Conclusions

One simple message leaps from the data in
this survey. In the new era of supply-chain management within the extended enterprise, the
primary concern of all suppliers is to improve the quality of their relationships. Better
understanding of suppliers and customers, better communications, more flexible production
systems, and closer integration of R&D all point to the rhetoric of the ‘shared
destiny’ relationship being translated into reality. The difficulty for suppliers
throughout the supply chain is that each vehicle manufacturer has a unique approach to
procurement. Despite various moves to harmonize basic requirements such as quality levels,
suppliers have to customize the relationship with each vehicle manufacturer.

There is clear evidence of a shift in focus
in the automotive industry from the first Tier – vehicle manufacturer link, to further
down the supply chain as best practice is disseminated. The suppliers that face the
greatest challenges are those which are marginal first Tier suppliers, or in the second
Tier. Often caught in a cost reduction squeeze from their first Tier customers, and a
price increase from their materials suppliers, second Tier suppliers may lack the depth
and breadth of management expertise to cope with the diversity of challenges to their
business. They often have the ambition and indeed the potential to retain independent
status, and are the most likely to turn to third parties for all sorts of functions from
training and market development to IT strategy. For those plants which are part of larger
groups, as is often the case, a key issue is of course the degree of control that plant
level management has over a range of issues. IT policy may be determined centrally.

Inter-country comparisons/patterns are more
difficult to discern compared with size/Tier issues. Behind the data is a tale of turmoil
in the second and third Tiers for all countries. The survey clearly shows the first Tier
and large firms are leading the way on a number of issues such as JIT and flexibility, as
may be expected. But the larger suppliers are much more likely to be concerned with issues
such as integration of R&D, prototype development, etc. than those lower down. In
contrast, the third Tier suppliers still show concern for more traditional aspects of
business: be they integrated payroll and stock control systems, or sales and marketing.

Suppliers in Germany remain most concerned
about costs within the context of concerns over the German location (‘Standort
Deutschland’), and about securing their lead in advanced automotive technologies. It is
interesting to note that responses from suppliers in Spain closely parallel those from
suppliers in Germany. It is significant that many suppliers in Spain are German-owned, and
increasingly serve vehicle manufacturers in Germany. US suppliers are most concerned about
increasing flexibility and developing closer links to their customers.

The Automotive suppliers face the following
challenges:

How to get closer to their
customers
… improved EDI linkage

Assemble to order
… customer demand cascade from distributor through supply Tiers

Changing customers from OEMs
(constructors) to Tiered suppliers
… different scheduling techniques and stability

… increasing scope of supply

… increasing complexity and control
requirements

Pressure on costs
… open book relationships

Competition from lower cost rate
countries
… dealing with import of supplies

Technology changes that could lead
to losses and gains in business
… steel to aluminium or plastic etc.

Increasing responsibility for
supply chain management
… point of sale on track or after build rather than upon receipt

Leaner organizations
… multi-skilled staff operating 24 hours per day

Environmental and legislative
demands
… emission of vehicles and plant, airbags etc.

The international nature of the automotive
industry makes these challenges global concerns with regional bias. The industry
unification gives excellent opportunities for the marketing of IT solutions that are seen
as a prime facilitator to solving these problems.