Differing Perspectives On Suppliers

Every now and then one page can say it all.  Take page 12 in the May 14th print issue of Rubber News (yes, really, for those of you not in the industry).  A total of two stories, the first being on GM looking for suppliers and the second on how Honda and Toyota want to work with suppliers.  The headlines are a little innocuous, but the body of the stories describe a situation we know all-too-well.

The GM story begins with,

General Motors' global expansion will require better suppliers, according to Bo Andersson, the auto maker's purchasing chief.  The Indian, Chinese, Russian and other markets opening up to GM, he said, will pay off for suppliers who achieve better collaboration with the auto maker.

Note the tone and perspective of the very last statement, "... who achieve better collaboration with the automaker."  Sounds a littler one-sided, which is basically the antithesis of "collaboration."  How about "... succumb to our pricing demands" instead?  To reinforce this attitude, here are some further quotes.

Andersson said the global auto industry is a $1.5 trillion business - and a profitable business - if you are a good player.

Supplier goals should be "to strengthen their customers' capabilities all around the world.  Make the customer stronger."

Yep, a little one-sided.  Strengthen the customer, but what about the strength of the supplier?  Contrast this to what Michelle Kumbier of Harley-Davidson said at the Kellogg Onshoring panel discussion last week:

Consequently they [Harley-Davidson] develop long-term partnerships with suppliers and spend considerable time working to support and nurture those suppliers to ensure they remain competitive.

Which brings us to the second article, titled Honda, Toyota Want Suppliers On Board From Start.  This article begins a bit differently from the GM article:

Honda of America Manufacturing and Toyota Motor Manufacturing North America have invited suppliers into the fold.  [Honda CEO Akio Hamada said] "We work to strengthen our local supply network to make sure it can be globally competitive."

Now that sounds more like a partnership.  A collaboration to strengthen the entire supply chain and benefit all parties, not strengthen just the customer's capabilities.  The article goes on to describe several specific collaborative activities, such as sending supplier and customer representatives to each others' plants to work on improvement activities, developing new technology and capability together, and even impoved communication methods.

Toyota also understands the need to develop closer supplier relationships.  They now routinely meet in what Toyota calls Obeya, which means "big room."  Toyota wants to communicate the old-fashioned way: face to face in a big room, said Gary Convis, executive vice president.  "The beauty of this is its simplicity," Convis said.  The Obeya concept brings together design engineers, design stylists, production engineers and representatives from purchasing, assembly, and suppliers, he said.  "Now we speak with one voice," Convis said.  "Obeya allows more integrated communications with our suppliers.  Suppliers see and feel their ability to work with us."

You can bash your suppliers into submission, losing more than a few of them along the way, or you can develop true long-term partnerships that benefit everyone in the supply chain.  I had heard that Ford and GM were working to improve how they work with suppliers, but these two articles make me think they have a long ways to go. 

Comments

[John Hunter]

Good post. I agree GM and Ford have a long way to go. My thoughts from 2005 on Ford and Managing the Supplier Relationship - http://management.curiouscatblog.net/2005/10/01/ford-and-managing-the-supplier-relationship/ How companies act toward suppliers is one good indication of how well they understand systems thinking.

[John Collins]

Working with GM, Ford, DCX, Toyota, and others on a daily basis, I feel I can fairly competently state that the "Big Three" (at the working level) haven't a notion of the concepts espoused by Toyota. Managing the supplier relationship is a two-way street, these folks have forgotten there is another lane on the highway. If they could only understand that it is the supplier's best interest to make them profitable, and lean on the supplier's expertise, they could easily surpass Toyota, Honda, and all the others.