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Supplier Relations with N. American Carmakers Continue to Fall
Suppliers report another year of worsening relations with North American carmakers, according to Planning Perspectives Inc.
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Suppliers report another year of worsening relations with North American carmakers, according to Planning Perspectives Inc.
The Detroit-area company’s annual assessment, known as the OEM-Supplier Working Relations Index (WRI), says only Toyota posted improved relations with suppliers this year. Toyota’s index rose from 328 to 333, which the report describes as “adequate.”
The 18-year-old study polls tier one suppliers on 16 variables. Results indicate supplier assessments of their carmaker customers in terms of overall relationship, communications, help, hindrance and opportunity for profit (see chart).
Honda, with a score of 313 this year, remains second-best in the rankings, followed by General Motors (287). Ford skidded from 270 to 250, leaving the company on the border between “adequate” and “poor.”
Nissan, which fell to last place in 2017, continued a decline that began in 2014 and posted a “very poor” rating of 182—the worst result for any carmaker since the study debuted in 2002. Fiat Chrysler Automobiles also slid further into the “poor” zone with a score of 204.
Planning Perspectives President John Henke says the deterioration suggests most carmakers either have no consistent supplier relations program, or don’t execute their plan well. Henke calculates that a single point change in his index can mean a swing of as much as $135 million in annual profit.
Henke’s research also finds a direct correlation between good supplier relations and the ability of a carmaker to win price concessions. He also notes that suppliers are more willing to share new technologies with companies in which they have a good relationship.