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Increasing your value: An automotive global supply approach

In today's increasingly transparent global markets, it's no longer a black science for outsiders (including customers) to predict the financial and operational performance of other organizations. Today, thanks to some new technologies which take external and internal information feeds and run sophisticated algorithms, buying organizations are now able to continuously evaluate the stability and ongoing performance of their suppliers.

But this does not imply that suppliers need to sit idle. In the automotive environment, there are a number of things that suppliers can do to improve how customers perceive them. A short list of these factors should always begin by looking at lean. Is your company TS16949 certified—and more important, does your organization breathe and live its ideals? Do you follow standardized work procedures, incorporate 5S systems, maintain visual controls, have a best-in-industry plant layout, and strive to eliminate inventory (both WIP and finished)? Does your organization implement Kaizen events as part of its standard operating procedure? From a lean perspective, a buyer can look at these elements along with others (e.g. pull/kanban, cellular flows, Total Productive Maintenance, quick changeovers etc) and make an immediate snap judgment about your operational efficiency.

Next, focus on quality levels. Many smart buying organizations look for suppliers who can produce parts with an internal customer PPM of less than 50. In addition, to differentiate yourself to Tier 1's and OEMs, demonstrate value added capabilities such as engineering and the ability to deliver innovative solutions such as integrated systems.

The quality and track record of your organization's management team can also help convince buyers of your value. Has the team languished in middle management in the past or stagnated in family-based leadership roles? What are their operational and management qualifications? What will references say about your leadership? All of these are questions smart buyers ask when evaluating partners.

Global capabilities—and reach can also go a long way to convince buyers that you're getting the best pricing and selling into the most appropriate markets. But don't forget the location of your supplier facilities (smart buyers will balance global capabilities with the ability to evaluate how you can cost effectively deliver your parts in a lean environment). What is your company's on-time delivery record? Still, having—and being able to talk about—your Asia strategy” is also important to improving how buyers perceive you.

Last, buyers are increasingly evaluating suppliers on the concepts of lean sourcing. Do you proactively bid out materials and parts? Are you aggressively and proactively managing suppliers using tools, techniques, and standardized practices? Suppliers who perform these activities will not only have a greater chance of survival—they also have a better understanding of what it means to run superior operations. And they're more valuable to their customers as a result.

Curious about how you stack up? You should be.
Aptium Global's Lean Sourcing diagnostic survey will help you identify the largest opportunities to improve your business. For more information on the survey or to participate, please Michael DaMour via email at

Source: Gunpowder newsletter - Aptium Global - GAI

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Other articles from the same issue (July,  2005).

Workaholism in Asia
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The practice of low-cost country sourcing (LCCS) is accelerating
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Increasing your value: An automotive global supply approach
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A foreign perspective on China's ports and shipping
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With sales rising 30% a year, Indian part maker investments will top $1 billion
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Thailand: What are the legal requirements for establishing a company?
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Establish a business presence in Japan in one of three modes
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RMs can help thwart kidnappers
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Don't put all eggs in China basket: METI
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Protect company trade secrets from in-house thieves
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