The turbulent economic environment in the automotive industry has had a negative impact on supplier relations, according to an annual survey of US auto suppliers.
The Working Relations Index (WRI) study conducted by Michigan-based consultancy Planning Perspectives found that suppliers to five of the six leading US auto makers reported a deterioration in working relationships in 2007-08, with an average fall of 7.8 per cent.
The only exception to the downward trend was Ford, which saw a rise of 17.9 per cent that took it above its North American rivals Chrysler and General Motors (GM).
Chrysler saw the sharpest slump, of 19.1 per cent, and has replaced Ford at the bottom of the rankings. This underlines the scale of the task facing Chrysler’s CPO, John Campi, who pledged in a recent interview with CPO Agenda to make improving supplier relations a top priority.
According to John Henke, president and CEO of Planning Perspectives, auto makers can ill-afford to have poor supplier relationships in the current climate.
“Last year, GM’s largest suppliers indicated that they were sharing new technology without the assurance of a purchase order and investing in new technology in anticipation of future business to the greatest extent in many years because of improved relations with GM,” he said.
“This year, Chrysler’s suppliers tell us that they have significantly pulled back in both of these areas because of worsening relations.”
GM’s procurement chief, Bo Andersson, last year told CPO Agenda about his attempts to improve relations with suppliers. Overall, GM’s relationships with suppliers have improved by 24.4 per cent over the past two years, according to the index, despite a 6.3 per cent drop in the past 12 months.
Toyota continued to top the rankings, although it too saw a fall, of 11.6 per cent, in how it was rated by suppliers, while fellow Japanese firms Honda and Nissan remained in second and third position with a drop in supplier relations of 5.5 per cent and 12.5 per cent respectively (see table below).
The WRI has been running since 2002 and rates each auto maker across 17 characteristics such as trust, communication, information, efforts to reduce costs and supplier involvement in product development.
