Four ways to better manage the auto supply chain

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

I think supplier relationship can be an interesting topic in China, because there is always under table deal, kick backs and things like that.

But it should be a very transparent and clear relationship between the two. I think one thing that Chinese manufacturers probably need to work a lot is just to become more professional, more modern, and to certain degree, Westernized.

The Chinese manufactures need to develop the best relationship and the most cost efficient as well.

Gasgoo.com: Have the major automakers’ supply chain management strategy changed after the financial crisis?

Tao Lin: I think in China, certain things have changed, but not so significantly compared to the US market. Most people are still doing well, for example, people like Volkswagen. Even GM is doing quite well in China.

If it is going well, why you want to make dramatic changes and see what happens? I don’t think there have been that many changes.

There have been ups and downs in the industry, but everybody in the industry knows that China is still a very attractive place. No matter what ups and downs we are seeing right now, it can still be going very well in the long run. So people are not really panicky like those in the US or Europe.

I’m sure there will be turbulences as we have seen in the past few months. I don’t really anticipate any major ups and downs, just small turbulences.

Gasgoo.com: Recently some Tier 2 and Tier 3 suppliers in China complains that their customers are asking far more quick R&D, production and delivery time, and some even require only one week’s lead time, so they have to work extremely hard to follow up.

And they think the automakers and Tier 1 suppliers should have shared more information with them before. What’s your suggestion to this problem?

Tao Lin: It’s the OEMs’ responsibility to manage make the supplier follow the step. And they have to listen to these people, such as what difficulties they might have and what kind of flexibilities they have.

In the process building the relationship, the OEMs should really talk to these people and listen to them if certain weeks of lead time enough for them to make the parts.

Every automaker has the secrecy that they need to keep for such a long time before they are open publicly, while keeping that, the manufacturers also need to think about the right time frame for their suppliers to turn around.

I think the Chinese automakers have the tendency of squeezing the suppliers. Telling them putting two weeks a work into one, for example, and that obviously is not a healthy way to do it.

And when that kind of behavior has actually impacted quality of the cars, they will realize that they need to make changes, in order to better managing the relationship. And again it’s really a learning process.