Pressure Reduction Pressure and Trusting Relations

Abstract

Manufacturer price reduction pressure on suppliers is an important contributor to helping a manufacturer maintain a strong competitive position by keeping costs low. The benefits of trusting supplier working relations also help strengthen a manufacturer's competitive position. The purpose of this study is to determine if manufacturer price reduction pressure and trusting working relations with the pressured suppliers, typically considered to be mutually exclusive, can co-exist. A structural equation modeling approach was used to analyze data, gathered via a mail survey, covering 946 production buying situations involving 279 Tier 1 suppliers and the six major automotive OEMs in the North American automotive industry; Chrysler, Ford, General Motors, Honda, Nissan, and Toyota.