Nice job Ford Purchasing.
Wonder if Ford Suppliers are weary for paying for reimbursing Ford for engineering driven warranty issues? Ford is the last company the supply base will bring new technology to.
I can see the internal memo now, Ford beast FCA in Supplier Survey.
Ostrich management at its best.
Toyota Sweeps Annual OEM-Supplier Relations Study
Since the Plante Moran automotive consultancy’s Working Relations Index was launched in 2002, Toyota has taken first place every year except 2009 and 2010, when Honda was rated No.1.
Jim Irwin | Jun 22, 2020
Toyota dominates the 20th annual North American Automotive OEM-Supplier Working Relations Index Study released today, with representatives of Tier 1 suppliers ranking the Japanese automaker No.1 in all 22 variables on the index.
Toyota improved its 2019 score by nine points while Fiat Chrysler gained 10 yet finished fifth among the six U.S. and Japanese automakers covered in the study. Ford held fourth place with a two-point gain while second-ranked Honda slipped 18 points, General Motors dropped 14 and Nissan tumbled eight points to fall behind FCA and into last place.
“With the unprecedented challenges now facing the automotive industry, the OEMs will be leaning more heavily than ever on their suppliers,” says Dave Andrea (below), principal in Plante Moran’s Strategy and Automotive & Mobility Consulting Practice, which conducted the study. “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.”
Respondents to the 2020 study rated Toyota the automaker they most preferred to do business with.
Since the Working Relations Index was launched in 2002, Toyota has taken first place every year except 2009 and 2010, when Honda was rated No.1.
Respondents represented 841 salespersons from 503 Tier 1 suppliers, representing some 60% of the six OEMs’ annual buy. They provided data on 2,752 buying situations.
Automakers pay close attention to the study because positive supplier relations benefit OEMs with better pricing, more investment in innovation and technology, more sharing of technology and better supplier support. All these factors contribute to the OEM’s operating profit and competitive strength.
Profit-per-vehicle data demonstrates strong working relations reduce OEMs’ cost of doing business, help improve efficiency and productivity, and reduce time to market, Plante Moran says in a news release announcing results of the 2020 survey.
This year’s study was conducted while the U.S. was in its initial throes of the COVID-19 pandemic: mid-February to mid-April. Widespread closings of automakers’ and suppliers’ plants took place in March, and the companies have been ramping up production only in recent weeks.
“So far this year, the OEMs and their suppliers have gone through some of the toughest economic times in their history,” Andrea says. “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.”
Andrea tells Wards during a briefing ahead of the study’s release that the COVID-19 pandemic has been “a once-in-100-years kind of deal. The last massive breakdown (of the automotive industry) was only a dozen years ago. The industry’s been hit with one thing after another.”
The industry in recent years has been contending with cars yielding market share to light trucks, plant closings, platform consolidations, the 2019 GM strike, electric-vehicle development and organizational restructuring, Andrea says. With all these factors in play, strong relationships with suppliers are more important than ever for OEMs, he says.
A comparison of the six automakers’ WRI ratings over the past eight years shows Toyota’s policy of “continuous improvement” has resulted in a 49-point gain since its low point in 2012. GM improved by 18 points and Honda by 17. Ford dropped three points over the same period, while FCA fell 50 points and Nissan backslid by 66 points.
The difference in WRI ratings has widened since 2012. While No.1 Toyota and No.6 FCA were separated by 40 points in 2012, the gap between top-rated Toyota and last-place Nissan in the 2020 survey was 155 points.
Collaboration is the key to healthy OEM-supplier relations, Andrea tells Wards.
“You really do have to institutionalize these factors – consistency of top leadership and culture, where supplier relationships fit into the overall strategy. Where the supply base is not an afterthought,” he says. “(There is) a more collaborative process versus being more transactional, just delivering on price.”