Toyota, Honda, Nissan top in supplier relations according to professor’s working relations index

In 14 years of study by Oakland University Marketing Professor John Henke's Planning Perspectives Inc. (PPI), Japanese automakers have topped the list when it comes to relationships with their suppliers. This year’s report is no different.

 

A recent Crain’s Detroit Business article reports:

The Detroit Three once again reigns supreme at poor relations with its supplier base compared to its Japanese competitors domestically, according to a survey released Monday by Birmingham-based Planning Perspectives Inc.

Toyota Motor Corp., Honda Motor Co. Ltd. and Nissan Motor Co. sit atop the annual survey, while Chrysler Fiat Automobile NV, General Motors Co. and Ford Motor Co. “languish” below, said John Henke, CEO of Planning Perspectives and professor of marketing at Oakland University.

“It’s clearer than ever … that the vice president of purchasing plays an incredible role,” Henke said. “When buyers aren’t doing their job and not focusing on maximizing the benefits (of the supplier relationship), it’s fiscally irresponsible.”

In the survey, which generates a Working Relations Index based on supplier responses, Southeast Michigan’s automakers performed poorer in communicating with and assisting suppliers in reducing costs and improving quality.Read the full story here

The May 12 issue of the Globe Advisor reports:

Results of the 14th annual automotive industry study on the major US and Japanese automakers' working relations with their suppliers show the US Big Three are once again falling behind their Japanese competitors, with Toyota, Honda and Nissan finishing 1-2-3 respectively in the top rankings. 

 

The study is watched carefully in automakers' boardrooms because an OEM's supplier relations rating can be directly correlated to its profitability and competitiveness -- including which OEM customer is first to see a supplier's newest technology and gets their best pricing.

The results of the 2014 North American Automotive - Tier 1 Supplier Working Relations Index® Study show the following: 

Toyota's and Honda's efforts to improve supplier relations have paid off as they have regained their momentum and are ranked one and two, respectively, while extending their lead.  Honda is the "most preferred" customer among the six OEMs. Nissan, the second most improved overall following Toyota, has taken over third place from Ford.After showing no real improvement in supplier relations for four years, Ford has slipped back to fourth place, having been passed by Nissan. For the first time in six years, Chrysler's overall ranking in supplier relations has fallen and the company is now ranked fifth, only one point above GM.

In spite of its recent efforts to improve supplier relations, GM has been displaced by Chrysler and has fallen into last place overall among the Big Six.

"History repeats itself.  Historically, the Japanese automakers -- especially Toyota and Honda -- had a commanding lead in supplier relations and were the companies suppliers preferred to deal with.  Then, the combination of the 2008 recession, the impact of the 2010 Japanese earthquake, and the increase in purchasing personnel caused both companies to lose their way and their rankings plummeted," said Henke.

"Meanwhile the US automakers, under new purchasing leadership, made significant improvements in their supplier relations.  Now, however, the ranking trends suggest that the Japanese automakers have figured out their problems, corrected them, and are back on track, while the US automakers appear to be faltering.  In fact, this year GM and Chrysler supplier relations have fallen back into the Very Poor to Poor range."

Read the full article, including a summary of key findings by automotive company here.

Watch an interview with CBS Detroit here.

About Professor Henke

Considered one of the nation's top authorities on buyer-supplier working relations, Professor John Henke’s firm's—Planning Perspectives Inc. -- annual automotive industry survey dissects the relationships between each of the six major North American car companies, including General Motors, Nissan and Toyota, and their Tier 1 production suppliers.

 

Read how Professor Henke’s expertise benefits the education of Oakland University business students here.