The pandemic-related semiconductor shortage of 2020-2022 wasn’t the only crisis to hit automotive supply chains in recent years. Regional conflicts and problems with port infrastructure have had impacts too. Collectively, these have been expensive and damaging, which should reinforce the need to tackle automotive supply chain issues.
According to Forbes, shortages of semiconductors cost the industry some 5 million units of production. Houthi attacks in the Red Sea in January 2024 have disrupted component supplies (mainly to Europe). The Baltimore bridge collapse held up the export of some of the nearly 900,000 vehicles passing through the port each year.
Just-in-time and Just-in-Sequence manufacturing mean there’s little inventory to buffer against the resulting delays. Those aspects of automotive supply chain management aren’t likely to change in any substantial way, so what can cost-conscious Tier 1 suppliers do to protect themselves and their customers against future supply chain problems?
Focus on Cost-Saving Solutions
Despite their exposure to global risks, Tier 1 suppliers, and their suppliers for that matter, have limited leverage over automotive supply chains, especially without pushing up costs unacceptably. (Buffer inventory, for example, is expensive to hold, requires space, and carries a risk of obsolescence if order patterns change.) A more effective approach is to look for cost savings elsewhere.
For many automotive OEMs and their suppliers, quality-related problems are both a significant cost and a huge opportunity. Rather than spend time and money handling customer complaints, investigating root causes, and dealing with returns and warranty claims, focus on eliminating their causes.
Three categories of quality problems appearing on almost every automotive Pareto Chart are:
- Aesthetic flaws and damage
- Damage due to handling and transport
- Issues with labels
The good news is that many of these are preventable. Applied to finished surfaces, temporary paint protection films guard against scratches and marks that will trigger an immediate flurry of complaints. Similarly, clear films on glass and plastic eliminate any possibility of damage caused by surfaces rubbing together, either during shipping or on the assembly line. As for labels, investing in quality materials and printing and application processes will cut down on complaints about lack of legibility or that a label has come off in transit.
Additional Tips for Meeting OEM Price Points
As an tier 2 automotive supplier, we’ve developed a lot of experience with industry problems, and we’re knowledgeable about what to do. We can propose two solutions to supply chain problems:
- Select cost-conscious suppliers
- Follow best practices in supplier relationships
A ruthless focus on cost control isn’t a universal trait. Our blog, “4 Traits of a Budget-Friendly Automotive Film Supplier” has some important tips to start with.
Then, when evaluating suppliers, look for those who work harder to eliminate waste, especially that resulting from handling and transportation damage. It’s especially galling when the otherwise good product becomes unusable due to casual treatment and ineffective or missing protective features. Suppliers that take better care of their products usually have a more rigorous attitude to costs.
When it comes to working with current and potential customers, you might start with our Tips For Building a Relationship With Tier 1 Automotive Suppliers. Then, as the relationship evolves, 10 Tips for Meeting OEM Price Point Demands should be useful too.
Manage Costs in Automotive Supply Chains
There’s been no shortage of automotive supply chain issues in recent years, and the future probably won’t be too different either. With the industry built around Just-in-Time delivery, risk reduction actions are hard to implement, but what you can do is focus on managing costs.
For many participants in the automotive industry supply chain, reducing quality-related waste, like that resulting from damage in transit, is a big opportunity. Our blog, The Impact of Automotive Films on Your Bottom Line, explores this in more detail, and if you’d like to learn more about how we can help, please contact us.