BMW Leads in Revamping Supplier Relations for EV Transition
The automotive industry is facing challenges in managing supplier relations, particularly with the shift towards electric vehicles (EVs). A recent study reveals that while some carmakers like Honda and GM have improved their relations, others, such as Ford, still face issues. Meanwhile, BMW Group is actively addressing these challenges by revising contracts and practices.
The study, focusing on North American Automotive OEM Supplier Working Relations, highlights the need for collaboration beyond purchasing. Leadership in finance and engineering must work together to manage supplier risk effectively.
BMW Group has taken a proactive approach by implementing its Programme Commission strategy. This brings together production, finance, sales, purchasing, and supply chain under one umbrella, fostering better coordination and risk management.
Carmakers are also urged to revise outdated contract terms and purchasing practices for the EV transition. BMW Group is already working on revising contracts to address new realities, including early revision demands for CO2 fleet regulations and adapting to market acceptance challenges of EVs.
Effective and timely communication is crucial in improving OEM-supplier relations. While some carmakers like Toyota, GM, and Honda need improvement, the study found that sharing risk and cost while pursuing cost reduction is key to building trust with suppliers.
The automotive industry is evolving, and so must its supplier relations. Carmakers must collaborate across departments, revise outdated practices, and communicate effectively to manage risks and build trust with suppliers. BMW Group's proactive approach serves as a model for others to follow.
