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2013 ihs oem supplier relations summary
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2013 ihs oem supplier relations summary


Le cabinet IHS sonde chaque année les équipementiers automobiles sur la qualité de leurs relations avec les constructeurs. Les chinois arrivent en queue de classement, juste avant les français.

Le cabinet IHS sonde chaque année les équipementiers automobiles sur la qualité de leurs relations avec les constructeurs. Les chinois arrivent en queue de classement, juste avant les français.

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  • 1. Copyright © 2013 IHS Inc. All rights reserved.Summary Contact:Matteo FiniSenior ConsultantIHS Automotivematteo.fini@ihs.com+44 203 1593 478IHS AUTOMOTIVES 2013 GLOBAL STUDYON OEM-SUPPLIER RELATIONSSuppliers choose BMW and Porsche as preferred customers despitetheir increasing demands on price reduction BMW and Porsche advance in the annual IHS study on OEM-supplier relationsas competition for the top position intensifies. Ratings of top-4 carmakersBMW, Porsche, Toyota and Mercedes are concentrated in a small range. Premium carmakers are becoming more price-conscious in purchasing partsfrom suppliers. Suppliers’ profit opportunity gap between selling to premiumOEMs and volume carmakers is reducing. IHS has recorded an overall improvement of OEM-supplier relations accordingto its metrics, despite OEMs’ pressure on suppliers to deliver significantpurchasing efficiencies. The higher average ratings are driven by OEMs’attempts to address some long-standing issues in the area of “Trust” and“Organisation”, examples of this being Hyundai and Ford, which haveemerged as more trustworthy customers than in previous editions of thestudy.LONDON (June 3, 2013) - Automotive suppliers globally have chosen BMW andPorsche as their customers of preference, despite both premium OEMs becomingtougher in price negotiations, according to suppliers taking part in IHS annual OEM-supplier relations study. Both BMW and Porsche have scored 627 in the SuRe (SupplierRelationship) index scale, a performance metric of the quality of relationship betweensuppliers and OEMs, based on 29 criteria, allocated in five categories: ProfitOpportunity, Trust, Pursuit of Excellence, Organization and Outlook. BMW leads the“Pursuit of Excellence” category, which gives an assessment of how demanding OEMsare with regards to product technology, quality and operations. Another Germanpremium OEM, Audi, leads the “Outlook” category of the SuRe index, which assessesthe overall level of attractiveness of OEMs and the perceived long-term opportunitieswith such customers.
  • 2. Copyright © 2013 IHS Inc. All rights reserved.BMW and Porsche have dominated the top positions of the ranking since 2011,following a period in which Toyota and Honda lost favour among suppliers. The top ofthe SuRe index ranking sees stiffer competition than in previous years with the ratingsof the first four carmakers separated by only six points in the SuRe index scale.Porsche’s improvement compared to last year has allowed it to reach BMW at the top ofthe ranking, while Toyota stages a partial comeback after three years of decline andgrabs the third position held by Mercedes in 2012.Average ratings have improved by 21 points compared to the 2012 results, excludingnew OEMs added to the study in 2013. The drivers of such improvements are improvedlong-term prospects in the case of some customers who are becoming more attractivefor profit reasons to supply to (e.g. Chinese OEMs which started from a low base). In asimilar fashion, OEMs which have historically had lower ratings in the “Trust” area, forexample Hyundai and Ford, have improved significantly.Premium OEMs giving fewer profit opportunities to their suppliersA more general trend hinting at a greater awareness by the OEMs of the importance ofgood OEM-supplier relations seems to emerge. However this does not seem to belinked to more favourable commercial terms for suppliers. Despite improving theiroverall ratings, as many as 11 carmakers out of the 35 ranked by suppliers have
  • 3. Copyright © 2013 IHS Inc. All rights reserved.recorded lower scores in the “Profit Potential” category, which reunites criteria related topricing and commercial aspects such as payment terms, reimbursement of tooling anddevelopment costs. Most of the drops affect premium carmakers such as BMW,Daimler, Audi, Porsche and even Jaguar Land Rover, which distinguished itself lastyear as the automaker giving more profit opportunities to its suppliers.“It is clear that as premium OEMs start to see their profit dip, they will push suppliers todeliver critical savings to prop up their bottom lines. What matters is the magnitude ofthe purchasing savings they try to achieve and whether suppliers are supported infinding ways to achieve these savings or they are asked to achieve them single-handledly”, said Matteo Fini, author of the study and senior consultant at IHSAutomotive.Some volume carmakers that were perceived as extremely price-focused seem to haveeased a bit their approach, such as Fiat and Nissan, which record an increase of their“Profit Potential” ratings by 7% and 6% respectively. Such movements combined themore aggressive stance on price from premium carmakers like BMW and Mercedessuggest that the gap in profit potential for suppliers between supplying premium OEMsand volume carmakers is getting smaller than in the past.Ratings differentiations across component sectorsA single OEM may get differing scores across the component sectors it purchases partsfrom. Results actually show distinctive approaches of the OEMs towards the differentcomponent sectors with marked variations of the SuRe index rating. For example BMWemerges as more price focused for powertrain components than for electrical andelectronic parts.“Significant dispersion of SuRe index ratings across different purchasing areas indicatesthe presence of inconsistencies in how Purchasing departments and other vendor-facing personnel handle the relationship with suppliers”, Fini commented. BMWrecorded a SuRe index rating of 698 in the Electrical area, while only 559 in body-in-white. Nissan also records among the highest deviations of ratings across the differentsectors, while Ford has the most consistent results.The component area of body-in-white shows consistently lower SuRe index ratings thanother component areas for all OEMs, suggesting this is one of the supply areas withless collaboration between OEMs and suppliers.
  • 4. Copyright © 2013 IHS Inc. All rights reserved.Detroit Three: Ford accelerating, GM and Chrysler stallingThis year’s study tells a mixed story on the Detroit Three. Ford emerges as one of thebig winners of this year’s study, as its overall SuRe index rating by increased by 55points to 568, recording also a 4% improvement in its “Profit Potential” ratings. Ford’scross-town rivals GM and Chrysler, which had had made great strides in establishingmore collaborative relationships with their suppliers, record only marginal improvementsin 2013.“Ford shows bold commitment to improving supplier relations, with a few interestinginitiatives reinforcing the idea that it is trying to establish relationships for the longer-term, one being pre-sourcing for performing suppliers” Fini said. GM and Chrysler haveboth backpedalled particularly in the “Profit Potential” category, meaning that they havea more aggressive stance on pricing. “GM and Chrysler have addressed some of thedeepest flaws in their relationship with the supply base, but still have major issues. Forexample both appear weak in giving credit to suppliers’ cost reduction efforts”.European volume OEMs not losing the cost focusEuropean mass car makers still struggle to establish fruitful and long-termcollaborations with their suppliers, as they post sub-optimal and less consistentperformances on a year on year basis. Volkswagen and more prominently its sister
  • 5. Copyright © 2013 IHS Inc. All rights reserved.brands Seat and Skoda have recorded some decent improvements in 2013, however itremains to be seen whether this is the beginning of a new trend suggesting Volkswagengroup invests more in OEM-supplier relations. Fiat also manages to increase its ratingsby nearly 6% compared to 2013. However both Fiat and Volkswagen are still among themost demanding customers in terms of price reduction according to suppliers thatparticipated in the study. PSA’s position in particular appears critical as its improvementin the SuRe index rating is rather limited in 2013, while its competitors are all advancing.“PSA seems to be looking rather aggressively for additional ways to reduce its costsbase through suppliers. This can lead to a long-term deterioration of its relationship withsuppliers”. Renault is on a similar journey, with suppliers rating the French automakeras the one requiring the highest annual price reduction to its suppliers.Emerging OEMs’ issuesThis year’s study also marks the addition of BYD, Geely, Great Wall, Changan, SAIC-GM-Wuling and Mahindra to the coverage of IHS study. Domestic carmakers in Indiaand China do not seem to have supplier relations at the top of their agenda, althoughsome positive signs are becoming apparent. Chinese carmakers Chery, FAW andShanghai Auto record some of the most significant improvements this year. Howevertheir track record on supplier relations is unproven and they are still in critical territory inthe SuRe index scale, represented by a rating lower than 450. The degree ofdevelopment of these OEMs’ technical capability does not seem to be linked to the
  • 6. Copyright © 2013 IHS Inc. All rights reserved.awareness of the importance of good OEM-supplier relations. “Geely is among the mosttechnically capable OEMs in China but seems less concerned about establishing goodrelations with suppliers when compared to other developing Chinese OEMs” says Fini.Other aspects compensating OEMs’ cost focusWhile OEMs’ obsessive cost focus seems to have sparked attrition with the supplybase, OEMs have managed to improve in other areas of the relationship by establishinggreater trust-worthiness with suppliers or providing a more cooperative organization.IHS has recorded an average increase of ratings in the “Trust” category of 5%compared to 2012. Ratings in the “Organization” category show a similar momentumwith a 4% improvement over 2012 results. Some automakers that had historicallyattracted disappointment from suppliers with regards to sensitive issues, such asproviding little protection of suppliers’ intellectual property or being inclined to switchsuppliers in search of better prices, have made strides in this area; for example Hyundaiand Ford.Suppliers have also indicated that Volkswagen and its sister brands Skoda and Seat, aswell as premium automakers BMW and Mercedes, have proved more supportive to theirsuppliers. OEMs have launched initiatives to improve communication with suppliers andprovided more help to achieve their quality targets. Such initiatives have beenrecognised and appreciated by suppliers, and can be an enabler towards theestablishment of long-term and mutually benefitting relationships between automakersand suppliers.
  • 7. Copyright © 2013 IHS Inc. All rights reserved.About the SuRe indexIHS Automotive’s SuRe index is based on a survey programme of the automotivesupply industry which started in 2005. From its inception, the survey has seen theparticipation of more than a thousand senior to middle managers working at automotivesuppliers and directly interfacing with OEMs personnel. In 2012, 49% of the 280respondents were based in North America, 32% in Europe, 15% in Asia and 4% inAfrica and the Middle East. The 2013 study covers 50 of the world’s top 100 automotivesuppliers.A variety of suppliers’ organisational functions are surveyed in order to include thedifferent perspectives on the business relations and practices of OEMs. Respondentsare active in marketing and sales, engineering, program management, research anddevelopment, quality and manufacturing. The 29 questions are organised under fivecategories: Profit Potential, Organisation, Trust, Pursuit of Excellence and Outlook. Thequestions cover the different phases of interaction, from request for quotation throughdevelopment to warranty liability management. These result in a numeric value, rangingfrom 0 to 1,000. A SuRe index higher than 650 is considered a satisfactory result, whileanything below 450 indicates the state of relations is poor.
  • 8. Copyright © 2013 IHS Inc. All rights reserved.
  • 9. Copyright © 2013 IHS Inc. All rights reserved.About IHS(www.ihs.com)IHS (NYSE: IHS) is the leading source of information, insight and analytics in criticalareas that shape todays business landscape. Businesses and governments in morethan 165 countries around the globe rely on the comprehensive content, expertindependent analysis and flexible delivery methods of IHS to make high-impactdecisions and develop strategies with speed and confidence. IHS has been in businesssince 1959 and became a publicly traded company on the New York Stock Exchange in2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable,profitable growth and employs 6,700 people in 31 countries around the world.IHS is a registered trademark of IHS Inc. All other company and product names may betrademarks of their respective owners. Copyright © 2013 IHS Inc. All rights reserved.