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In the last crisis of the automotive
industry, in the year 2009, many
well-known suppliers to the auto-
motive industry painfully recog-
nized that their set ups were not
sufficiently robust and flexible to
survive the critical loss in sales.
Insolvencies and take overs were
the consequences as a result. Due
to even further weakened equity
capital companies that survived
are nowadays even more dependent
on the stake holders than in 2009.
This does not only apply to tier
1 suppliers but also to those posi-
tioned further away in the supply
chain.
Therefore I would like to briefly
touch upon some essential chal-
lenges. Suppliers typically get from
the OEMs only frame contracts with-
out defined purchase commitments.
To strengthen their own planning
reliability good knowledge of the
product lines of the OEMs, in which
the product is used, as well as the
relevant production quantities, is
of essence. This, combined with
the monitoring of the sales figures
of the OEMs as well as the relevant
competitors allows an earlier and
more reliable judgment about the
sales expectations of their own
products. The results can then be
mirrored onto the prognosis figures
of the OEMs.
The scale of sales fluctuations can
reach such high values that they
endanger even the existence of a
company. In 2009 sales collapses
reaching more than 50% were not
uncommon and struck many com-
panies not sufficiently geared up.
Anticipating planning with stress
scenarios would bring possible ac-
tion alternatives earlier to the man-
agement focus. Timely discussions
with the stake holders like custom-
ers, suppliers, employees, share-
holders and banks, may increase
the room for manoeuvre. Just now,
with the tense equity situation of
many companies, particularly after
the year of crises 2009, it requires
special anticipatory measures to be
taken. The room for capacity ad-
justment and investment is mostly
very tight and does not allow for
any mistakes.
For the lasting success of their
products, it is essential to possess
cost as well as quality leadership.
Their own production processes
have to offer the optimum possible
productivity. As a consequence a
company can hardly afford to post-
pone any productivity improving
investment. Furthermore quality
assurance has to be effective and
ever present within the whole pro-
cess of adding value.
The OEMs are global players with
worldwide sourcing. They expect
from their suppliers global and re-
liable readiness for delivery, which
as a consequence sets the highest
requirements for the logistics and
service of suppliers. Commonly
there are local branches close to the
production facilities of the OEMs.
This sets for the mostly medium
sized suppliers the highest require-
ments regarding the complexity of
the processes. To name only some
challenges: sourcing of adequate
personnel, controlling, quality as-
surance, but also the protection of
their own know-how have to be ad-
equately considered to master the
adventure of globalization.
The sales crisis in 2009 has clear-
ly demonstrated, how significant
the challenges for an automotive
supplier can be and stressed many
companies, endangering their ex-
istence and some even further.
The automotive industry today as a
result of the unresolved debt crisis
in many countries is again faced
with difficult times, since it can
be assumed that regional markets
will face reduced sales of cars. The
equity facilities of the supplying
industry have to a great extent not
yet recovered from the last crisis,
therefore it is even more important
to set the right course right now.
I recommend that companies ana-
lyse if they are sufficiently well po-
sitioned in this context. Vosco, the
experts in your industrial sector,
will be pleased to give you support.
Dr. Gunther Voswinckel
Automotive suppliers and
their challenges
21
ITAtube Journal No1/May 2013
Markets
Some comments by Dr Gunther Voswinckel of Vosco
Dr. Gunther Voswinckel, Vosco
VOSCO UG Management
Consultants
Scharnhorststrasse 45
D-41063 Moenchengladbach
Germany
Tel: +49 2161 309255
Fax: +49 2269 125201
Email: DrGuntherVoswinckel@
vosco.net
Web:www.vosco.net