SUPPLIER EYE

For decades, there has been a tug-of-war between many suppliers and their vehicle-manufacturer customers with respect to future planning volumes. The stakes are significant. Using volumes that are too high drives an extreme capital commitment and risk suppliers to stranded capital and missed opportunities to employ resources elsewhere. Using volumes that are too low means the OEM may miss potential sales and the supplier would be stressed with extreme overtime to keep up. It is a never-ending balance.

OEMs often use internally built ‘Capacity Planning Volumes’ (CPVs) to ensure they capacitize to both their annual and peak volume expectations. These volumes are used as the divisor to understand per-part costs and how tooling, machines, infrastructure and other capitalized items are amortized over the life of the program. Suppliers often utilize third-party views such as the S&P Global Mobility Light Vehicle Production Forecasts to gain an impartial perspective of market dynamics, as well as existing and expected vehicle introductions.