Porsche tops in supplier relations, survey says
Overall results show big dip in satisfaction among partsmakers
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COLOGNE, Germany – Porsche edged Toyota to finish No. 1 in the eyes of partsmakers in a new study on automaker-supplier relations.
Porsche finished on top with 617 out of a total 1,000 points in the 2011 Supplier Relationship (SuRe) index -- a ranking of 30 global automakers that was the key part of the 7th annual Automotive News Europe/SupplierBusiness OEM-Supplier Relations Survey presented here today.
Toyota, last year's top finisher, was second with 614 points while Honda Motor Corp. (602), BMW AG (594) and Audi AG (592) rounded out the top five.
Overall, the average score for automakers fell to 513 points, the lowest SuRe index total since the statistic started being kept in 2006. This year's score also is well below the all-time high average of 572 points in 2010.
BMW tumbles
A reason that the overall average dropped was because of big declines in the scores given to automakers such as BMW, Toyota and Honda.
BMW's score slipped 42 points from last year, falling below 600 for the first time since the SuRe results we launched.
Fini said BMW fell because suppliers found that the German automaker has become "more confrontational" than in previous years. He said BMW's declining score coincides with its drive to cut costs for parts and supplies by 4 billion euros by 2012. BMW announced the goal in late 2007 and Herbert Diess, BMW's purchasing chief, told Automotive News Europe in March that the automaker has completed the program more than one year earlier than expected.
Fini also said suppliers find that BMW is no longer very fussy about low-cost sourcing, despite being a premium brand.
"All these aspects do have an impact on suppliers' perception of their profit opportunity," he said.
Toyota, Honda slip
Toyota and Honda dropped by more than 50 points each this year compared with 2010. Fini said one reason for the decline was that suppliers "did not seem impressed with the level of support they received from the two carmakers following the March 11 Japan earthquake."
But an even bigger reason for the drop, he said, is that there appears to be a structural change in the automakers' purchasing styles with regards to pricing policies and global sourcing. He said that both are trying to increase their low-cost sourcing.
The financial benefits of good relations
Fini said that a score of 650 or higher on the SuRe index means relations between the two sides are starting to work. The supplier is more willing to open its books and collaborate with the automaker in finding cost reductions as well as ways to reduce waste and improve quality. The supplier does this because it feels it has the support of the automaker, the chance to continue growing and the chance to earn a fair margin.
"Over the last five years there has been a high correlation between operating income of carmakers and their respective SuRe index results," Fini said. "That means better relations with suppliers are linked to higher profitability for the OEM."
Finishing at the bottom of the ranking were Chery Automotive (365), Dongfeng Motor Group (428), SAIC Motor Corp. (433), BYD Co. (449) and FAW Group Corp. (456). (For full results, see Supplier Relations index PDF above, right)
• Executives at 223 automotive suppliers rated automakers on 28 metrics such as payment terms, quality of communication, keeping agreements on price, demands to achieve high quality, opportunities for new or increased business.
• Of the respondents, 46 percent have their company headquarters in North America, 42 percent in Europe, 12 percent in Asia-Africa.
You can reach Douglas A. Bolduc at dbolduc@crain.com.
