Toyota retakes pole position in vendor relations study

23 May 2011

23 May 2011 | Angeline Albert

Japanese car maker Toyota has the best relationships with its suppliers according to an annual study of six major automotive manufacturers.

The latest results, based on responses from tier-one vendors, placed Honda second, Ford third, Nissan fourth, General Motors fifth and Chrysler sixth.

Toyota regained the title from Japanese rival Honda which had held the top spot for the past two years, according to the Annual North American OEM - Tier 1 supplier working relations study published by SRM consultancy Planning Perspectives.

Although overall the results indicate US car makers are not doing as well as their Japanese counterparts, Ford, GM and Chrysler have made positive progress in most areas, whereas the Japanese firms’ relations have seen a decline over the past 12 months.

A particular area where the US “big three” are trailing is in the area of “Original Equipment Manufacturer (OEM) Trust”. Toyota and Honda have a major lead in their respect for suppliers’ intellectual property, such as patents and confidentiality of technical innovations.

The US companies also rank poorly in vendors’ willingness to share new technology without assurance of a purchase order. Suppliers are more willing to share new technology with Honda and Toyota than with GM and Chrysler. Tier-one vendors are also more willing to invest in new technology for Honda, Toyota, and Ford than they are for Nissan, GM, and Chrysler.

“With the continuing need for innovation and technological leadership on both the product side and manufacturing side, the financial and competitive value of ‘trust’ cannot be discounted,” said John Henke, study author and president of Planning Perspectives.

“The US automakers need to move toward mutually beneficial contracts that protect suppliers’ intellectual property a lot better than they’re doing. If the Japanese automakers can do it, surely the US automakers can do it.”

As well as innovation, Henke added, car makers with the best rankings also receive the greatest benefit from suppliers in terms of lower costs and higher quality.

“There is no silver bullet that will bring about more collaborative, more trusting supplier relations. Such relations result from complex interactions of OEM-supplier activities. While the actions of both parties reinforce the trust each party has of the other, it is the actions of the OEM that are the primary determinants of the supplier working relations,” he said.

The study analysed responses from 540 sales people at 415 tier-one suppliers, representing 63 per cent of the car makers’ annual spend.

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