GM improves in supplier relations study, Nissan drops

Melissa Burden
The Detroit News

General Motors Co., which has revamped purchasing department leadership, increased training and improved communication with suppliers, has moved up from the bottom and into fourth place in an annual study ranking the six largest automakers by their relationships with suppliers.

The 2016 North America Automotive OEM (Original Equipment Manufacturer) Buyer-Supplier study, released Monday, found GM and Ford Motor Co. improved from a year ago, while Nissan Motor Corp. fell to fifth place from fourth, and Fiat Chrysler Automobiles NV remained at the bottom. A year ago, GM and Fiat were tied for worst supplier relations.

The study, in its 16th year and conducted by Planning Perspectives Inc. in Birmingham, focuses on the relationships and trust suppliers have with automakers. Trust and good relationships are key to winning a supplier’s newest technology and most innovative designs and receiving the best prices, said John W. Henke Jr., president of Planning Perspectives.

And automakers with the best supplier relationships also see benefits to their bottom lines, often gaining millions of dollars to their operating profits over competitors, Henke said.

GM grew the most from last year, while Ford also increased slightly and remained in third place. The two companies still lag Japanese competitors and leaders, Toyota Motor Corp. and Honda Motor Co. Inc., though each company saw slight drops from 2015.

GM for the past few years has been focused on bringing suppliers into vehicle development and design discussions earlier and in some cases issuing contracts for multiple generations of vehicles. The automaker also has sought ideas from suppliers on how to reduce waste.

“All the hard work that we’ve been putting in the last couple of years seems to start to be paying off,” said Steve Kiefer, GM’s vice president of global purchasing and supply chain since fall 2014.

Kiefer, who previously worked for supplier Delphi Automotive before joining GM in September 2013, said positive relationships with suppliers is helping GM improve quality and will bring innovative technology and designs into next generation vehicles. The carmaker works with more than 20,000 global suppliers, annually spending about $90 billion.

“It is good to do what we’re doing right now, which is improving our relationships, listening to suppliers, implementing their ideas and coming up with items that improve their profitability and our profitability simultaneously,” Kiefer said.

Planning Perspectives found that only GM’s purchasing leader and the company’s buyers appear to be working together to build trust among supplier partners.

“The majority of suppliers … have a high perception of him (Kiefer),” Henke said.

“They see him as someone who knows what it is to be a supplier. He’s gotten it down, his attitude of building better relations, down into his organization.”

The study also found GM was the lone automaker to show “meaningful improvement” in its purchasing area performance, gaining in five of six areas, while Nissan dropped in six categories.

Henke said Nissan “started getting very adversarial” toward suppliers in the past few years, boosting pressure on them to cut prices, coupled with threats to reduce business if concessions weren’t given. It resulted in Nissan receiving less money back from suppliers and its overall supplier relationships worsened, according to the study.

Nissan, in a statement, said it would use the study with suppliers.

“Suppliers continue to play an important role in Nissan North America’s growth where we have achieved record sales and production,” the carmaker said. “We will use the study’s insights to work collaboratively with our supply base on continuous improvement.”

All automakers can stand to improve supplier relations, Henke said, as they will be even more critical as carmakers confront impending government fuel economy regulations, new technologies needed for autonomous driving and amid a sales market that is expected to plateau within the next few years.

The 2016 study included responses from 647 salespeople from 492 Tier 1 auto suppliers, including 38 of the top 50 North American auto suppliers.

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