From Market to Commitment: A New Inter‐firm Relationship in the North American Automotive Supply Chain

The automotive industry in North America is experiencing a period of far‐reaching reorganization. Part of that change is in the automotive supply chain, including firms in the industry, such as Ford or General Motors, that assemble the vehicles and firms that are their suppliers. The particular emphasis in the research reported below is on the new relationships among these firms in the automotive supply chain. Some of the data come from in‐depth interviews with twenty‐six senior executives in North American automotive companies, from a survey of 175 firms in the North American automotive industry, and from sessions with an advisory board of representatives of leading industry companies. Additional data derive from historical accounts of the industry. This paper briefly summarizes the differentiation of the supply chain into four types of firms, and the reallocation of tasks within the supply chain. This has meant a transfer of responsibilities from the assemblers (such as Ford) to various kinds of suppliers, and a resultant shift in the system of responsibility and authority in the supply chain. The paper then explores in detail changes in the nature of relationships among firms in the supply chain from a type termed the market model to a type termed the commitment model. Additional topics include changes in the way relationships among firms are initiated and reasons for the new type of relationship. The changes are interpreted in terms of both firm‐level and industry level‐factors. The changes and their underlying causes allow certain predictions: the process of change to the new type of relationship will continue at least until 2005; and it is uncertain how far the new mode of relationship, the commitment model, will extend through the supply chain.