GM Shows Improved Supplier Relations

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 the 7th Annual North American OEM-Tier 1 Supplier Working Relations Study. That said, Toyota and Honda still have a commanding lead in good working relations with their suppliers and are by far the preferred U.S. automakers with whom suppliers want to do business,
Ford, however, has slipped into 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,” says John W. Henke, Jr., Ph.D., president and CEO, of Planning Perspectives, Inc., which conducts the annual study.
“In late 2005, Bo Andersson (GM’s Group Vice President, Global Purchasing and Supply Chain) announced a GM program to improve relations with its suppliers.
“It is now apparent that the program 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.
“On the other hand, Ford announced a similar program 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,” he added.
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 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 with GM the lowest – except this year – since the WRI’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.
Now in its 7th year, the annual study determines the supplier working conditions in numerous areas at the North American domestic OEMs (GM, Ford and DaimlerChrysler) and the foreign domestic OEMs (Toyota, Honda and Nissan).
This year, 308 suppliers – representing 52% of the OEMs’ total annual buy – responded to the survey.
Demographically, the supplier-respondents represent 35 of the Top 50 North American suppliers, 58 of the Top 100 and 69 of the Top 150 North American suppliers.
The study culminates in the Working Relations Index (WRI) which is a quantitative ranking by suppliers of their working relations with each of the six OEMs.
Since 1990, PPI has specialized in developing and implementing in-depth surveys of suppliers for the automotive OEMs and Tier 1 suppliers, and companies in numerous other service and manufacturing industries worldwide, including the aircraft engine, computer, construction tools, electronics, energy, and food industries.