Automakers are Making Record Profits Now, but Suppliers Hold the Keys to OEMs Future

Transcription

1 16 th Annual North American Automotive OEM - Tier 1 Supplier Working Relations Index Study Automakers are Making Record Profits Now, but Suppliers Hold the Keys to OEMs Future 2016 Information may not be used for any commercial or academic purpose without written permission from PPI. 16 th Annual North American Automotive OEM - Tier 1 Supplier Working Relations Index Study Society of Automotive Analysts Purchasing Summit 17 May 2016 John W. Henke, Jr., Ph.D. President/CEO, Planning Perspectives, Inc. Professor Emeritus of Marketing, Oakland University Research Fellow, Center for Supply Chain Management, Rutgers University 2016 Planning Perspectives, Inc. Page 1 of 10

2 Basis of Participants Answers OEM Commodity Area Buying Situation Purchasing Areas Commodity Areas Body-in-White 1. Body-in-white, stampings, frames Chassis Electronics & Electrical Exterior Interior Powertrain OEMs: FCA Nissan GM Ford Honda Toyota 2. Fuel handling, exhaust systems, cooling systems and components 3. Brake systems, steering, suspensions 4. Tires, wheels, and mechanisms 5. Electronics, ICs, PC boards, ECUs, sensors, wiring 6. Audio systems, safety systems, security systems 7. Body panels, exterior ornamentation, fascias, sealing 8. Exterior lighting, mirrors, glass, wiper systems, latches 9. Seat systems, restraint systems, airbags 10. IPs, consoles, interior trim, headliners, carpeting, matting 11. Heating, ventilation, A/C 12. Engines and engine components 13. Transmissions and transmission components 14. Axles, traction systems and components 2016 Information may not be used for any commercial or academic purpose without written permission from PPI Annual Study Participants Time Frame: Early-March to Mid-April Internet-Based 647 sales personnel 492 Tier 1 suppliers 38 N.A. Top 50 suppliers 59 N.A. Top 100 suppliers 2015 annual N.A. sales equals 59% of six OEMs annual buy 1998 buying situations (OEM Commodity Area combinations) Anonymous and confidential 2016 Information may not be used for any commercial or academic purpose without written permission from PPI Planning Perspectives, Inc. Page 2 of 10

3 Working Relations Activities Components Buyer-Supplier Relationship Supplier trust of buyer Variables Supplier perception of overall working relations with Buyer Buyer Communication Buyer open and honest communication Buyer communicates timely information Buyer communicates adequate amounts of information Working Relations Index Buyer Help Buyer Hindrance Buyer help to suppliers to reduce costs Buyer help to suppliers to improve quality Buyer late/excessive engineering changes (reverse measure) Conflicting objectives across Buyer functional areas (reverse measure) Supplier given flexibility to meet cost objectives Supplier involvement in Buyer product development process Buyer shares savings from supplier cost reduction proposals Buyer rewards high performing suppliers with new/cont d bus. Supplier Profit Buyer covers sunk costs on cancelled or delayed programs Opportunity Buyer concern for supplier profits when asking price reductions 1 Buyer refers to the supplier s customers. Supplier opportunity to make acceptable return over long-term 2016 Information may not be used for any commercial or academic purpose without written permission from PPI. 5 Working Relations Index Supplier s Perception Supplier s Reaction Adversarial Worthwhile Business Our Business to Lose Short-term view Operational view Long-term view Minimal expenditures; Maximum returns Do our best Strategic actions in anticipation of Buyers needs 2016 Information may not be used for any commercial or academic purpose without written permission from PPI Planning Perspectives, Inc. Page 3 of 10

4 OEM Supplier Working Relations Percentage of Occurrence Good - Very Good Very Poor - Poor Adequate 45% 33% 21% 54% 26% 20% 56% 29% 15% 38% 31% 32% 49% 29% 23% 54% 16% 500 OEM - Supplier Working Relations Index GM Ford FCA Nissan Honda Toyota Information may not be used for any commercial or academic purpose without written permission from PPI Buying Situations by WRI Categories 70% Very Poor - Poor Adequate Good - Very Good 60% 50% 40% 20% 10% FCA Nissan Red number indicates statistically significant difference with previous year. Asterisk (*) indicates statistically significant difference with Information may not be used for any commercial or academic purpose without written permission from PPI Planning Perspectives, Inc. Page 4 of 10

5 Percentage of Occurrence Percentage of Occurrence 55% 31% 24% 34% 21% 35% 58% 23% 23% 29% 19% 48% 51% 26% 28% 32% 21% 41% 43% 29% 27% 28% 44% 43% 27% 33% 26% 24% 48% 46% 27% 24% 43% 70% Buying Situations by WRI Categories Very Poor - Poor Adequate Good - Very Good 60% 50% 40% 20% 10% General Motors Ford Red number indicates statistically significant difference with previous year. Asterisk (*) indicates statistically significant difference with Information may not be used for any commercial or academic purpose without written permission from PPI. 9 Buying Situations by WRI Categories 70% Very Poor - Poor Adequate Good - Very Good 60% 50% 40% 20% 10% Honda Toyota Red number indicates statistically significant difference with previous year. Asterisk (*) indicates statistically significant difference with Information may not be used for any commercial or academic purpose without written permission from PPI Planning Perspectives, Inc. Page 5 of 10

6 Extent of Work Extent of Work Basic Business Practices Purchasing VP Working to Build More Trusting Supplier Relations Very great (5.0) Great (4.0) Some (3.0) Little (2.0) FCA Nissan General Motors Ford Honda Toyota Red number indicates statistically significant difference with previous year. Asterisk (*) indicates statistically significant difference with Information may not be used for any commercial or academic purpose without written permission from PPI. 11 Very great (5.0) Basic Business Practices Buyer Working to Build More Trusting Supplier Relations Great (4.0) Some (3.0) Little (2.0) FCA Nissan General Motors Ford Honda Toyota Red number indicates statistically significant difference with previous year. Asterisk (*) indicates statistically significant difference with Information may not be used for any commercial or academic purpose without written permission from PPI Planning Perspectives, Inc. Page 6 of 10

7 Purchasing Area Working Relations Indices 2016 Purchasing Area 1 Detroit 3 OEMs Japanese 3 OEMs FCA GM Ford Nissan Honda Toyota Body-in-White Chassis Electrical & Electronics Exterior Interior Powertrain Red number indicates lowest Purchasing Area WRI across OEMs; Green number indicates highest Purchasing Area WRI across OEMs 2016 Information may not be used for any commercial or academic purpose without written permission from PPI. 13 Purchasing Areas Change in 2016 WRI Relative to 2015 WRI OEM Body-in- White Chassis Purchasing Area 1 Electrical & Electronics Range in Exterior Interior Powertrain WRI Differences Toyota Honda Ford General Motors Nissan FCA Red number indicates amount of drop in Purchasing Area WRI relative to 2015 Green number indicates amount of increase in Purchasing Area WRI relative to Information may not be used for any commercial or academic purpose without written permission from PPI Planning Perspectives, Inc. Page 7 of 10

8 Buyer Characteristics Index Very Poor-Poor Mediocre Good-Very Good Supplier Relations and Buyer 1 Profits A Systemic Model Foundational Activities Buyer Activities and Behaviors Interfacing with Suppliers Collaborative Supplier Working Relations Supplier Behaviors Impacting Buyer Profits Buyer Profit Impact 1 In this context, Buyer refers to the suppliers customer Buyer Characteristics Indices OEMs Overall FCA Nissan GM Ford Honda Toyota 2016 Information may not be used for any commercial or academic purpose without written permission from PPI Planning Perspectives, Inc. Page 8 of 10

9 Basic Business Practices Index Very Poor-Poor Mediocre Good-Very Good 400 Basic Business Practices Indices OEMs Overall FCA Nissan GM Ford Honda Toyota 2016 Information may not be used for any commercial or academic purpose without written permission from PPI. 17 More Collaborative Relations Greater Supplier Contribution to OEM Profits Row Fiscal Year Nissan 2 General Motors R-1 Pressure to reduce price R-2 OEM threat of lose business / Fear of OEM retaliation reason for price 17% 29% 33% 18% 27% 23% concession 4 R-3 Working Relation Index R-4 R-5 R-6 Supplier piece price concession 5 contribution per vehicle $214 $146? $195 $194 $207 Supplier non-price benefits 5 contribution per vehicle $2685 $2615? $2607 $2044 $2841 Supplier contribution to OEM 5 operating profit (EBIT) per vehicle $2899 $2761? $2802 $2237 $ The Annual Study results relate to the OEM s fiscal year which is one year prior to the Annual Study year;, e.g., 2016 Annual Study results pertain to the OEMs FY Red numbers indicate significant difference with the previous year; yellow box indicates significant difference with Scale: 1 To a little or no extent; 2 To a little extent; 3 To some extent; 4 To a great extent; 5 To a very great extent 4 Percent of buying situations 5 Supplier Profit Contributions per vehicle are based on light vehicles manufactured and wholesaled in North America; operating profit (EBIT) excludes any extra-ordinary expenses that may have been included in the OEM s annual report Information may not be used for any commercial or academic purpose without written permission from PPI Planning Perspectives, Inc. Page 9 of 10

10 16 th Annual North American Automotive OEM - Tier 1 Supplier Working Relations Index Study Society of Automotive Analysts Purchasing Summit 17 May Planning Perspectives, Inc. Page 10 of 10