Kiefer said GM put in place a strategic supplier engagement process, a scorecard that allows the firm to make it very clear to suppliers what business and behavior attributes the firm is looking for.
The firm uses the same scorecard throughout its operations.
"It allows us to be very clear on what the expectations are on the GM side, but it also allows us to be very clear on how the supplier is doing, how they're progressing toward our metrics," Kiefer said.
"As we've been earning that right to have a better relationship, we're finding all kinds of incredible opportunities to take cost out of the product by not just dropping price, but by finding elements in the value stream and eliminating the waste. The supplier and General Motors can be more profitable."
Toyota, Honda and Ford have similar expectations with regards to quality, delivery, cost, technology, improvement and safety. Thai-Tang said he's found that suppliers want to do business with a partner that exemplifies three main characteristics: Someone who will give them opportunities for business growth, who acts fair and honorably, and is consistent and predictable.
"We always look at how we can improve our business and our relationship with our suppliers," Thai-Tang said. "Some of it really correlates back to those three things. Ford was struggling in some regions outside of North America in terms of profitability (in 2018) and that impacted our suppliers and their business."
Communication was at the top of Toyota's list. Young added that strong collaboration and consistency were two other tenants the OEM looks for in suppliers, and in turn tries to exemplify.
"Our suppliers are engaged with multiple functions of our plants day in and day out," Young said. "We try to have a level of consistency with how we treat our supplier partners. Based on their importance to our overall business, we must treat them with respect and we must work with them to solve problems."
Heminger said Honda expects its suppliers to be proactive, focusing on creating successful opportunities while also implementing innovative business practices that can contribute to loss of waste and modernizing the supply chain.
While she just took over her current post on April 1, Heminger has been with Honda for 23 years, beginning in purchasing. She's found the main reason Honda has consistently posted high supplier relations marks is because the firm treats its supply base as an extension of its manufacturing lines.
"We want to be that company that suppliers want to work with," she said. "We want our suppliers to want to have a relationship with us. Working proactively with them is something we're committed to every day, from me to our junior associates."
Supplier development
When dealing with about 1,000 different suppliers globally, there are bound to be mistakes, and OEMs go to great lengths to develop suppliers.
"When we have problems—and we do, nothing's ever perfect—we have a fairly large organization within purchasing and supply chain that will come in to help," Kiefer said. "We've brought in some of our own to help the suppliers, and then we have a group of external consultants we rely on quite heavily to help manage difficult launches."
Ford also has a supplier technical assistance team whose job is to help suppliers when they struggle, be it operationally, with quality or in launching a new technology. When needed, Thai-Tang said that team is deployed into suppliers' plants to help, most often in the case of major launches where suppliers are pushed to meet requirements.
He added that Ford also has helped financially distressed suppliers secure financing or provided temporary relief on payments to keep them solvent. And smaller-scale suppliers with less resources can take advantage of Ford's joint technology program, which Thai-Tang said allows those companies access to some of the OEM's patents, enabling them to ride up the technology curve.
Toyota's supplier support steering committee provides feedback to suppliers regarding quality and delivery performance. Like GM, it also uses a grading system and Toyota helps struggling suppliers in a variety of ways.
Young said if it's a systemic issue, Toyota will engage at the corporate level. If it's more focused on one plant, a line or a specific part, Toyota take a different approach. And if a supplier is trending unfavorable in Toyota's rankings, the firm will give the supplier a self-assessment and engage to try to avoid the company from tipping into that ranking.
"If a supplier fails, we fail," Young said. "It's our responsibility to ensure the success of our suppliers. That doesn't mean that every supplier at the end of the day can meet our expectations, but for the most part we have a level of understanding and patience with our supplier partners. When performance starts to deteriorate, we collaborate fully with them to help improve their overall performance. Nobody can be perfect, we understand that."
Heminger said when issues arise, Honda seeks to understand the supplier's conditions and then work through the situation. Some are more extreme than others, citing Hurricane Florence as one recent example of a major event that impacted its suppliers in North and South Carolina.
She said when these things happen, Honda deploys its associates to those regions to make sure suppliers have the capability to stabilize their situation as quickly as possible.
"When your family needs help, you go," Heminger said. "That's what you do. We don't think twice about it. That is the culture and the nature of Honda. Any time we see a supplier might be needing assistance, we don't question our involvement. We are involved, and we want to help them through any kind of challenging situation they have."
Balancing act
The automotive industry is facing significant disruption—increased fuel efficiency standards, a shift to electric engines and the dream of fully autonomous vehicles. Some of these are closer to fruition than others, but all are driving significant investments and new partnerships.
"Innovation is critical to our long-term success," Heminger said. "We don't have any kind of contractual requirements, but it's our desire that suppliers have innovation and continuous improvement as part of their business culture. We want them to bring these ideas to the table and we're always looking for suppliers who can help us take on these new technologies."
The earlier suppliers are engaged, the more efficiencies they can put into the vehicle design, but there is a balancing act. Integrating driver assisted technology will have a very different approach than deciding between floor mats, and the gambit of other categories fall somewhere between that spectrum.
Kiefer said it recently brought in a seat supplier very early on one of GM's truck and SUV platforms because it had an innovative second row seat design, one that ultimately drove the design for the rest of the vehicle's cabin.
"In some of those areas we're being forced to work with new suppliers," Thai-Tang said. "Software is a great example. Traditionally many of these suppliers would be in the sub-tier. In a traditional model, we'd go to a Tier 1 supplier and they'd select the sub-tier suppliers. We're finding that in many of these areas we have to deal with these sub-tier suppliers directly because in many cases they're on the critical path in terms of what we can deliver in feature and function."
Young said Toyota seeks to get suppliers involved as early as possible, anywhere from 12-24 months prior to concept of an upcoming vehicle program to best avoid putting in unnecessary constraints on suppliers.
Thai-Tang said when a part is changed, the firm begins with the incumbent supplier to help it understand the manufacturing process—what capital equipment will be needed and how it can re-design the part to provide the best value.
There are always going to be trade offs in the industry, but Kiefer said early involvement is the best way to get into production quickly and for suppliers to produce a cost-effective part.
"We may have very high expectations, but our approach and willingness to work with our partners is consistent globally," Young said.
