Study: Ford Climbs to Third Place Overall in 'Working Relations' With Suppliers

For the first time in the ten-year history of the North American OEM/Supplier Working Relations Study conducted by Planning Perspectives, a U.S. automaker Ford is ranked in the top three OEMs.

The annual study tracks supplier perceptions of their working relations with the top three U.S. and top three Japanese automakers across 14 commodity purchasing areas. This year 646 sales personnel from 510 suppliers participated, providing data for nearly 2,500 buying situations.

Honda and Toyota, finished in first and second place, respectively. Ford took the third spot.

Nissan continues to slip in the rankings, dropping to fourth place this year, while GM in fifth place continues showing strong, steady improvement. Chrysler is also showing some improvement but is still in last place, the position it has held since 2008.

This study is significant because the results are used to calculate the Working Relations Index (WRI), and automakers with a higher WRI realize significantly greater benefits from their suppliers than those automakers with a lower WRI.

To calculate the WRI, Planning Perspectives ranks each OEM across 17 variables comprising five key categories:

How the OEM is perceived in terms of its overall supplier relations

OEM communications with the supplier

OEM help given to suppliers to reduce cost and improve quality

OEM hindrance to suppliers doing their best job

the supplier's profit opportunity at the OEM

Ford and GM were the biggest winners in this year's study, improving across the board in all five key categories of the WRI. But, analysts caution that the U.S. automakers still have a long way to go, particularly when it comes to getting supplier price concessions.

"The U.S. automakers are improving their approach to getting price reductions, but they still don't fully appreciate that threats of changing suppliers or other forms of retaliation, whether real or perceived, don't help their cause," says John W. Henke, Jr., Ph.D., president and CEO, of Planning Perspectives. "This suggests that either upper management's message has not gotten down to the purchasing team members in the trenches, or perhaps those purchasing personnel working directly with suppliers still believe that the old, adversarial approach still works best when it comes to price reductions. Old habits are tough to change."

More details about the 10th annual North American OEM Supplier Working Relations Study are available here.

TAGS: Finance
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