined for the past several years at all six automakers surveyed.
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The lack of progress in improving supplier relations becomes more evident when the relations for each OEM are considered at the Purchasing Area level, Henke said. Even improvements at the traditional industry leaders in working relations – Toyota and Honda – are stagnating.
“At FCA, and particularly at Ford, the Purchasing VPs are perceived by suppliers to be working to build more trusting relations but their buyers are not,” the study reported.
“The Purchasing Area volatility, coupled with these less than rigorous efforts to build more trusting supplier relations suggests that automakers purchasing executive may have ‘taken their eye off the ball,’” Henke said.
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Henke also noted that while carmakers are making record profits, they are also facing more financial and technical challenges as well as new government regulations that have increased the burden on the industry.