May 31, 2013
Are General Motors and Chrysler Group playing hardball with suppliers again? The latest automaker-supplier relations study by consulting firm Planning Perspectives Inc. was troubling.
The big jump in their scores in last year's study appeared to show that GM and Chrysler had learned a hard lesson during the 2009 bankruptcy proceedings: Better supplier relations pay dividends.
But after Toyota and Honda made real progress toward closing the gap with suppliers, the two Detroit companies seemed to stall during the past year. They didn't lose ground, but neither did they continue their progress, as reflected in the study of 441 suppliers. In fact, all of North America's six major automakers made zero progress.
John Henke, who conducts the study and has long been a strong advocate of close partnerships between suppliers and carmakers, was frustrated by the results. He says better relations lead to lower pricing, quicker sharing of technology and better-quality parts.
But are the bad old days back? It seems too early to write off the progress GM and Chrysler have made. Both have begun working with supply chains to ensure successful vehicle launches. That's a critical step because quality and productivity problems involving suppliers have hurt launches throughout the industry in the past year.
Last fall, Chrysler said it would start involving key suppliers earlier in product-development projects and would de-emphasize competitive bidding. It's too soon to assess the results of that effort. Chrysler also is helping suppliers adopt its "World Class Manufacturing System," a concept of continuous improvement.
GM has enlisted its retired engineers to help suppliers with the launch of its new full-sized pickups. The engineers are working mainly at GM's Tier 1 suppliers to ensure quality on key subsystems, but they also are keeping an eye on the readiness of Tier 2 and Tier 3 suppliers.
Those moves resemble the way the Japanese have long worked — successfully — with suppliers.
Yes, parts makers have been grumbling more in 2013. It's a stressful time. They have been under pressure to keep up with rising demand. More vehicles will be launched in the next year or so than at any other time in the industry's history.
Henke is right to alert carmakers to the danger of letting relations with suppliers slip. But these aren't the bad old days.
This column originally appeared in the May 20 issue of Automotive News, a sister publication to Plastics News.