Building Deep Supplier Relationship
•The HBR Spotlight
Cihauv
Two Japanese automakers have had stunning success building relationships with North Annerican suppliers-often the same companies that have had contentious dealings with Detroit's Big Three. What are Toyota and Honda doing right?
by Jeffrey K- Liker and Thomas Y- Choi
uilding Deep supplier^
"The Big Three [U.S. automakers] set annual cost-reduction targets [for the parts they purchase]. To realizo those targets, they'll do anything. [They've unleashed] a reign of terror, and it gets worse every year. You can't tr\ist anyone [in those companies]."
- Director, interior systems supplier to Ford, CM, and Chrysler, October 1999
Relationships
"Honda is a demanding customer, but it is loyal to us. [American] automakers have us work on drauhngs, ask other suppliers to bid on them, and give the job to the lowest bidder. Honda never does that."
-CEO, industrial fasteners supplier to Ford, CM, Chrysler, and Honda, April 2002
"In my opinion, [Ford] seems to send its people to 'hate school' so that they learn how^ to hate suppliers. The company is extremely confiTontational. After dealing with Ford, 1 decided not to buy its cars."
- Senior executive, supplier to Ford, October 2002
"Toyota helped us dramatically improve our production system. We started by making one component, and as we improved, [Toyota] rewarded us vrtth orders for more components. Toyota is our best customer." ',
- Senior executive, supplier to Ford, GM, Chrysler, and Toyota, July 2001
o corporation needs to be convinced that in today's scale-driven, technology-intensive global economy, partnerships are the supply chain's lifeblood. Companies, especially in developed economies, buy more components and services from suppliers than they used to. The 100 higgest U.S. manufacturers spent 48 cents out of every dollar of sales in 2002 to buy materials, compared with 43 cents in 1996, according to Purchasing magazine's estimates. Businesses are increasingly
Cihauv
Two Japanese automakers have had stunning success building relationships with North Annerican suppliers-often the same companies that have had contentious dealings with Detroit's Big Three. What are Toyota and Honda doing right?
by Jeffrey K- Liker and Thomas Y- Choi
uilding Deep supplier^
"The Big Three [U.S. automakers] set annual cost-reduction targets [for the parts they purchase]. To realizo those targets, they'll do anything. [They've unleashed] a reign of terror, and it gets worse every year. You can't tr\ist anyone [in those companies]."
- Director, interior systems supplier to Ford, CM, and Chrysler, October 1999
Relationships
"Honda is a demanding customer, but it is loyal to us. [American] automakers have us work on drauhngs, ask other suppliers to bid on them, and give the job to the lowest bidder. Honda never does that."
-CEO, industrial fasteners supplier to Ford, CM, Chrysler, and Honda, April 2002
"In my opinion, [Ford] seems to send its people to 'hate school' so that they learn how^ to hate suppliers. The company is extremely confiTontational. After dealing with Ford, 1 decided not to buy its cars."
- Senior executive, supplier to Ford, October 2002
"Toyota helped us dramatically improve our production system. We started by making one component, and as we improved, [Toyota] rewarded us vrtth orders for more components. Toyota is our best customer." ',
- Senior executive, supplier to Ford, GM, Chrysler, and Toyota, July 2001
o corporation needs to be convinced that in today's scale-driven, technology-intensive global economy, partnerships are the supply chain's lifeblood. Companies, especially in developed economies, buy more components and services from suppliers than they used to. The 100 higgest U.S. manufacturers spent 48 cents out of every dollar of sales in 2002 to buy materials, compared with 43 cents in 1996, according to Purchasing magazine's estimates. Businesses are increasingly