Automotive manufacturers with the best supplier relations will be ahead of the game...

Automakers with the best supplier relations will be ahead of the game in the transition to electrification, according to a study, by 2019 North American Automotive OEM - Supplier Working Relations Index (WRI) and presented in Supply Management news.

"As demand for new technologies becomes a major challenge for vehicle producers, Toyota and Honda – who top the 2019 North American Automotive OEM - Supplier Working Relations Index (WRI) – show how effective communication with suppliers and assistance in cost reduction and technology investments keep profits up and mitigate production disruptions."

Purchasing needs to be made a strategic priority, according to the WRI, otherwise manufacturers are likely to struggle with the constant change in supply and production demand resulting from the “rapid transition” to electrification and automation, according to Dave Andrea, principal in strategy and automotive at consulting firm Plante Moran. He said: “Purchasing has to be as much a strategic priority of OEMs as engineering is, in order to deliver the electrified, automated and the new mobility business models envisioned for the next generation of vehicles.

The WRI study shows suppliers' judgement on the overall customer supplier relationship based on five components: trust, communication, assistance, measurement of hindrance on supply base, and opportunity for supplier profitability. Six automotive manufacturers were evaluated: Honda, Toyota, General Motors (GM), Ford, Nissan, and Fiat Chrysler Automobiles (FCA) US.

Toyota and Honda topped the WRI study in all areas, with Honda rated at 3.55 out of 4 and Toyota rated 3.52 out of 4 for communication. Andrea attributes their top positions to maintaining consistency of operations through effective communication, “timely resolution of issues”, and “stable production schedules”.