Toyota Scores the Top Spot Again in 2024 OEM-Supplier Survey

Five of six automakers improved their overall working relations with suppliers.

June 10, 2024

Kami Buchholz

Toyota tops the 2024 Working Relations Index (WRI) study, notching its highest score since 2007. Shown here: the 2024 Toyota Tacoma. (Toyota)

Toyota has locked down the top ranking in the 24th annual North American Automotive OEM-Supplier Working Relations Index (WRI) for the 14th consecutive year. This record-setting accomplishment shows how strongly the Japanese automaker intertwines its engineering and purchasing efforts with input from its suppliers.

A WRI graph tracking the year-over-year and 10-year performance metrics of the six OEMs in the study: Toyota, GM, Ford, Stellantis, Nissan and Honda. (Plante Moran)

“Working with suppliers to reduce the cost of their parts in production, or before going into production, is even more important today to offset cost inflation, costs tied to production schedule interruptions, and product development demands for electrification,” Dave Andrea, principal in Plante Moran’s Strategy and Automotive & Mobility Consulting Practice, told SAE Media

More than 690 executives from 429 Tier 1 suppliers completed this year’s online Plante Moran survey between mid-February and mid-April. Comparing WRI year-over-year results, Toyota, Honda, General Motors, Nissan and Stellantis gained points, which are based on suppliers ’perceptions of their working relations with OEMs, while Ford lost some.

Results of the 2024 WRI study showing variables related to overall OEM purchasing organization effectiveness. (Plante Moran)

Although Stellantis gained single-digit points in this year’s study, the automaker has been in the last-place doldrums since 2021. Coming in at the bottom of the list of six automakers is partially due to suppliers dealing with late engineering revisions. “We don’t know if these late engineering changes are generated by engineering specifically or are the result of late product decisions that tie back to Stellantis ’product development process,” Andrea said.

From an engineering perspective, this year’s study had both good and bad findings. “A positive trend we saw in this year’s survey was that suppliers said, generally, that the OEMs ’engineering and purchasing groups were better aligned at the point of sourcing for the best decisions,” Andrea said. In contrast, the biggest disappointment was the number of suppliers that rated OEMs lower on their cost reduction processes. “While it may not fully be an engineering issue, engineering plays a big role in validating new ideas to reduce supplier’s material, labor and process costs,” Andrea said.

2024 WRI study data about how OEMs discuss supplier roles in long-term purchasing strategies. (Plante Moran)

Balancing costs associated with maintaining supplier products for internal combustion engine-powered vehicles while dealing with the EV transition is a tall task for suppliers. Managing the turmoil requires assistance from automakers, according to the survey. “OEMs must reduce the cost of doing business, specifically unintended costs that add no value to the product or the commercial relationship,” Andrea said. “Suppliers also suggest that the industry change its processes to accommodate the inherent risk and costs of the EV transformation.”

Those process changes, Andrea said, include writing contracts to pay for upfront fixed investment rather than amortizing the costs into uncertain, annual volume piece prices. That would allow suppliers to reach full capacity over the program’s life, maximizing volumes rather than requiring those volumes at the start of production.

A perennial issue in the WRI study is timely communication, including OEMs sharing information on long-term purchasing strategy. In the context of an EV product cycle plan, timely communication impacts product specifications, validation processes, and other engineering and non-engineering activities. “Purchasing is the conduit and not the originator of the most critical information,” Andrea said.