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The Visible Value Blog

Why modern demand chains are a tightrope for tier 2 automotive suppliers

Posted by David Stain

November 1, 2016 at 10:17 AM



Nothing is ever simple. This is especially true in manufacturing environments, complex in even their most basic forms. In the automotive sector today, managing product assortment has become central to fulfilling contracts and running a successful business. The term ‘On Time In Full - OTIF’ is the nirvana.

So in automotive at tier 2 level, how do suppliers manage just-in-time delivery to customers when they have to customise each variant to each individual client? They might only be producing, for example, ten variants of a given component. But if they supply 1000 customers, albeit with only those components, the mix becomes enormous, as each customer might want something slightly different.

At the same time, these customers have their priorities in terms of the supply chain. They need just-in-time – the parts they require at lineside, delivered in batches at regular intervals, guaranteed. They don’t want to be going to the expense of storing stock. Understandably, they won’t stand for disruption to the manufacturing line, and will factor penalty clauses into supply agreements. And they need traceability.

That’s a lot of needs for a supplier to meet with a smile on their face. And this is bearing in mind that if customers are at one end of the tightrope, downstream suppliers are at the other. Caught in the middle, tier 2 providers are having to manage both components and stock.

This is the point where transparency through the demand chain becomes vital. How do current track and trace processes provide the clarity you – and those depending on you – need? How do you know where your finished goods are, and not just within your immediate working environment?

With total visibility of the demand chain, suppliers can ensure that deliveries are coming and production scheduled attuned and aligned downstream, while customers’ ordering requirements are being met upstream. In this scenario, they’re still in the middle, but they’re on plan. Auto ID and mobile technology, along with stage and gates through the manufacturing process, provide the visibility and the certainty they need.

These technologies give the ability to track and trace at item, carton, pallet and shelf level. Suppliers know exactly what’s available and where, whether in-transit or at point of manufacture. In turn, it’s clear whether suppliers are going to meet their contract, or whether they need to do something different at any given point.

The fact is, getting total visibility isn’t as complicated as it sounds – and it doesn’t need high-level IT tech to achieve it. Equipment is available that enables suppliers to give every physical component a digital signature. This provides the foundation for suppliers to see, track and manage their demand chains, and meet both customer needs and their own business objectives, we call this Enterprise Asset Intelligence.

To learn where technology can take you, download our track and trace guide

Topics: Manufacturing, EMEA, automotive, Enterprise Asset Intelligence, just-in-time, track and trace