Friday 14th Jun 2019 - Logistics & Supply Chain

Motor industry must embrace change

The motor industry must change the fundamental nature of manufacturer-supplier relationships to embrace cooperative sourcing, according to a study by Russell Reynolds Associates and Booz & Company.

The study outlines the characteristics of a high-performing manufacturer-supplier relationship, the type of working environment necessary for success, and the executive competencies needed on both sides to produce positive change in 2009.

“Navigating a Path to Change: A Leadership Strategy for Changing the Manufacturer-Supplier Relationship” is the result of a survey conducted by the Automotive Practice of Russell Reynolds Associates in partnership with the Automotive, Transport and Industrials Practice of Booz & Company. The survey is the result of 43 in-person interviews of senior executives at nine major auto manufacturers and 19 suppliers in the and with a focus on their global operations and practices.

According to the study, car makers will need a healthy, cooperative relationship with suppliers if they are to navigate an environment marked by significant challenges and opportunities. After decades of confrontational tactics, the survey revealed several leadership qualities that will be in high demand as the auto industry fights for survival and growth in the coming months. Some of these characteristics include:
* Commitment from the CEO and senior management to establish an atmosphere of trust and transparency with suppliers
* Alignment of strategic goals and open sharing of critical data
* A long-term commitment to developing supplier relationships as an investment and not an expense
* Clarity of purpose between manufacturers and suppliers at the c-level to know precisely what can and cannot be accomplished with each relationship
* Streamlined decision-making
* A drive to understand each other’s business.

The report says that while many of these findings seem like common sense, they don’t reflect the history of much of the Western motor industry where, in many cases, the relationships between manufacturer and supplier have been between unequal partners and have been characterised by friction and mistrust. If anything, this has got worse as the industry has faced a period of lower margins and greater market pressures. The experience is not universal, however. European manufacturers are more likely to follow a collaborative model than their counterparts and sometimes this difference can be seen in the American and European operations of the same company.

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