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Relations sour between suppliers and GM, FCA, Nissan

May 18, 2015

John Henke of Planning Perspectives says it's best for automakers to use a non-adversarial approach when dealing with suppliers
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An annual study says suppliers have a poor relationship with General Motors, Fiat Chrysler (FCA) and Nissan, mainly because those automakers were adversarial in their dealings with them.

John Henke of Planning Perspectives says the results of his annual OEM-Supplier Relations Study was disappointing and surprising, because in recent years, GM and Chrysler had been making improvements with supplier relations.

Henke says it's telling that when asked why they gave GM, FCA, and Nissan lower prices, suppliers said they were threatened with loss of business or retaliation if they didn't.

On the other hand, Toyota and Honda both dramatically improved relations with their suppliers last year.

Henke says he's not sure how Toyota did it, but Honda sent its purchasers back to basic training – all 600 of them.

"They put everybody through their fundamental training of the Honda philosophy, regardless of how long they had been there."

A key aspect of the Honda philosophy is to treat each individual with respect, and as a valued member of a team.

Henke says had GM, Nissan, and FCA improved their relations as much as Honda and Toyota, they would have garnered an additional combined $2.1 billion.

That's because of "non-price" benefits that attach to good OEM-supplier relations. 

Henke says suppliers are much more willing to offer their best people and technology to automakers with which they have good relations, and that helps the automakers made better, more competitive products.