Sourcing/Procurement Trends
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Technology Changes in the Automotive Industry Raising Risk Levels for Corporate Procurement
As auto sector looks to new technologies to fuel future growth, the 'Periodic Table on Wheels' poses particular challenges for traditional purchasing strategies, BrainNet argues
Bonn — February 5, 2010 — Far-reaching technology change in the automotive industry presents a hefty challenge to procurement departments across the sector, and supply management executives must consider taking urgent steps to prepare their supply chains for the new realities in the industry, according to a recent analysis from European consultancy BrainNet Supply Management Group AG.
Many of the materials needed for new technologies such as hybrid drives are scarce, subject to price volatility or sourced from politically unstable regions, the consultancy notes. The availability of these resources is becoming one of the major risks to progress. A recent analysis by BrainNet revealed that corporate purchasing departments in the automotive industry are not adequately prepared for these challenges.
"Economic growth is very resource-intensive," said Dr. Heiko von der Gracht, director of the Center for Futures Studies and Knowledge Management, supported by BrainNet, at the Supply Chain Management Institute (SMI) of the European Business School (EBS). "In years to come, access to raw materials could even far surpass labor as a factor in the choice of location."
Mining of raw materials has increased enormously in recent years, while extraction costs have risen and reserves diminished. And it's not only growth that is making the raw materials issue a key risk criterion for business: technology change is also a resource-intensive process. As a result, the dependence on scarce and expensive resources is becoming a fundamental risk, particularly for the automotive industry.
A Periodic Table on Wheels
The automotive industry is on the brink of a technology revolution, with the development of alternative propulsion systems, the weight reduction required to cut CO2 emissions, and the fast-growing proportion of electronic components providing the main challenges.
"Technology change also represents a paradigm shift for purchasing in the automotive industry," said Sven Marlinghaus, a partner and managing director at BrainNet. "Plastics and rare metals will make up a rapidly increasing share of the total value-added. Manufacturers and system suppliers are not optimally prepared for this development."
The car of the future demands a formidable range of materials. The hybrid engine, hybrid battery, electronic equipment and spray additives require lanthanoids lanthanum, praseodymium, neodymium, cerium, dysprosium and terbium, while the catalytic converter requires zirconium.
Other components demand copper, cobalt, tin, and lithium and also the very rare niobium as an alloy addition. Rare earths such as scandium and yttrium are of enormous importance in future technologies, for example, in energy technology. The switch from steel to duroplastics and thermoplastics in order to reduce weight further adds to the material diversity.
Many of the materials needed for new technologies such as hybrid drives are scarce, subject to price volatility or sourced from politically unstable regions, the consultancy notes. The availability of these resources is becoming one of the major risks to progress. A recent analysis by BrainNet revealed that corporate purchasing departments in the automotive industry are not adequately prepared for these challenges.
"Economic growth is very resource-intensive," said Dr. Heiko von der Gracht, director of the Center for Futures Studies and Knowledge Management, supported by BrainNet, at the Supply Chain Management Institute (SMI) of the European Business School (EBS). "In years to come, access to raw materials could even far surpass labor as a factor in the choice of location."
Mining of raw materials has increased enormously in recent years, while extraction costs have risen and reserves diminished. And it's not only growth that is making the raw materials issue a key risk criterion for business: technology change is also a resource-intensive process. As a result, the dependence on scarce and expensive resources is becoming a fundamental risk, particularly for the automotive industry.
A Periodic Table on Wheels
The automotive industry is on the brink of a technology revolution, with the development of alternative propulsion systems, the weight reduction required to cut CO2 emissions, and the fast-growing proportion of electronic components providing the main challenges.
"Technology change also represents a paradigm shift for purchasing in the automotive industry," said Sven Marlinghaus, a partner and managing director at BrainNet. "Plastics and rare metals will make up a rapidly increasing share of the total value-added. Manufacturers and system suppliers are not optimally prepared for this development."
The car of the future demands a formidable range of materials. The hybrid engine, hybrid battery, electronic equipment and spray additives require lanthanoids lanthanum, praseodymium, neodymium, cerium, dysprosium and terbium, while the catalytic converter requires zirconium.
Other components demand copper, cobalt, tin, and lithium and also the very rare niobium as an alloy addition. Rare earths such as scandium and yttrium are of enormous importance in future technologies, for example, in energy technology. The switch from steel to duroplastics and thermoplastics in order to reduce weight further adds to the material diversity.
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