Steel Buyers Basics: What Goes Around, Comes Around

One of the core themes in my series of articles on steel purchasing basics is the importance of the supplier/customer relationship.  Many large OEM customers rate their suppliers as a tool in order to get them to improve their performance but generally they pay little attention to how their suppliers rate them.  However, Planning Perspectives Inc. publishes such a rating each year in May on the large auto companies and the results are instructive.

Suppliers identified General Motors and Chrysler as the worst auto companies to do business with.  Honda and Toyota were rated best.  GM and Chrysler have had a long history of being last in this survey, improved after their bankruptcies but have recently fallen back.  To me the first line in the report says it all; “Ford, General Motors, FCA US and Nissan collectively would have earned $2 billion more in operating profit last year had their supplier relations improved as much as Toyota’s and Honda’s did during the year.”