Tooling is another major pinch point, but it is not something that can quickly be replenished in the supply chain. The skilled laborers required to operate the machinery also are in short supply, especially since many apprenticeship programs have been offshored, and those programs can’t be reconstituted fast enough. Today’s automotive manufacturing environment is highly automated and the workers needed to operate the machinery and troubleshoot and fix breakdowns must have a high level of education and training.
It’s evident that production output must meet a great consumer demand. Several companies are initiating strategies to keep pace with such industry challenges. Ford Motor Co. recently rolled out its One Manufacturing production system to drive improved efficiencies, increase capacity utilization and push lowest total production cost.
AIAG’s partnership with ProMexico is yet another initiative to provide quality training for automotive suppliers within Mexico. Through the program, AIAG offered week-long training earlier this year in Mexican manufacturing hubs to improve both business processes and quality performance of lower-tier suppliers. The training also was designed to help these companies move forward on their informational and educational journey to be better prepared to produce quality products.
In addition to talent, other industry actions that the automotive supply chain must address in the short term include:
- Manufacturing Capacity—The industry needs to extract maximum value with existing capacity. Companies will have to get creative to determine ways of squeezing additional output from the factories and tooling currently in place.
- Logistics—Companies in the industry need to collaborate on logistics and create efficiency in throughput by sharing loads and bundling demand. Half-empty trucks carrying loads from only one facility or company to an end destination is inefficient. The industry should find ways of ensuring every truck to a single destination is full by making multiple pick-ups and stops along the way.
The end result
As the automotive industry continues to rebound, it is important to focus on the acceleration, redevelopment and reconstitution of lower-tier suppliers to provide them with the tools, the know-how and the know-who as cost effectively as possible. Small companies do two things: they employ most of the people; and they tend to drive innovation. Performance shortfalls will continue to occur but there is a tremendous realization that the collaborations are at an outfit premium—we either all win or we all lose. If the “big boys” don’t survive and the lower-tier suppliers don’t survive—we all have issues.
J. Scot Sharland is the executive director of AIAG, where he leads the not-for-profit organization’s collaborative industry initiatives to drive cost and complexity from the supply chain via global standards development and harmonized business practices. For more information, please visit www.AIAG.org.