More than three years ago, Thomas Lyons et al. noted that U.S. manufacturers and their suppliers were being pushed by world-class competition to develop new styles of relating to one another.1 This changing climate was manifest in:

• The emergence of multifunctional teams for the development of cross-technological projects;
• The reduction of the total number of suppliers;
• The lengthening of contracts so that they spanned component lifetimes;
• The increased reliance on suppliers for such services as design, research and development, and engineering; and
• The acquisition of components and subassemblies rather than individual parts.

Lyons et al. portrayed manufacturers as generally enthusiastic about these trends and as initiators who looked for ways to improve quality, reduce project cost, reduce complexity in vendor relationships, and enhance R&D support. They stereotyped suppliers, on the other hand, as reticent and fearful of disclosing confidential information, of expanding services without compensation, and of losing operational autonomy. The authors challenged the industrial community to manage the evolution of these emerging relationships cooperatively, with the benefits shared equally among the participating parties.

A year later, on the basis of a survey of U.S. automotive suppliers, Susan Helper reported that the suppliers’ fears were justified.2 The old behavior of aggressive competition persisted. The large (and more powerful) manufacturers extracted concessions and achieved improvements at the expense of the smaller (and less powerful) suppliers. Through... To read the complete article, login or sign-up using the form below.

Become a premium subscriber today to read this and all MIT Sloan Managmeent Review articles.

Buy this article. Purchase one or more copies of this article in PDF form.

Become a premium subscriber today to read this article and the entire archive of MIT SMR articles.

Upgrade your existing subscription to premium

Sign in if you are a premium subscriber.

E-Mail:
Password:

Do you subscribe the MIT Sloan Management Review in print? Enter the email address and password you used when ordering. Don't remember? Lookup your subscription account information

• Register for free access to recent articles and the current issue of MIT Sloan Management Review.
• Subscribe and read articles from the past three years online.
• Premium subscription give you access to the entire archive of articles.