A recent survey by the American Society of Quality (ASQ 2013 Manufacturing Outlook Survey) revealed that 75% of suppliers are confident in their ability to meet their customers’ needs, but one-third of respondents anticipate a shortage of parts or services in 2013 due to an issue with suppliers. An astounding 80% of manufacturers responding to the ASQ survey say they have been “burned” by suppliers in the past, something that adds an extra layer of trepidation to the supply chain managers at big OEMs.
More than 1250 manufacturing professionals from around the world responded to ASQ’s 2013 Manufacturing Outlook Survey, conducted online in November during World Quality Month. ASQ calls itself “the leading authority on quality in all fields, organizations and industries.”
Of the respondents who anticipate a problem with a supplier, 42.1% said they are working with partners on process improvements to mitigate volume capacity, while more than 26% re working with their suppliers’ competitors, presumably to dual-source critical components. Other manufacturers said they are “stockpiling parts” in advance of any supply problems, and even expanding facilities and implementing capabilities to make necessary parts themselves should their suppliers fail to meet demand.
Of the 80% of OEMs who have been “adversely affected” by production interruptions due to a supplier’s inability to meet demand, 25% went to their suppliers’ competition to get their parts requirements met. Sixty percent of the Survey’s respondents said their organizations have a “formal process” in place to address supply chain risk. That denotes a lot of uncertainty out there.
Obviously these concerns impact the OEM/supplier relationship and the potential for future business. After all, if a supplier can’t competently demonstrate an ability to supply molds or molded parts on time with the expected quality specifications, new business doesn’t appear to be likely. There’s nothing like handing your competitor’s new business on a silver platter!
The ASQ survey pretty much parallels other surveys, in particular the Original Equipment Suppliers Association (OESA) Survey that comes out six times a year. The OESA’s survey has made it pretty clear over the past year that the automotive OEMs are nervous about their suppliers, from the Tier 1s and further down.
A recent editorial in IHS SupplierBusiness noted that General Motors is making “some crucial decisions about its purchasing operations in the coming weeks and months” as it seeks a permanent replacement for Bob Socia, the global purchasing chief who was named president of GM China.
The SupplierBusiness editorial also pointed out that with several “important” vehicle launches coming in 2013 for GM, “the biggest concern among suppliers has to do with GM’s declining market share and the fear that financial pressure” on the big OEM could have the company reverting to its “pre-bankruptcy approach to dealing with suppliers—more adversarial and less transparent about production schedules.
“Is GM about to start beating up suppliers again?” asks the editorial’s writer.
Already some moldmakers that supply GM either directly or through Tier 1 molders say that two of the three U.S. auto makers (GM and Chrysler) are losing their kinder, gentler attitudes toward them. Strong-arming suppliers at a time of critical new-vehicle launches probably isn’t the best way to ensure quality and dependability.
The SupplierBusiness editorial noted that the “Detroit 3 companies have not performed particularly well following the recession” when it comes to vehicle launches, “which have been plagued with timing and quality issues.”
That’s most likely the reason that the editorial cited information from Automotive News that “GM is assembling a team of 100 engineers to work closely with suppliers as the new models come on stream. And it will be more than just first-tier suppliers that will see involvement of GM’s engineers. The impact will be felt as far down as Tier 3 and Tier 4.”
That means moldmakers that supply GM might have one of these engineers on their doorsteps soon.
With the focus on quality and the ability to keep up with demand during ramp-up, IHS notes that some lower tier suppliers might have difficulty keeping up. Obviously, from OESA surveys and the ASQ 2013 survey, most OEMs—not just those in the automotive industry segment—are feeling nervous about their suppliers’ ability to keep parts flowing and production going.