Automotive industry findings: Global Supply Chain Survey 2013
Supply chain performance
Supply chain performance:
The leading Automotive companies achieve the lowest EBIT margins compared with other industries (10.4%). But they have the highest number of inventory turns (18.2) and a nearly best-in-class delivery performance (97.3%). The performance gap between the Leaders and Laggards is quite small, signalling that the industry has already adopted mature supply chain practices.
Organisational set-up:
Automotive companies typically manage their planning, manufacturing, operational procurement and delivery functions regionally, and their new product development and strategic procurement functions globally. They outsource less than 10% of their planning, sourcing and enabling activities; a relatively low, 15% of their manufacturing and assembly activities; and 10%-35% of their delivery activities.
The key attributes of Automotive companies
Leading practices
Leading practices:
The most important value drivers for Automotive companies are minimised costs (90%), maximum delivery performance (87%), maximum volume flexibility and responsiveness (83%) and complexity management (67%). The Leaders focus on continuous improvements in production efficiency and inventory management — together with best-cost country sourcing, to drive down costs and on collaborations with key customers and suppliers.
Top differentiating practices
- Decreased manufacturing costs through reduction of waste
- Inventory reduction
- Best-cost country sourcing
- Collaborative planning with key suppliers
- Collaboration with key customers on planning and execution
- Order fulfilment cycle-time reduction improve manufacturing time
- Flexible shift models/payment structure
- Internal capacity flexibility 80%-120%
- End-to-end supply chain planning and visibility
- Making to order
- Automation of processes in order to cope with complexity
- Assortment/inventory policies distinguished by product family and storing location
- Multiplication of sources and sole-sourcing avoidance
- Visibility and regular monitoring of main suppliers’ operational indicators
- Regular review of suppliers’ financial risk and mitigation through risk-sharing partnerships
- Agreement of supply chain partners to adhere to highest ethical standards
- Internal carbon footprint optimisation and improvement
- Return of supply chain to manage recycling
- Localisation of procurement organisation in tax-efficient countries
- Intellectual property and patent royalty optimisation
- Import/export optimisation (e.g., bonded warehouse)