Four ways to better manage the auto supply chain

• Source: Gasgoo.com
• [08:06 September 25 2009]
• Comments

An exclusive interview with Tao Lin, head of China, Synovate Business Consulting

Gasgoo.com: How should the automakers react to the supply chain challenge brought by the ups and downs in the automotive market?

Tao Lin: Supply chain is really tricky for automaker. When you only look at things from the consumer point of view, you walk to a 4S store and you make a purchase of a vehicle, and you drive it home.That’s it.

But for the car manufactures, they have to deal with many many people before the car is put together, some parts have the lead time of 2-3 weeks, but some parts may have 20-30 weeks before they are supplied.

So a car manufacturer can deal with 5,000 to 10,000 different suppliers just for the different needs to put the vehicle together. And every automaker may have a different timeframe and different demand, and different way of working.

That creates very much a logistic challenge to any automakers. So a lot of things have to happen especially after the financial crisis.

When there are ups and downs in the auto market, some manufactures have done an even better job than before and some are not ding so well. I think there are a couple of things people can look at in better managing the supply chain.

1. Benchmark with competitors and learn from certain manufactures that have done a great job in managing the supply chain.

In a cost sensitive times like this, you need to look at what your competitors are doing, really looking at people who are doing better than you are, such as Toyota, other Japanese automakers, and some European automakers as well, in terms of efficiency, and how to manage different suppliers from different locations for different demands.

And among the American automakers, Chrysler in my opinion probably had done the best job prior to financial crisis in managing supply chains, especially in the US.

2. Listen to suppliers.

A lot of suppliers these days are being squeezed from all different directions by different people, for example, raw materials prices, their logistics, their capabilities, the changes they have to make since the financial crisis.

So I think listening to suppliers and their difficulties, flexibilities, and their willingness to work with carmakers, which would really be helpful for automakers these days in terms of making a decision, how to work better with different suppliers.