Navigating Automotive Supply Chain Challenges

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In this episode of the Automotive Leaders Podcast, host Jan Griffiths dives into the findings of the 24th Annual North American Automotive OEM and Supplier Working Relations Index (WRI) with guests Dave Andrea of Plante Moran, who led the study, and Sig Huber, Chief Commercial Officer for ELM Analytics.

Dave starts by giving a macro-level overview of the industry's recent challenges, from electrification and new market competitors to supply chain disruptions and cost inflation. Despite these hurdles, Toyota, Nissan, Honda, and General Motors have emerged as top performers in the WRI. Toyota, in particular, saw another significant 30-point increase, reflecting their strong culture of continuous improvement and respect for people, known as The Toyota Way.

They discuss General Motors, which has shown steady improvement despite leadership changes. Dave credits the company’s progress to the consistent focus on supplier relations by successive Vice Presidents of Purchasing. Sig emphasizes that GM's efforts under leaders like Steve Kiefer have embedded supplier relationship management deeply into the company’s culture.

Jan and Dave then address the decline in Ford’s ratings, attributing it to organizational challenges and a more command-and-control purchasing style. Sig warns that Ford’s recent UAW negotiations and slower-than-expected EV adoption rates add to their struggles.

On a brighter note, Stellantis shows signs of improvement under Marlo Vitous’s leadership despite a rocky past with supplier relations. However, Jan questions how much Stellantis's top executives value the WRI.

In their closing comments, Dave and Sig reflect on the industry's future and the need for change. Dave emphasizes adapting business practices to navigate uncertain technology trends and regulatory issues. Sig highlights the industry's resilience, stressing that collaboration and trust with suppliers are crucial for overcoming challenges.

Themes discussed in this episode:

• Understanding the significance of the Automotive OEM-Supplier Working Relations Index (WRI) Study as a tool for assessing industry performance and supplier relations
• Addressing electrification, supply chain disruptions, and cost inflation and their impact on OEM-supplier relationship
• Analyzing the cultural and organizational elements that contribute to Toyota's enduring success, including continuous improvement, respect for people, and long-term relationship-building
• The influence of leadership changes, such as Vice Presidents of Purchasing, on supplier relations and organizational performance
• Ford's decline in WRI scores and the organizational issues contributing to challenges in supplier relations and performance
• The role of effective communication in fostering strong relationships between OEMs and suppliers.
• The importance of trust and collaboration between OEMs and suppliers in navigating future challenges.

Featured guest: Dave Andrea

What he does: Dave Andrea leads the Plante Moran NA Automotive OEM - Supplier Working Relations Index (WRI) study and its associated activities. With over 30 years of experience in the automotive industry, he specializes in supply chains, government relations, automotive economics, industry structure, market trends, and technology development. Dave is an accomplished facilitator and moderator for working groups, councils, and conference panels. Renowned for his integrity and strong team collaboration, he has earned trust across all industry sectors.

Featured guest: Sig Huber  

What he does: Sig Huber serves as the Chief Commercial Officer at ELM Analytics, bringing a wealth of expertise in supplier risk management spanning over 25 years. With a distinguished career at both FCA (now Stellantis) and Toyota, Sig has demonstrated exceptional leadership in guiding supplier risk management teams to success.

Mentioned in this episode:

• The 24th annual North American Automotive OEM-supplier Working Relations Index® (WRI®) Study
• Past Episode with Sig Huber: UAW Strike and the Automotive Industry: Supply Chain Insights
• The Toyota Way

Episode Highlights:

[00:03:22] Industry Challenges: The auto industry has faced challenges, including electrification, supply chain disruptions, and cost inflation. The WRI reflects how well vehicle manufacturers handle these pressures, with all six major OEMs facing similar issues.

[00:05:19] Top Performers: Toyota, Honda, and General Motors are the top WRI performers. Toyota, in particular, saw a significant 30-point increase attributed to overcoming recent organizational expansions and focusing on continuous improvement.

[00:10:17] General Motors' Leadership: Despite three different Vice Presidents of Purchasing over five years, GM maintained a strong focus on supplier relationships, resulting in positive WRI results.

[00:20:57] Challenges for Ford: Ford faces difficulties. The need for quick improvement is emphasized, particularly under new leadership aiming to navigate rising labor rates and slower EV adoption.

[00:25:16] Stellantis' Improvement: Stellantis has shown some positive trends after initially struggling with new supplier terms and conditions a few years ago. The discussion highlights the importance of improved communication and leadership in driving these changes.

[00:33:02] Closing Comments: Both guests stress the need for cultural and organizational changes in the industry. This includes restructuring business practices to handle uncertain technology trends and regulatory issues better. Trust and collaboration between OEMs and suppliers are also highlighted as essential for navigating future challenges.

Top Quotes:

[00:08:18] Sig: “Toyota is a really interesting company due to the culture that they have and that they've fostered for decades. They have their internal processes, which they call The Toyota Way, built around two things: number one is continuous improvement, and number two is respect for people. And so, I think that the people who work there really understand that relationships between companies, and in other words between OEMs and their suppliers, are forged at the personal level. They maintain strong personal commitments to the people that they're working with on the other side of the table, and I think they view themselves as being accountable for things that they promise and vice versa.”

[00:11:57] Dave: “With General Motors, one thing that I always point out is that they've had three Vice Presidents of Purchasing within the last five years. It was Steve Kiefer first, and he really took the WRI personally; he thought it was his scorecard. It's exactly what Sig is talking about; it starts at the top, and that sets the pace for the whole organization. Then Shilpan Amin came in for 18 months, and now Jeff Morrison, and they all took the WRI as a centerpiece of how they want to run the organization. And so, their numbers have continued to go up even with those leadership changes.”

[00:14:40] Sig: “If you have a dedicated purchasing lead that really gets it and is empowered within their organization to try to instill cultural change. That's the secret to making this work, but it's not easy because it's a person-to-person issue, right? Each person in your company dealing with each person in the other company needs to treat each other with respect, and you need to deliver on things that you're saying you're going to promise to deliver, and that's why this is so hard because it requires a culture change led by one department but has to be embraced by individuals in other departments.”

[00:33:04] Dave: “I think going forward for the industry we do have to change the way the industry does business and in the business practices.”

[00:34:42] Sig: “There are problems that come up every day, every week, every year, and the industry find ways to solve those problems. The best way to solve those problems is through collaboration and trust, and I believe that the corporations that are able to get this right and create new ways to build cooperation and trust with their suppliers are going to be the ones that survive because even though the change is exciting, there are a lot of headwinds right now.”