Detroit, Michigan – Toyota has the best working relationship with its suppliers, but overall, domestic automakers are showing steady improvement while Japanese companies continue to slip, according to a new report by Planning Perspectives Inc. (PPI). The study includes Chrysler, Ford, General Motors, Honda, Nissan and Toyota and their relationship with suppliers for their North American operations.

The study, 2011 North American OEM-Tier One Supplier Working Relations Study, ranked Toyota first, followed by Honda, Ford, Nissan, GM and Chrysler. The annual study tracks supplier perceptions of working relations with their automaker customers across six major purchasing groups to gain the Working Relationship Index (WRI). This year, 451 suppliers participated, representing 63 per cent of the six automakers’ annual buy.

The 2012 study will include Volkswagen, Mercedes-Benz and BMW, which also have manufacturing operations in North America, but which were not included in detail this year due to only having one year’s worth of data. If all nine were ranked this year, PPI said Mercedes-Benz would be in first place, followed by Toyota, BMW, Honda, Ford, Volkswagen, Nissan, GM and Chrysler.

Over the years, the study has shown that automakers with a higher WRI realize greater benefits from their suppliers, including higher quality, lower prices and more technology sharing, than those with a lower WRI.

“In the last several years the U.S. automakers, realizing that an adversarial approach to working with suppliers won’t work, have been working hard to work more collaboratively with their suppliers,” said John Henke, president and CEO of PPI. “Given their continuing improvement over the last two to three years, it appears that they have made the internal management changes necessary to change the way their buyers are working with suppliers. They have begun to realize the benefits of trusting supplier relations, which should cause them to work even harder to be better.”

Since 2008, the domestic automakers have each reduced the number of suppliers ranking them as having “very poor” or “poor” working relations, while increasing the number saying they have “good” or “very good” relations. Toyota and Honda are roughly the opposite, PPI said, with Nissan showing slight improvement. Similarly, in the four working relations categories of communication, OEM help, supplier profit opportunity and relationship, the U.S. automakers have all shown significant improvement since 2008, with the Japanese companies remaining roughly the same. In areas such as rewarding high-performing suppliers with new or additional business, OEMs covering costs when programs are cancelled or delayed, and concern for suppliers’ profit margins, the three U.S. automakers have shown continuing improvement, with “generally the opposite” happening at Toyota, Honda and Nissan. Nevertheless, Toyota and Honda continue to have the best supplier relations, still well ahead of the U.S. companies.

The U.S. companies lag in “OEM Trust,” according to the study, which includes respect for suppliers’ proprietary information and intellectual property as as patents and confidentiality of technical innovations, and in the suppliers’ willingness to share new technology without assurance of a purchase order.

The study found that suppliers are more willing to share new technology with Honda and Toyota than with GM and Chrysler, and are more willing to invest in new technology for Honda, Toyota and Ford than they are for Nissan, GM and Chrysler.

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