Automotive suppliers know what it is like to be left out in the cold by customers who demand cost cuts and have no interest in collaborative product development.
But that does not mean they have to act the same way toward their suppliers.
System integrators should seek out business with carmakers interested in long-term relationships that benefit everyone involved. They also should look within to see whether they are doing business the way they want to be treated, Ronald Clogg, senior manager of business operations and planning for Denso International America Inc., said during the auto industry's Management Briefing Seminars, held Aug. 4-8 in Traverse City.
``If my customer treats me poorly, that's no excuse to treat my suppliers poorly,'' Clogg said. ``That's our philosophy.''
A strong core philosophy and ethical behavior should be the goal at every firm, said Kim Korth, president of Grand Rapids, Mich.-based consulting group IRN Inc.
``To assume that because you get in trouble somewhere that you're going to throw your ethics out the window is fundamentally wrong,'' she said.
Honda, Toyota and other automakers gained support from within the industry by working closely with their suppliers. Those suppliers, in turn, brought the carmakers new products and manufacturing improvements that could help attract car buyers, while cutting overall costs.
Large Tier 1 producers, likewise, can draw their own mixture of innovative, quality companies to their doors by adopting a collaborative approach, Korth said.
``Even if our customer says there's going to be a 5 percent across-the-board cut, we're not going to turn around and pass on that 5 percent or 7 percent automatically to our suppliers,'' Clogg said. ``We're going to go to our supply base and work within our philosophical, collaborative approach to determine how best to approach those savings through the value stream.''
But that business approach is not easy. A principled company requires that everyone sign on to the same overriding concepts to push through those principles.
``At Toyota, there is a consistency of the policies across the company,'' said Gene Tabor, general manager, purchasing, planning, facilities and supplier diversity, for Toyota Motor Manufacturing North America Inc. ``That has helped us to maintain consistency wherever you go.''
Of course, suppliers do not have the same clout as their carmaking customers, but if they invest in strong products that others do not have, they can improve their overall standing, said Mike Flynn, director of the Office for the Study of Automotive Transportation at the University of Michigan's Transportation Research Institute. The right products will help to win them sales with desired automakers.
And a good relationship with their own suppliers can help them come up with those products in the first place, Korth said.
``It's a tough industry,'' Clogg said. ``I don't see any reason for companies to insist that they make it even more tough for everyone.''