The auto industry is craving greater supply chain visibility

Improving visibility has taken center stage at many companies in the past two years – but this is not the first time it’s become a top priority. Japanese automakers and suppliers have been trying to bring more clarity to their supply chains.

Following the 2011 tsunami and earthquake that ravaged parts of Japan and left much of the country’s auto infrastructure to continue normal production, Toyota Motor Corp. vowed to map out its entire supply chain, including Tier 4 and Tier 5 suppliers.

Toyota has launched a system called SAVE, for Visualization and Enhancement for Supply Chain Application, which will allow you to quickly evaluate how supplier operations can impact future disruptions.

“As soon as something comes up around the world, we can immediately see from North America, our potential exposure,” said Bob Young, group vice president of Toyota Motor North America for Purchasing Supplier Development. Automotive News this year. “The War [in Ukraine] was an example: Do we have anything coming from Ukraine? Do we have anything coming from Russia? What is it What are our options? “

Hearsch said that getting a better handle on where parts are coming from, and when, helped with the Toyota handle of the global microchip shortage of the early days of the crisis.

“The Japanese automakers were really impacted and couldn’t make cars,” he said of the 2011 production collapse, “and they weren’t disrupted in a way that many other automakers were. Ten years later, they still had many lessons. Western companies had experienced that viscerally and created systems that were more fragile than they needed to be. “

Establishing more visibility is a work in progress. Many companies believe that one way to get there is to take the localization of their supply chains in hopes of insulating themselves on industrial catastrophes.

Hearsch said that in the pre-pandemic era of relative stability, a number of suppliers were willing to take on more risk than satisfy their automaker customers or even their own internal cost targets.

“This is a system created by OEMs where the OEMs are simply made of a vehicle, and it is the Tier 1’s responsible for delivering parts,” he said. “Suppliers were willing to take risk because the system was robust.”

Today suppliers – and their customers – are looking for a better idea.

Kristin Dziczek, an automotive policy adviser at the Federal Reserve Bank of Chicago, said supply chains require a significant level of trust between automakers and suppliers.

“You don’t want to give too much information to your customer. You have to trust that they’re going to do the right thing,” she said.

The concern is knowing what an automaker might be doing with troubling supplier information, Hearsch said.

“The history is not that good,” he said. “OEMs have a history of wanting to use this information to reduce their costs, and that often comes at the expense of a Tier 1 or Tier 2 supplier.”

There is an important balance between striking a supply chain and giving suppliers room to operate independently, said Bosch’s Thomas.

“We feel we have a responsibility to deliver our customers,” he said. “We don’t want to confuse the supply base, either. If every one of our customers knew that one supplier was a bottleneck, one could only imagine how many confusing messages the supplier would have.

“That’s not the bottlenecks we need to help our OEMs with,” he added. “But at the end of the day, it’s difficult to have multiple people directing our supply base at different directions.”

New mindsets are needed on suppliers, as well, ZF’s Streng said. Having open lines of communication as crises unfold will be critical to ensuring disruptions are minimized, she said.

“It was drilled into my head 30 years ago when I was an intern that bad news is not like fine wine. It doesn’t age with time,” she said. “We’ve had to make sure our suppliers understand that.”

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