Melissa Burden

The Detroit News

General Motors Co. has improved its relationships with key suppliers for the second straight year, and is moving up the rankings to its highest position ever in an influential study that grades automaker relations with key suppliers.

Just two years ago, GM’s supplier relations were ranked the worst of six automakers in the annual North American Automotive OEM (Original Equipment Manufacturer)-Supplier Working Relations Index study. But new purchasing leadership at the carmaker – coupled with new ideas and more of a willingness to work together with suppliers, and GM’s push to drive culture change through the company – caused Tier 1 auto suppliers to report improved dealings with the company.

GM has moved to third place the 17th annual study that was released Monday. It ranked fourth a year ago.

“Our suppliers are so important to the success of General Motors,” said Steve Kiefer, GM’s senior vice president of global purchasing and supply chain since 2014, and a former Delphi Automotive executive. “We need them to be aligned with our priorities, we need their support, we need their performance to be good if ours is going to be good. By all accounts, it seems to be going in the right direction.”

Automakers with the best relationships with suppliers often win suppliers’ new technology, most innovative designs and best prices, says study author John W. Henke, president of Birmingham-based Planning Perspectives Inc. Companies with the best supplier relationships often make tens of millions of dollars more in profits, Henke said.

Henke cited Kiefer for the automaker’s supplier relations improvement: “They now have solid leadership at the top in global purchasing and supply chain who are committed to developing better relations.”

Japanese automakers have led the study for years, and Toyota Motor Corp. and Honda Motor Co. Inc. continue to maintain the top two spots. Henke said the Japanese automakers culturally have had high concern for better relationships with all parties including suppliers.

Ford Motor Co. also improved in the index, but its overall ranking fell from third to fourth because of GM’s progress in the past year. Nissan Motor Corp. fell for the third straight year, dropping from fifth into sixth place. Fiat Chrysler Automobiles NV’s performance continues to decline, but because Nissan’s performance was worse, Fiat Chrysler moved into fifth from sixth place a year ago, Henke said.

Henke said Nissan’s focus on getting the lowest prices from suppliers has hurt the company’s ranking.

“They’re just becoming incredibly adversarial ,” Henke said.

Nissan indicated the survey results did not match its own findings. “These study results do not reflect our experience of the technical or commercial relationships that we have with our suppliers, who have made significant contributions to Nissan’s growth in North America,” Nissan said in a statement.

Kiefer attributes GM’s three-year-old strategic supplier engagement process as the “cornerstone of what has helped turn things around.” The process, which started with about 400 of GM’s top suppliers and has grown to include about 1,000 globally, gives suppliers a consistent set of priorities and scorecard elements which GM tracks.

GM works with more than 20,000 suppliers globally, annually spending about $90 billion with them. In March, GM honored 118 of its top suppliers, the most in any year since its first Supplier of the Year event 25 years ago.

Henke said GM will have to double down to continue its improvement and its march toward unseating Toyota and Honda. “They’re going to have to work very hard to keep this momentum going,” he said. “But it is not inconceivable if they keep it up that they could get closer if Honda and Toyota don’t get things turned around in a more positive way.”

This year’s study included responses from 652 salespeople from 108 Tier 1 automotive suppliers that represent 64 percent of the six automakers’ annual spending with suppliers.

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