Car Companies Are Getting Along Better With Suppliers

BIRMINGHAM, MI -- (WWJ) A new study shows that better supplier relations are becoming the norm among auto companies.

"I think it probably is an indication of what to come in a new era of supplier relations in the auto industry," said John Henke, who is president of Planning Perspectives, which has been surveying suppliers on this issue for a dozen years.

The three domestic automakers continued on the steady improvement track they've been on. Toyota remained in first place, with Honda second…but both companies slipped a bit, putting the three Japanese carmakers and three domestic carmakers very close to each other.

This is important, Henke said, because suppliers indicated to him that companies who are better to work with get better deals.

"They provided a 14 percent higher price concession last year than those suppliers who said they had low relations."

Ford is the top domestic carmaker, finishing third overall. Nissan is fourth, GM fifth and Chrysler sixth. But Henke says Chrysler has shown great progress.

Much of that progress has been attributed to former purchasing chief Dan Knott, who recently passed away, just weeks after taking a medical retirement.

"He was incredibly fair," said Henke. "He was very concerned that suppliers were treated fairly. I think that's one thing that will continue at Chrysler."

The slight declines at Toyota and Honda are not yet an indication of a brewing problem. Henke says Toyota, in particular, has a lot of new people in its purchasing operations, why may not have enough experience with the Toyota way of dealing with suppliers.

"They just need to get the behavior they want pushed down further and get everybody to exercise the right behavior to get the kind of relations they want."

However, Henke said there is a lot of room for improvement on the part of all auto companies, and there are still a significant number of suppliers who have a lot of complaints.

Still, the domestic automakers new policy of reducing the number of suppliers they deal with should help, said Henke.

"There's going to be a group of suppliers for each of those companies that they are going to be compelled to assure the best outcome to have excellent relations with those."

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