Detroit, U.S.A.

Toyota has once again secured the top position in the Plante Moran consultancy’s annual North American Automotive OEM - Supplier Working Relations Index (WRI) Study. This comprehensive study evaluates the relationships between six U.S. automakers and their suppliers. While most automakers improved their scores, Ford experienced a significant decline, reflecting ongoing challenges in its supplier relations.

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Toyota's consistent leadership

In the 2024 WRI Study, Toyota emerged as the highest scorer with 368 points, marking its highest score since 2007. This consistent performance underscores Toyota's commitment to fostering strong supplier relationships. Honda followed closely with 344 points, its best score since at least 2014. General Motors (GM) secured the third position with 299 points, while Nissan achieved 255 points, reflecting notable improvements.

Ford's decline and organisational challenges

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Ford's performance in the WRI Study has been declining for four consecutive years, with a sharp drop of 22 points to 197 in 2024. Since 2014, Ford has seen its score fall by 70 points. Dave Andrea, Principal at Plante Moran’s Strategy and Automotive & Mobility Consulting Practice, attributes this decline to the organisational turmoil following Ford's aggressive push into the electric vehicle (EV) market. The creation of the Model E business division has led to internal confusion and negative perceptions, impacting supplier relations.

Understanding the WRI study

The WRI Study evaluates automakers on a XXX-point scale based on trust, timely communication, mutual profit opportunities, assistance, and reduced friction in supplier dealings. Andrea highlights that the study's findings show the importance of equitable risk and cost-sharing, which enhances long-term financial and innovative capabilities for both automakers and suppliers.

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Focus on collaboration

Toyota, Honda, and GM have been recognised for their fairness and transparency in dealing with suppliers. These automakers understand that maintaining strong supplier relationships is crucial, especially during a period marked by the transition to EVs and supply-chain disruptions.

Communication and transparency

Dave Andrea, Principal in Plante Moran’s Strategy and Automotive & Mobility Consulting Practice notes, "The three top-scoring automakers are perceived as communicating most transparently with their suppliers." This transparency is vital for building trust and ensuring timely issue resolution. The study found that automakers with the highest WRI scores also excelled in maintaining open lines of communication with their suppliers.

Addressing organisational issues

Ford's decline in the WRI Study reflects the need to address internal challenges and improve supplier relations. Andrea points out that engineering, manufacturing, and product development influences have contributed to Ford's lower scores. To regain its standing, Ford must streamline its organisational structure and enhance communication with suppliers.

Strategic supplier integration

To improve its WRI score, Ford should focus on integrating suppliers into its strategic planning. Andrea advises, "The highest-scoring automakers make a concerted effort to include suppliers in their strategies and create expectations for a reasonable return on investment." By adopting this approach, Ford can foster stronger, more collaborative relationships with its suppliers.

Overall trends

The 2024 WRI Study indicates that most automakers are improving their relationships with suppliers despite ongoing challenges. Andrea comments, "With all the challenges and conflicts facing suppliers this past year, it’s not surprising that some automakers dropped even further in their scores. But several automakers improved significantly."

Survey methodology

Plante Moran conducted the 24th annual WRI Study from mid-February to mid-April, surveying 696 executives from 429 Tier 1 suppliers. These executives rated their relationships with automaker customers across eight major purchasing areas and 20 commodity areas.

Toyota's leadership in the WRI Study highlights its commitment to strong supplier relationships, while Ford's decline underscores the need for organisational improvements. As the automotive industry continues to evolve, fostering transparent and equitable supplier relations will be crucial for automakers to navigate the challenges ahead and achieve mutual success with their suppliers.