Estimated reading time: 2 minutes, 17 seconds

Automotive Supply Chain Connections

Automotive-Supply-ChainIn designing Supply Chain Control Towers, we have been heavily concerned with visibility into outsourced and/or offshore finished products suppliers. But the Manufacturing function itself depends on it's own critical parts suppliers. We have to realize that success is more than just assuming Manufacturing's ERP/MRP will handle everything for us. Let's take a look at the automotive industry and what it takes to create an integrated manufacturing process.

What do we mean by integration? It starts with complete visibility both up and down the manufacturing path. This path must be solid as a rock, high speed and able to support CAD/CAM as well as EDI. 

Let's start with a lower-tier supplier who may only have one single part. Their part COULD be shipped directly to the OEM (Original Equipment vehicle Manufacturer), but more than likely it goes to a first-tier or second-tier supplier who produces sub-assemblies. This company's B2B vendor must be able to supply a very “nimble” service that can easily adapt to the growing demands of its automotive customers. 

At the same time, integration to the supplier's internal system is critical. This becomes even more important if this supplier is selling to more than one OEM. The best chance of success is when your vendor also controls the B2B Gateway (sometimes called a VAN2). Other vital questions include the availability of a migration service and, as always in the automotive world, cost. 

Next, let's look at large first-tier suppliers that produce finished systems for OEMs and need to be highly integrated with their own suppliers. This “finished systems first-tier concept” is relatively new to the automotive industry, and these companies must be innovative and produce high-quality products that deliver exceptional value to their OEM customers. This means reducing costs and eliminating inefficient legacy infrastructure. It is an excellent opportunity for an innovative B2B vendor to shine. Some of the B2B requirements are: (1) a strong B2B gateway (VAN2) able to support possibly several hundred suppliers; (2) ability to manage a mission-critical supplier migration; (3) establish VPN, or similar, connections as required; and (4) like everything in automotive: be “nimble”.

Finally, an OEM might be looking at several challenges: (1) migrate from a legacy, unmaintainable EDI system to a modern, scalable B2B solution that could securely deliver EDI over the Internet via FTP, provide a platform for future growth and provide a web based CAD/CAM data exchange platform to maybe 1000+ suppliers; (2) exactly replicate the data processing rules of the existing system; (3) Capability to migrate EDI data exchange with suppliers from costly ISDN and X.25 networks to the Internet, immediately realizing significant cost savings, as well as decreased communication times; and (4) provide a solution that the OEM can maintain in-house.
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