OK, Visteon Corp., what changed your mind? Was it the reaction from your suppliers, or the public attention?
Either way, you made the right decision. Backing off the pay-to-play demand and saying you now prefer a collaborative approach to working with suppliers is exactly the right message. Back up those words with action and you'll be every supplier's best friend.
Still, you have to wonder ...
Back in January, someone, probably a disgruntled supplier, leaked Visteon's ``request for quotes'' documents to several newspapers, including Plastics News. Our Detroit-based reporter Rhoda Miel joined forces with Terry Kosdrosky, a reporter at sister publication Crain's Detroit Business, to shine a light on the policy. Their story ended up on Page 1 of the Feb. 24 editions of Plastics News, Crain's Detroit Business and Automotive News - and other media quickly picked up the story.
Visteon was caught like a deer in the headlights. The company was demanding that its suppliers of injection molded components pay hefty upfront fees in order to win long-term work. Visteon claimed the upfront payments - equal to 10 percent of the contract's first-year value - were just a tool to determine which firms were willing to remain connected to Visteon as it shaved its supplier base from 2,500 to 500.
To injection molders, the payments sounded more like extortion. Some auto industry consultants agreed.
Now Visteon has reversed course, which makes sense, given that Jonathan Maples, Visteon's vice president of quality and materials management, has a history of working well with suppliers. After all, he was a colleague of Tom Stallkamp during the era of Chrysler Corp.'s popular Supplier Cost Reduction Effort program.
As an aside, that's a reminder of one of the curious parts of this story. It's no secret which auto companies work well with their suppliers and which have a reputation for beating suppliers upside the head whenever they get within arm's reach. The more collaborative automakers generally are very happy with their cooperative approach because they appreciate the numerous benefits - working as a team has a way of paying off for everyone involved. The confrontational companies annually swear off the nasty habit, only to relapse like drunken sailors on shore leave as soon as times get tough. Why would Visteon choose now to explore the less-popular way?
Chalk it up to the competitive pressure in the auto industry, where cutting costs has become a cost of doing business. Auto manufacturing capacity far exceeds demand, and consumers are accustomed to low prices, big rebates and zero-interest financing. Visteon investigated another path, but was throttled in the attempt by public opinion and the reaction from its suppliers.
Any company that decides to go with a pay-to-play plan needs to learn from Visteon's mistake. The right path is clear: It's no secret that the Japanese carmakers have the best reputation for working as a team with their suppliers. Emulating them on a Big Three scale isn't going to be easy, but it's the best strategy.
