The following is an excerpt from an article discussing supplier relationships with the Big Three North American automakers. "The Big Three select suppliers on the basis of lowest price and annual price reductions," said Neil De Koker, president of the Original Equipment Suppliers Association. "They look globally for the lowest parts prices from the lowest cost countries," De Koker said. "There is little trust and respect. Collaboration is missing." Japanese auto makers want long-term supplier relationships. They select suppliers as a person would a mate. The Big Three are quick to beat down prices with methods such as electronic auctions or rebidding work to a competitor. The Japanese are equally tough on price but are committed to maintaining supplier continuity. "They work with you to arrive at a competitive price, and they are willing to pay because they want long-term partnering, said Carl Code, a vice president at Ernie Green Industries. "They [Honda and Toyota] want suppliers to make enough money to stay in business, grow, and bring them innovation." The Big Three's supply chain model is not much different from the one set by Henry Ford. In 1913, he set up the system of independent supplier firms operating at arm's length on short-term contracts. One consequence of the Big Three's low-price-at-all-costs mentality is that suppliers are reluctant to offer them their cutting-edge technology out of fear the contract will be resourced before the research and development costs are recouped. Source: Robert Sherefkin and Amy Wilson, "Suppliers Prefer Japanese Business Model," Rubber & Plastics News, March 17, 2003, Vol. 24, No. 11 arrangements and partnership. The Japanese automobile manufacturers want their suppliers to be financially healthy a. The Japanese supply chain model is one based on because they rely on them for seems to imply that the longer-term benefits from partnership are being ignored by the the next best price comes along. ? ? . The Big Three automakers, in contrast, are only concerned about getting the best from their suppliers. The article ? . As a result, they are willing to view their supplier relationships as temporary-until b. These suppliers support the Japanese system because it provides for win-win opportunities, whereby the customer and the supplier can both be successful. The suppliers are concerned about their margins being squeezed down to the point that they will be unable to maintain financial viability and/or provide the level of supplier service that will be demanded in the long term under the conventional ? . Suppliers are also concerned about the uncertainty of temporary or short-term contracts. Such demand volatility can add risk and cost to the business over time C. Supply chain management is management provides the supplier the financial incentives to invest in process and product innovation, invest in supply chain collaboration (such as EDI, RFID, and Internet collaboration), and share best practices, such as lean manufacturing principles, across business entities. Such investments provide the customer access to new technologies, new ideas, more efficient processes, and ultimately lower costs and higher value for all parties involved in the supply chain. ? to the customer. However, the customer may have to trade off between short-term and longer-term benefits. For example, supply chain The following is an excerpt from an article discussing supplier relationships with the Big Three North American automakers. "The Big Three select suppliers on the basis of lowest price and annual price reductions," said Neil De Koker, president of the Original Equipment Suppliers Association. "They look globally for the lowest parts prices from the lowest cost countries," De Koker said. "There is little trust and respect. Collaboration is missing." Japanese auto makers want long-term supplier relationships. They select suppliers as a person would a mate. The Big Three are quick to beat down prices with methods such as electronic auctions or rebidding work to a competitor. The Japanese are equally tough on price but are committed to maintaining supplier continuity. "They work with you to arrive at a competitive price, and they are willing to pay because they want long-term partnering, said Carl Code, a vice president at Ernie Green Industries. "They [Honda and Toyota] want suppliers to make enough money to stay in business, grow, and bring them innovation." The Big Three's supply chain model is not much different from the one set by Henry Ford. In 1913, he set up the system of independent supplier firms operating at arm's length on short-term contracts. One consequence of the Big Three's low-price-at-all-costs mentality is that suppliers are reluctant to offer them their cutting-edge technology out of fear the contract will be resourced before the research and development costs are recouped. Source: Robert Sherefkin and Amy Wilson, "Suppliers Prefer Japanese Business Model," Rubber & Plastics News, March 17, 2003, Vol. 24, No. 11 arrangements and partnership. The Japanese automobile manufacturers want their suppliers to be financially healthy a. The Japanese supply chain model is one based on because they rely on them for seems to imply that the longer-term benefits from partnership are being ignored by the the next best price comes along. ? ? . The Big Three automakers, in contrast, are only concerned about getting the best from their suppliers. The article ? . As a result, they are willing to view their supplier relationships as temporary-until b. These suppliers support the Japanese system because it provides for win-win opportunities, whereby the customer and the supplier can both be successful. The suppliers are concerned about their margins being squeezed down to the point that they will be unable to maintain financial viability and/or provide the level of supplier service that will be demanded in the long term under the conventional ? . Suppliers are also concerned about the uncertainty of temporary or short-term contracts. Such demand volatility can add risk and cost to the business over time C. Supply chain management is management provides the supplier the financial incentives to invest in process and product innovation, invest in supply chain collaboration (such as EDI, RFID, and Internet collaboration), and share best practices, such as lean manufacturing principles, across business entities. Such investments provide the customer access to new technologies, new ideas, more efficient processes, and ultimately lower costs and higher value for all parties involved in the supply chain. ? to the customer. However, the customer may have to trade off between short-term and longer-term benefits. For example, supply chain