BIRMINGHAM, Ala. - The automaker supply chain has gone through 15 years of change. But finding the best method to get parts designed, built and delivered quickly and cheaply remains a challenge.
The auto industry's supply-chain model is facing continued pressure from foreign automakers with an expanding supplier base to feed their growing operations throughout the South, said industry experts at the Automotive News Manufacturing Conference here.
"There is still no silver bullet to fix the supply chain," said Robert Parker, vice president of consulting firm AMR Research of Boston.
Parts makers to the Big 3 have clamored for a new supply-chain model that will allow them to emerge with a stronger financial position, a higher return on capital and more interest from investors.
Their discontent stems from General Motors, Ford Motor Co. and the Chrysler group, which face higher costs than their transplant competitors. That has put intense pressure on suppliers for price cuts so U.S. automakers can offset the high cost of incentives on new vehicles.
Speakers who work for New American Manufacturers - such as Charles Ernst, vice president of operations for Honda Manufacturing of Alabama LLC, and Gene Tabor, general manager of purchasing planning, materials, facilities and systems for Toyota Motor Manufacturing North America Inc. - told of the need to establish trust with parts makers as a critical step in continuous improvement.
Consultant Parker called for building trust between automaker and supplier for better collaboration. "The path to higher productivity is trust," he said.
Toyota's Tabor said suppliers are crucial for the ideas and technology he needs to stay ahead of competitors.
Henry Jackson, president of Jackson Plastics Inc. and a supplier to Toyota, said higher minority diversity in the industry can boost the number of "consumers who buy our goods, and that will help everybody rise to the top."
AMR's Parker said the good news for the industry is that its parts-ordering ability puts it at the top of all industries. The bad news, he said, is that the expenses the auto industry incurs for that efficiency - inventory, warehousing and distribution center operations - rank it last among industries.
Logistics is an issue, said Honda's Ernst. Ten of Honda's suppliers, which had served the automaker's Odyssey minivan plant in Alliston, Ontario, relocated or built satellite plants near the new Honda assembly plant in Lincoln, Ala., which also builds the Odyssey.
Ernst said improved truck scheduling and packaging slashed logistical costs: "You would be surprised at the amount of air you are shipping. We were."
Ron Kruse, president of client services for Caterpillar Logistics Services Inc., a unit of the heavy equipment company, said that as successful companies globalize they will demand more from the logistics companies that connect their supply chains. Those customers, he said, want cost reductions, greater responsiveness and smarter inventory control.