The Lack of Lean Partnerships

I recently heard statements that were a perfect example of two things: what lean manufacturing is all about, and everything that is wrong with the U.S. automotive industry.

            The statements came at the recent Center for Automotive Research conference on suppliers, from Frank Macher. He is CEO of Collins & Aikman, a major automotive supplier that has been in bankruptcy since May of 2005.

            “I actually received an apology from Toyota for allowing us to go into Chapter 11,” he said. He explained that his company had worked closely with Toyota on development of some products, and the automaker told him it should have done more to improve the supplier’s prospects. And since the bankruptcy filing, Toyota has been a source of support and continued business, Macher added.

            On the other hand, he said, his conversations with U.S. automakers were “very confrontational. It was almost, how dare we go into Chapter 11 on them.”

            Toyota understands a true lean strategy means developing close relationships with your supply chain partners.

            But the U.S. automakers don’t think about partnerships. As Macher put it, “it’s about price, and it has been about price for a very long time.”

            As he spoke, Macher’s anger and frustration were almost palpable. He described the challenges suppliers face; to those of us unfamiliar with the inner workings of these relationships, they were shocking, or at least discouraging. Among them:

• Customers promise to reimburse suppliers the cost of tooling required to make a new part, but the reimbursement goes unpaid for up to two years.
  
• Customers order unrealistically high volumes, and the supplier gets stuck with the cost of the excess.
  
• Customers seek bids on future business that they know is unprofitable. “To allow people to bid on business three years down the road that they know is underwater to start is immoral,” Macher declared.

            He proposed a customer/supplier bill of rights. The customer, he said, has the right to expect quality products, built to specification every time.

            He then rattled off a long list of supplier rights, including realistic volumes, a pay-as-you-go commitment, timely tooling reimbursement and more.

            My favorite: “It is not a sin to make money.”

            Macher recognizes the changes taking place in the industry. If better relationships can be established, he said, “At the end of the day, we’re all going to be smaller, but I think we’re going to be healthier.”

            He declared, “Suppliers have to be able to provide a quality product without any compromises. But in turn, we should receive fair compensation.

            “Is that really asking too much? It doesn’t seem like it. It seems like fair pay for a fair day’s work is a real deal.”