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OEM Sourcing Profile reports

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This first edition report considers the key drivers within the industry along with the changing nature of supplier/OEM relationships and the current challenges and opportunities present within the market. It includes a suppliers relationship survey of all the major global truck OEM's and also profiles each in detail.


Background to this research

It is clear by the long term growth of the commercial vehicle industry that, despite current setbacks, the world relies increasingly on road transport as the life blood of economic growth. The extraordinary combination of cost efficiency and flexibility remains a winning combination, and transport by truck cannot be replaced by other modes of transport. Trucks deliver around 80% of all freight worldwide and, in Europe alone 70Kg of goods per day per person are delivered, and this is forecast to increase by around 63% before the year 2030.

Today, the task of moving goods between two points is a part of an overall supply chain process which has become sophisticated and efficient over the last thirty years; what began as relatively small operations with comparatively local and simplistic sourcing has grown to become a vast array of global and regional suppliers serving a smaller number of regional and increasingly global OEMs that are every bit as demanding as any sophisticated industry, and often more demanding than the car manufacturing business.

For suppliers the industry is characterised by relatively long term relationships in which the more dynamic OEMs demand the latest technology improvements, as well as looking to suppliers to take a share of the difficulties in harsh market conditions. The industry is notoriously cyclic, particularly in North America, for many reasons, but generally it matches or leads economic activity in demand terms. OEMs are looking for a range or attributes in suppliers, but regardless of their individual methodology they are generally seeking the benefits of economies of scale at a component or system level including both cost – or price – advantage and technology leadership.

These reports consider purchasing & product strategies, forward model programs, manufacturing plans, sales, production and financial outlooks along with research specific to each OEM. It provides insights from other suppliers and statements from the vehicle manufacturers themselves, as well an independent perspective on the supplier base’s experience of those policies in reality.

Each report includes:

- Purchasing Strategy
- Production Strategy
- Results from our surveys of supplier experience of working with the OEM
- Plant and Model Mix
- Unique Interviews

This product includes the Who Supplies Whom Database, which identifies the supply base of each OEM.

After having provided an overview on the current standing of the OEM with regards to various aspects including sales, financial performance, product line-up and the macroeconomic environment, the report analyses the production strategy of the car maker going through the operations, revealing where volumes are expected to occur at a geographical and program level and deciphering the car maker's platform strategy. The core topic is the analysis of the car maker's purchasing strategy with a focus on the most critical areas of the interface with its supply base involving supplier selection, price policy, quality approach, R&D and modules and systems.

Based on original research and SupplierBusiness' well–established surveys of working experiences with OEMs over the last few years, the report also provides the opportunity to grasp how current suppliers rate OEMs about a complete range of aspects that really matter to the supply base.

The report includes the SWOT analysis of supplying the OEM along with IHS Global Insight's much respected Forward Model Programs and a list of the major suppliers by component sector.

Thanks to its added value and unique insight, the report is a must for those suppliers looking to re–optimise their customer portfolio in light of the major changes currently underway in the global automotive sector.

Background to this research

A compelling product line-up, a renewed focus on its core brand and the misfortunes of its main competitors have surely helped Ford, the only carmaker not to request US government financial support, to weather the gloomy business environment which saw the bankruptcies of its cross-town rivals.

Ford’s turnaround plan, based on an aggressive restructuring of its production network, employment levels and labour agreements, is well under way, although the reduction of its massive debt burden still represents one of the car maker’s biggest challenges.

The carmaker’s purchasing strategy is certainly influenced by the implementation of “One Ford” as a generalised plan to stimulate synergy savings across the organisation and on the product side with a portfolio of truly global cars, which represent very attractive programs for the supply base. The re-organisation of its internal production network, the disposal of the remaining Automotive Components Holdings plants and the difficult management of its former supplier arm, Visteon, have additional implications on the car maker’s purchasing strategy.

In addition to the above, this report analyses how the supply base consolidation plan is being carried out by the car maker, the latest updates on Ford’s Aligned Business Framework and the sourcing strategy at a regional level for major global sourcing areas. The approach to electrification, R&D focus, technology biases and quality management are also examined through the supplier’s lens. Throughout the report we describe an array of business practices, collected directly from Ford’s current suppliers, which help you understand what to expect when dealing with the car maker on a global basis. Thanks to our authentic internal research “Supplying Ford” represents an excellent support strategic decision-making for the medium-to-long-term and a barometer of the current state of relations between Ford and its large supply base.

Specifically they offer insights into the purchasing strategy of each carmaker, based on interviews and SupplierBusiness’ well-established surveys of peer-experience of working with OEMs over the last few years.

The “OEM Sourcing Profiles” provide invaluable information for suppliers looking to re-optimize their customer portfolio in the light of the major changes currently underway in the global automotive sector.

This report includes:

- Current Overview
- Purchasing Strategy
- Analysis of GM's worldwide operations region by region
- Overall Financial Condition
- GM's turnaround plan
- Global Manufacturing Plans
- Product Strategy
- The Greening of GM
- Forward Model Programs

Based on original research and SupplierBusiness well-established surveys of peer-experience of working with OEMs over the last few years, the report offers insight into the corporate policies that have shaped PSA and their continuing strategies for the successful co-existence of Citroën and Peugeot. In addition we describe how suppliers currently rate PSA over a number of key areas for the business.

Our OEM Sourcing Profiles provide a unique insight for suppliers looking to re-optimize their customer portfolio in the light of the major changes underway in the global automotive sector.

The PSA report includes:

- Financial Analysis
- Product Strategy
- Manufacturing Strategy
- PSA Purchasing
- PSA in the eyes of the Suppliers
- R&D Spending

Based on original research and SupplierBusiness’ well-established surveys of peer-experience of working with OEMs over the last few years, the report offers insight into the corporate policies that have shaped Renault and its ongoing alliance with Nissan.

The SupplierBusiness “OEM Sourcing Profiles” provide a unique insight for suppliers looking to re-optimize their customer portfolio in the light of the major changes currently underway in the global automotive sector.

The Renault report includes:

- Manufacturing Strategy
- Purchasing Strategy
- Forward Model Program
- Executive Interview
- Strength and Weaknesses Analysis
- Sales and Production strategy

Based on original research and SupplierBusiness' well-established surveys of peer-experience of working with OEMs over the last few years, the report offers insight into the corporate policies that have shaped Nissan and attempts to adjust to the current economic climate.

The SupplierBusiness Supplying OEM Sourcing Profiles provide a unique insight for suppliers looking to re-optimize their customer portfolio in the light of the major changes currently underway in the global automotive sector.

The Nissan report includes:

- Corporate Strategy
- Financial Analysis
- Technology
- Global Manufacturing Structure
- Purchasing Strategy
- Executive Interview

Download "Table of Contents", please click here.

The last few months have underlined the importance of the OEM customer base of each supplier for the medium and long-term strategic success. The SupplierBusiness “Supplying OEM sourcing Profiles” provide guidance and insight on the strategic position of the leading global automotive OEMs.

Based on original research and SupplierBusiness' well-established surveys of peer-experience of working with OEMs over the last few years, the report offers insight into the corporate policies that have shaped Toyota.

The SupplierBusiness  “OEM Sourcing Profiles” provide a unique insight for suppliers looking to re-optimize their customer portfolio in the light of the major changes currently underway in the global automotive sector.

The Toyota report includes:
· Manufacturing Strategy
· Purchasing Strategy
· Forward Model Program
· Executive Interview  

Based on original research and SupplierBusiness’ well-established surveys of peer-experience of working with OEMs over the last few years, this report offers insight into the corporate policies that have shaped Honda and how it intends to cope with the current financial situation.

This report provides a unique insight for suppliers looking to re-optimize their customer portfolio in the light of the major changes currently underway in the global automotive sector.

This report includes:

1. Corporate Profile

1.1 Company Description
1.2 Financial Analysis
1.3 Countermeasures
1.4 Opportunities
1.5 April-September 2008 Results
1.6 Third quarter Downturn
1.7 Technology Strategy
1.8 Environment Technology
1.9 Safety Technology
1.10 Manufacturing Strategy
1.11 Recent Investments
1.12 Honda Purchasing Strategy & Relationship with Suppliers

2. Interview with Masaya Yamashita

3. Asia Forward Model Program

4. North America Forward Model Program

- OEM's current standing
- Production strategy (Locations, Platforms,etc)
- Procurement spending and organisation
- Levels of vertical integration
- Biases in supplier selection
- Business practices regarding pricing and quality
- R&D Spending and focusings
- Modules and systems outsourcing policy
- Forward Model Programs
- SWOT Analysis of Supplying the OEM

After having provided an overview on the current standing of the OEM with regards to various aspects including sales, financial performance, product line-up and the macroeconomic environment, the report analyses the production strategy of the car maker going through the operations, revealing where volumes are expected to occur at a geographical and program level and deciphering the car maker's platform strategy. The core topic is the analysis of the car maker's purchasing strategy with a focus on the most critical areas of the interface with its supply base involving supplier selection, price policy, quality approach, R&D and modules and systems.

Based on original research and SupplierBusiness' well–established surveys of working experiences with OEMs over the last few years, the report also provides the opportunity to grasp how current suppliers rate OEMs about a complete range of aspects that really matter to the supply base.

The report includes the SWOT analysis of supplying the OEM along with IHS Global Insight's much respected Forward Model Programs and a list of the major suppliers by component sector.

Thanks to its added value and unique insight, the report is a must for those suppliers looking to re–optimise their customer portfolio in light of the major changes currently underway in the global automotive sector.

Research background

Europe's first car maker VW is poised to put an end to one of the most famous sagas in the history of the automotive industry. The merger with Zuffenhausen-headquartered Porsche should be completed before 2011, though the process will not be without pain for the Wolfsburg carmaker, putting its currently safe financial position under strain.

Nonetheless Volkswagen's high appeal among customers and suppliers is untarnished. Its products, spanning from the more mainstream brands Seat and Skoda, to premium brands such as Audi, benefit from strong brand positioning in their respective segments with an overall balanced product line-up. VW is the market leader in Europe as well as in China and Brazil, two of the most promising growth countries. Although not all its promises with regards to volumes of deliveries to customers might prove feasible, the car maker's potential volumes remain one of the main points of attraction for the supplier base, which is eager to win contracts with the German OEM as this allows to have access to the group's volumes.

In fact VW has been pursuing higher-than-peers standardisation levels thanks to a sensible platform strategy – its piece de resistance – and have materialised in substantial synergies, particularly in production costs as well as purchasing costs. The modular platform strategy applied at a group level will further boost synergies across the different brands and segments, with two architectures and 24 modules per architecture covering most of the carmaker's offering.

While the last blind spots in its production network, namely North America, are being filled with the new plant in Chattanooga, Tennessee, the internal supplier network still plays an important role in the car maker's production strategy, which has a higher degree of vertical integration compared to competitors, even if this approach will continue to be circumscribed to certain component areas. Asia represents one of the main areas to which the car maker is willing to allocate a growing share of its purchasing expenditure even for its European operations. A country by country procurement strategy is being applied, which is analysed in this report for the car maker's major sourcing countries.

BMW's biggest challenge lies in translating the growing sales it achieved over the last decade in tangible profits for its shareholders. An all-round strategy has been set by the management board to achieve this, which hinges on productivity improvements and heavily on cost-cutting steps. The latter measures are focused on purchasing, which is expected to take the lion's share of the cost-reduction, and on R&D. And these two areas are the ones which have the most potential to cause significant risks for the car maker.

On the procurement side BMW could keep losing favour with suppliers because of new business practices accompanying the increased price pressure being exerted on suppliers. On the other hand, less in-house R&D could entail BMW losing one of its core advantages in the premium segment. However, both sectors will be affected by the management's decision to set up appropriate targeted alliances with other OEMs, even Stuttgart archrival Daimler, to share the burden of capital intensive activities such as R&D and to spot synergy savings from joint procurement.

The operation will entail a redefinition of the role of Porsche within the VW galaxy, which already contains nine brands.

The ties between the two car makers are long-standing. In fact, VW already represents a key supplier and production partner of Porsche, with which it already shares two platforms for the Cayenne and the brand new Panamera. The creation of a new merged group will entail no major changes on the über-outsourcing strategy which characterises Porsche's approach to sourcing, at least in the short run, and changes at management level might imply an overhaul of the Purchasing division.

In the longer term, more platform sharing and content transfer from VW is seen highly likely with the inevitable consequences on supplier selection. Contract manufacturing could also be reduced in the future and more operations could be brought back in house. The low level of vertical integration requires a Japanese-style management of relations and involvement with suppliers. This might be at risk when more purchasing activities are carried out together by the two car makers. Therefore a shift towards more adversarial relations is likely to occur, mainly because of an increased pressure on suppliers for price reductions.

This OEM Sourcing Profile provides a unique insight for suppliers looking to re-optimize their customer portfolio in the light of the major changes underway in the global automotive sector.

The Hyundai report includes:

- Analysis of Hyundai's current situation
- Production strategy
- Purchasing Strategy
- R&D Spending
- Forward Model Programs
- SWOT Analysis of Supplying Hyundai

- OEM's current standing
- Production strategy (Locations, Platforms,etc)
- Procurement spending and organisation
- Levels of vertical integration
- Biases in supplier selection
- Business practices regarding pricing and quality
- R&D Spending and focusings
- Modules and systems outsourcing policy
- Forward Model Programs
- SWOT Analysis of Supplying the OEM

After having provided an overview on the current standing of the OEM with regards to various aspects including sales, financial performance, product line-up and the macroeconomic environment, the report analyses the production strategy of the car maker going through the operations, revealing where volumes are expected to occur at a geographical and program level and deciphering the car maker's platform strategy. The core topic is the analysis of the car maker's purchasing strategy with a focus on the most critical areas of the interface with its supply base involving supplier selection, price policy, quality approach, R&D and modules and systems.

Based on original research and SupplierBusiness' well–established surveys of working experiences with OEMs over the last few years, the report also provides the opportunity to grasp how current suppliers rate OEMs about a complete range of aspects that really matter to the supply base.

The report includes the SWOT analysis of supplying the OEM along with IHS Global Insight's much respected Forward Model Programs and a list of the major suppliers by component sector.

Thanks to its added value and unique insight, the report is a must for those suppliers looking to re–optimise their customer portfolio in light of the major changes currently underway in the global automotive sector.

Research background
In spite of a massive slowdown in sales, particularly marked in the premium segments, and there being little sign of an economic recovery, Audi has been able to record sales decreases similar to those considered ‘volume’ players and is generally faring better than its German competitors BMW and Mercedes. After having passed the milestone of one million sales in 2008, the German OEM has a challenging target of 1.5m sales by 2015. But however likely the automaker is to achieve such an ambitious target, there is room for volume growth at Audi and its suppliers are set to benefit from that.

Nonetheless, suppliers have raised doubts about Audi’s commitment to quality, which has affected the way the automaker is perceived by customers, as well as in research and development departments. Right now, Audi can brag some of the most successful partnerships with suppliers which lead to the introduction of breakthrough technologies.

As the new Modular Platform Strategy is being introduced at VW group level, major changes are taking place on supplier selection as well as other aspects of the automaker's sourcing strategies. The "Supplying Audi" report identifies these, as well as where opportunities lie for suppliers. The procurement policies and business practices of the car maker are examined in detail, focusing on areas such as pricing, quality, R&D and supplier selection.

Download "Table of Contents", please click here.

The last few months have underlined the importance of the OEM customer base of each supplier for medium- and long-term strategic success. This report, as a part of the Supplying OEMs series, provides guidance and insight into the OEM's strategic position on the purchasing side.

- OEM's current standing
- Production strategy (Locations, Platforms,etc)
- Procurement spending and organisation
- Levels of vertical integration
- Biases in supplier selection
- Business practices regarding pricing and quality
- R&D Spending and focusings
- Modules and systems outsourcing policy
- Forward Model Programs
- SWOT Analysis of Supplying the OEM

After having provided an overview on the current standing of the OEM with regards to various aspects including sales, financial performance, product line-up and the macroeconomic environment, the report analyses the production strategy of the car maker going through the operations, revealing where volumes are expected to occur at a geographical and program level and deciphering the car maker's platform strategy. The core topic is the analysis of the car maker's purchasing strategy with a focus on the most critical areas of the interface with its supply base involving supplier selection, price policy, quality approach, R&D and modules and systems.

Based on original research and SupplierBusiness' well–established surveys of working experiences with OEMs over the last few years, the report also provides the opportunity to grasp how current suppliers rate OEMs about a complete range of aspects that really matter to the supply base.

The report includes the SWOT analysis of supplying the OEM along with IHS Global Insight's much respected Forward Model Programs and a list of the major suppliers by component sector.

Thanks to its added value and unique insight, the report is a must for those suppliers looking to re–optimise their customer portfolio in light of the major changes currently underway in the global automotive sector.

Research background
After having completed one of the most challenging turnarounds in automotive history, Fiat now is benefitting from scrapping schemes thanks to the strong bias of its product portfolio towards lower segments of the market. Fiat's supremo, Sergio Marchionne has been hunting for bargains and was able to finalise an alliance with bankrupt Chrysler. The Italian automaker now has to address several critical issues, including the turnaround of its North American partner and the rationalisation of production facilities in Italy. In addition it must refresh its product portfolio, despite development delays as a result of the economic downturn.

On the purchasing side, major changes have been evident to Fiat's strategy since it dissolved its joint-venture with GM. The "Global Sourcing" approach, one of the central planks of the car maker's approach to procurement in the GM-Fiat era, has been effectively replaced by global partnerships with those suppliers which are able to supply Fiat plants worldwide and are willing to expand their footprint to best-cost countries when needed. Fiat’s relations with suppliers have improved significantly and suppliers acknowledge Fiat is a much more attractive car maker compared to three years ago. However some old bad habits remain – in areas such as payment terms and quality, for example.

As a special feature this report includes a special section focused on the recent alliance with Chrysler and on the potential implications this could have on the traditional supply base of the Italian car maker as well as on the North American supply base.