Better supplier relations at General Motors and Chrysler, as measured by an annual survey of suppliers by consulting firm Planning Perspectives Inc., deserve a salute. But the survey's foremost message is how much work remains to be done.
GM and Chrysler finally seem to understand, at least at the senior executive levels, that you can't build great cars with barely adequate parts and that the best way to get better parts is to work together with suppliers in a relationship based on respect and openness. Moreover, automakers with good supplier relations get suppliers' newest technologies first and tend to pay lower prices for parts of higher quality.
After years of abysmal relations with suppliers, GM and Chrysler have made a concerted effort to improve those ties. The sharp gains are a testament to the efforts of the two companies' purchasing bosses: Bob Socia at GM and the late Dan Knott at Chrysler.
There's much more room for improvement. Even after the latest gains, GM's rating by suppliers barely falls into "adequate" territory, says Planning Perspectives President John Henke Jr. Chrysler falls shy of even that rating.
Front-line buyers for those two automakers all too often still revert to a business model that favors beating up suppliers to save two cents per part. If that is to change, automakers need to find ways to reward buyers for collaborating with, rather than berating, suppliers.
But the shocking news from the survey was how far the one-time leaders in this aspect of automaking have fallen.
Just a few years ago, Toyota and Honda were head and shoulders above other large automakers in North America in how well they worked with suppliers. Companies that sold parts to Toyota and Honda would tell you those customers were extremely demanding on quality and relentless in cutting costs but also treated suppliers fairly and communicated with them well.
Now, after several years of falling scores on the survey, Toyota and Honda have joined Ford, Nissan and GM in being rated just "adequate" by suppliers. It's as if Bentley's quality has slipped to where it's roughly equal to that of Chrysler's late K-cars.
This industry does best when one or more companies set a gold standard that others strive to emulate, whether in quality, performance, fuel economy, customer service or supplier relations. Today no single company sets the benchmark for supplier relations.
The opportunity is there: Some automaker will emerge in the next few years as the leader in working with suppliers. The potential payoff makes that a goal worth pursuing.