Leading manufacturing companies have long recognized the automotive industry’s pivotal role in the supply chain evolution. Data-driven strategic sourcing, supplier performance management, cooperative cost reduction programs, and supply chain risk monitoring systems are just a few examples of how auto OEMs have stayed on the cutting edge of procurement and supply chain practices. Automakers have continually reduced lead times, added flexibility, and eliminated costly waste throughout the supply chain by communicating real-time production changes and other critical information down through supply tiers via portals. On the supplier quality front, auto companies provide suppliers with instant visibility to even a single defect found at an OEM’s plant or in the market, allowing them to identify and address issues before they have a major impact on the OEM or their customers.
Challenges Lead to Innovation
Tom Lake, Senior Advisor and Consultant for PLG uses the automotive industry as an example of how these supply chain disciplines and practices can be applied to other manufacturing industries. Lake says, “This relentless drive to reinvent has been borne purely out of necessity as automakers have faced a 40-year wave of global competition from Japanese, Korean, and Chinese contenders. With most auto companies buying at least 70% of their COGS from suppliers, a constant effort to maintain a cost-effective supply base has been a prerequisite to survival. Those who were slow to innovate have paid the price with losses in competitiveness, market share, and profitability.”
To read the full article in Trade & Industry Development magazine, click here.
