Survey results highlight the right conditions for innovation and investment

The new era of supplier relations will see suppliers’ innovation and investment increasing – but only under the right conditions.

Rounding off the second half of the Automotive Insight Panel at the APMA-AUTO21 conference, John Henke, president of Planning Perspectives, discussed the 2009 Annual Automotive Tier 1-OEM Supplier Relations Survey. The survey, which asked 231 suppliers about thousands of possible buying situations, was released May 25 and studies supplier working conditions at GM, Ford, Chrysler, Toyota, Honda and Nissan.

John Henke

At the centre of Henke’s discussion is the role that buyer assistance, buyer communication and buyer-supplier involvement play in a mutually beneficial process between manufactures and suppliers.

“If these conditions exist, your willingness to invest in innovation is going to pay off,” said Henke.

Another significant shift is suppliers’ opinions of Toyota, which ranked second – down from a seven-year stint in first place, a spot now held by Honda. “There are a lot of people out there who have better supplier relations than Toyota, but Toyota used to be the best in the world,” said Henke. “Last year we thought Toyota had lost their way. But Toyota doesn’t have a way right now.

“Investment in innovation has also fallen off. Ford was the only manufacturer to increase their level of investment in new technology, while Chrysler is holding steady and the rest – Honda, Toyota, GM and Nissan – have reduced their investment,” he explained.

“The economy alone does not have an impact on suppliers saying they’re investing less,” said Henke.

Henke also discussed the OEM side of the relationship between manufacturers and suppliers. He emphasized that pressure for competition and price reduction should be handled fairly and equitably. “What we’re talking about in price reduction demand is not the demand itself, but how reduction is carried out,” he said.

For more information, visit AUTO21 at www.auto21.ca or the APMA at www.apma.ca.