Suppliers: GM better, rivals not
GM, Ford, and Chrysler are frequent targets here for their “beat up the suppliers” approach to supply chain management. Here's some encouraging news for GM (and for their suppliers)… not such good news for Ford
General Motors Corp. has substantially improved its rocky relationship with parts suppliers for the first time in 15 years, while the rapport has worsened at Ford Motor Co. and Chrysler, according to a study to be released today.
GM's improvement suggests the automaker's aggressive plan to work more harmoniously with its parts makers is gaining traction.
Comparing Toyota to Ford:
…82 percent of suppliers consider Toyota a preferred or very preferred customer, compared to 10 percent for Ford, which has the worst supplier relations, according to the survey.
This was true at some work I did with a Tier 1 auto supplier once… the same company made parts for Toyota and Chrysler, and they MUCH preferred Toyota as a customer, partly due to their attitudes and partly due to the fact that Toyota actually kept their production plan stable instead of changing it constantly (Beer Game, anyone?).
There are more metrics and examples in the article, check it out.
Toyota Way Principle #11 says:
Respect your extended network of partners and suppliers by challenging them and helping them improve.
Dr. Deming used to preach, as part of his 14 points:
2. Adopt the new philosophy of cooperation (win-win) in which everybody wins. Put it into practice and teach it to employees, customers. and suppliers.
4. End the practice of awarding business on the basis of price tag alone. Instead, minimize total cost in the long run. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
Looking at the data, GM has a long ways to go, but at least they are improving.
On a scale of zero to 500 — with zero being the worst — the survey rated GM's overall relations with its suppliers at 174, up from 131 last year. “We've never seen that type of improvement before,” said John Henke, president of Planning Perspectives. “They've just generally been doing things better from the standpoint of working with their suppliers.”
As they have since the report began in 2001, the suppliers ranked Toyota and Honda the best companies with which to work.
Of the six companies ranked, Toyota had the best relations with suppliers with a score of 415, followed by Honda (380), Nissan (289), Chrysler (199), GM (174) and Ford (162). Ford and Chrysler fell several points from last year.
Henke called a Ford program to improve supplier relations a “disappointing failure.”
Any suppliers care to comment on how the “Detroit Three” are doing?
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When I used to work for a major DaimlerChrysler supplier, we complained a lot about their “SCORE” program (Supplier COst REduction), but our management insisted that it really was in the company’s best interest because it allowed the suppliers to keep 50% of what they saved so long as they met a 5% cost reduction target for the year.
It was when the Germans felt the crunch and cancelled SCORE that the complaining really started. Cooperation went out the window and it was everyman for himself. I read somewhere that Stallkamp cried when they cancelled SCORE and destroyed the supplier relationships he worked so hard to build up. I also believe this was one reason that, in the mid-90s Toyota execs were calling Chrysler the only American company that they “feared.” Hopefully the new Chrysler leadership will resurrect some of the old behaviors… but I am doubtful.
I’ve told the Stallkamp story as I saw him nearly cry when he spoke at Harvard B-School after the takeover. Yes, he was very emotional about that, more on it here: