The financial crisis of 2008 lent credence to the adage that “only the strong survive.” The balance of power between customer and supplier shifted to become more equal. The notion of annual price reductions baked into contracts was challenged. The concepts of early upfront business awards and increased collaboration between supplier and customer started to become a reality.
Today, purchasing organizations at the OEMs are led largely by individuals with engineering/manufacturing backgrounds. OEMs expect their Tier I suppliers to have cost standards/cost models to guide their business relationship and accelerate focus on continuous improvement.
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