Consolidation, e-business growth anticipated by auto suppliers

Manufacturing News, Source : The Manufacturer US
Published : 04 Sep 2002 11:48

Mid-tier auto suppliers expect further consolidation by their customers, according to a study by the Center for Automotive Research (CAR).

Eight-one percent of respondents anticipate that their customers will reduce their supply base within the next two years. Respondents also said they plan to reduce the number of their suppliers and will use the capability to engage in e-business as a key factor in supplier selection.

The study of 160 suppliers found that most respondents expect a small increase in IT spending over the next two to three years. “It’s clear that, while e-business adoption has proceeded more slowly in the lower tiers of the automotive supply chain than at the OEM and tier 1 levels, there are still applications that are perceived as having real business value in the lower tiers, such as demand planning and procurement,” said Jonny Morell, senior research analyst at CAR.

When asked which e-business tools would have the greatest impact on their organization, inventory reduction was ranked highest by 70% of respondents. While 18.9% of suppliers characterize e-procurement applications as required for success today, 39.3% expect it to be required for success in two to three years. Similarly, 27.1% of respondents say e-business enabled demand planning and management is required for success in today’s automotive supply chain, but the number almost doubles, to 47%, for those who expect it to be a requirement for success in the next two to three years.

Engineering and design applications significantly lag demand planning and procurement, according to the survey results. Although a significant number of customers have managed to implement CAD interoperability or mandated single-platform CAD usage, very few of the suppliers have managed to get to that point, with only minor improvement expected over the next two to three years.

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