Nissan's cost-cutting puts it at odds with suppliers

An index measuring relationships between major carmakers and suppliers puts Nissan in last place, while General Motors (GM)  jumps to its highest ever position.

GM rose two places from last year to take the number three spot behind long-time leaders Toyota and Honda.

Now it lies above Fiat Chrysler Automobiles (FCA), Ford and Nissan in the North American Automotive OEM – Supplier Working Relations Index (WRI).

Nissan has dropped for the third straight year since 2014, when it was in third place, to last place in the study.

Despite heading the table, Toyota and Honda are scoring lower than previous years.

Ford has fallen one place to fourth position despite improving its scores slightly.

“GM’s turnaround in supplier relations is remarkable,” said John Henke, president of Planning Perspectives, which conducts the annual study.

“The reason for their dramatic improvement – and Nissan’s fall – is easy to understand.”

He said GM has improved across the board in all five of the key areas that comprise the WRI ranking, while Nissan has dropped in all five.

“While both companies have had significant cost-cutting programmes in place for the last two years, their programmes have had opposite results in supplier relations,” Henke said.

“Nissan’s adversarial approach to reducing costs has greatly disrupted relations with its suppliers and it is safe to say that it has cost them tens of millions of dollars in supplier contribution to profits.”

The five metrics are OEM supplier relationship, OEM communication, OEM help, OEM hindrance and supplier profit opportunity.

Ford’s WRI ranking improved slightly in supplier relationship, communication, and hindrance categories, but it declined in help.

Honda saw lower results in communication and help, but improved slightly in hindrance, while Toyota improved in communication and supplier profit opportunity, improved slightly in hindrance, but fell in help.

Ford, GM, Honda and Toyota all saw significant gains in the extent to which they were seen as a preferred customer, while Nissan and FCA remained relatively flat.

Honda has been the most preferred customer for the last three years – and Nissan the least preferred.

GM, Toyota and Honda’s buyers are more highly rated by suppliers as fair, equitable, knowledgeable and trusted than those at Ford, and especially those at Nissan and FCA.

Benefits of collaborative supplier relationships include more supplier sharing of innovation, greater price concessions, more supplier investment in OEM-related innovation and greater supplier support.

The index also divides a carmaker’s purchasing function into six areas: body-in-white, chassis, electrical/electronics, exterior, interior and powertrain.

GM improved in five of the six purchasing areas, while Nissan fell in five of the six.

Honda declined steeply in body-in-white and exterior, declined slightly in chassis and was flat in the other three.

Toyota improvement significantly in electrical/electronics and slightly in powertrain, while dropping in the four other areas.

Ford fell in powertrain, chassis, and interior; gained slightly in body-in-white and gained significantly in exterior and electrical/electronics.

FCA fell in body-in-white, powertrain and interior but significantly improved in electrical/electronics and slightly improved in chassis and exterior.

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