Supply-chain trends

With increased responsibility for modules and warranties, automotive suppliers are finding innovative ways to manage their supply chains.

Through mergers, acquisitions, and company closings, the automotive industry has been shrinking from a numbers standpoint over the past several years. Even though the supply base is getting smaller, communicating vital information in a timely manner from company to company is still a major challenge. With fewer companies and more complex relationships among them, the supply chain should be thought of more in terms of a supply web, said Gary Baker, Client Solutions Executive for EDS. “As the number of companies shrink (and) we aggregate a lot of activity within the industry, we're going to see that connections are not singular but multi-connections. You're going to have a supplier that supplies a lot of different companies, and we're going to see not a chain but a web.”

A major trend affecting the automotive supply chain and the interrelationships along it is the shift toward Tier 1 suppliers as vehicle systems integrators. According to Paul Hebeler, Director of Oracle's Automotive Industry, this shift is causing a lot of pain for suppliers that don't have the capabilities to support that type of responsibility. “It's a cost issue- to build out that engineering capability and everything else to support it. (OEMs) are asking suppliers to build their supply chain, take ownership of the module, and do all of the parts innovation and product life cycles. The suppliers jumped at (the opportunity) because they wanted the ownership, but it's forcing them to upgrade or at least focus on the infrastructures that they have to support these kind of systems requirements that they really never had before,” he said. “The good news is these suppliers don't have these legacy systems and engineering tool sets that are constraining them; they now have the ability to work with some top-shelf technology providers,” Hebeler added.