SUPPLIER EYE

For more than 100 years, OEMs and suppliers have partnered to build components, engineer and integrate systems, offer services such as logistics, software, and marketing support, and even manufacture complete vehicles. Some of these relationships have lasted decades -transcending corporate buyouts and mergers, new leadership and shifting technology requirements. Others have been, well, short-lived. In the end, OEMs can't build today's vehicles without a vibrant and stable supply base. And suppliers have a finite number of OEM customers. It is an ongoing dance, refined over time.

During the past couple of decades, while U.S. inflation roughly averaged 2%, suppliers were integrating economics into the bulk of their production costs over the life of the program cycle when quoting business. A cycle is approximately five years for vehicles and a couple years longer for powertrains. Additionally, many suppliers have enjoyed the reduced risk of material resale programs (the OEM or Tier 1 buys the material) or they are able to adjust pricing on a quarterly cost index structure - popular with plastics-resin buys. Whatever the structure, suppliers still assume numerous risks over the program cycle - everything from unpredictable volume swings, logistics turmoil, labor issues and infrastructure costs.