Supply Excellence — Supplier Bites Back

Supplier Bites Back

November 6th, 2006 · by Tim Minahan · No Comments · automotive sector, supply management

You heard it here first! Supply Excellence has long warned that the inconsistent and sometimes heavy handed supplier management approaches of U.S. automakers would have negative consequences for Detroit. Now there’s proof.

Last week auto parts supplier Collins & Aikman stopped shipments to Ford Motor Company in response to an unresolved pricing dispute between the two firms. According to an Associated Press article, the supplier stopped shipping carpet, instrument panels, and other plastic parts to a Ford assembly plant in Mexico. The short-term stoppage, which was exacerbated by Ford’s lean, just-in-time manufacturing approach, halted the production of about 400 vehicles, including Ford’s hot-selling small- and mid-size cars. It also had ripple effects, causing other area suppliers to halt production so as not to disrupt Ford’s assembly sequencing queue.

The article stated, “The stoppage underscores the tensions between parts manufacturers and automakers as The Big Three continue to press suppliers for cost cuts in the face of intense competition from Asian car companies.” And I couldn’t agree more.

Big supply cost reduction plans (including sending more supply offshore) from Ford, General Motors, and, more recently, Chrysler, have frustrated already tenuous supplier relationships in North America. Collins & Aikman, like several other U.S. auto suppliers (including Delphi), is operating under Chapter 11 bankruptcy protection, making additional price concessions difficult, if not impossible, to stomach.

U.S. automakers could see more rebellious acts from suppliers in coming months unless they stabilize sourcing and supplier management approaches.

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