Automotive industry findings: Global Supply Chain Survey 2013

Supply chain performance

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

Organisational set-up

Leading practices

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)