Throughout most of the 20th century, competitive advantage was defined by the production and labour capabilities of individual original equipment manufacturers (OEMs). In the mid 90s, OEMs sought to reduce those costs by distributing those capabilities across a global supply chain. Competitive advantage is now given by the combined capabilities of the suppliers that make up the OEMs’ supply chain. Therefore, the only way to improve competitive advantage is to improve those combined capabilities through better integration – that is information exchange across the supply chain.

In the same way if the industry want to benefit from the disruptive changes bound to take place in the near future it must be prepared to adapt both its supply chain functioning mechanisms and improve the relations between all the economic actors involved in the different stages of the chain of production.

New types of future mobility will also reflect on different OEMs-suppliers relations. The future technological changes will be carried for the largest part by the suppliers. Currently around 70% of the added value of a vehicle is produced within the value-chain and this situation is not going to change in the future although, because of the crisis, OEMs are developing in-sourcing-strategies.

According to a McKinsey’s analysis[1] for consumer goods makers, high-tech players and other manufacturers, between 40 and 60 percent of a company’s carbon footprint resides upstream in its supply chain—from raw materials, transport, and packaging to the energy consumed in manufacturing processes. For retailers, the figure can be 80 percent. Therefore, any significant decarbonising efforts will require collaboration with supply chain partner.

In the same way employment in the value-chain is the major part of employment in the automotive industry. Thus, the responsibility of OEMs with regard to employment and working conditions in the whole sector needs to be considered, too.

Any company that has undertaken the mission of implementing an integrated supply chain management strategy knows that one of the greatest challenges it faces is the significant change in internal culture that is required to make the supply chain redesign successful. It is not an easy mission, to re-condition people to accept change, especially in organisations where a certain mindset and industrial relations has prevailed for many years. It is even more difficult to broaden this change to a whole sector.

 

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[1] http://www.mckinseyquarterly.com/Energy_Resources_Materials/Environment/Climate_change_and_supply-chain_management_2175

Against this background, CLEPA and EMF have decided to organise a roundtable discussion/debate that will take place in Brussels in June 2010 in order to examine different dimensions linked to change and integration of the supply chain. Around 100 authoritative representatives from the industry (both car manufacturers and suppliers), the trade unions, national and regional authorities, European institutions and environmental groups will meet to discuss the theme “Integration of the Supply Chain” with a special focus on the following proposed themes:

·           Code of good conduct (following example France and VDA)

“The European automotive supplier industry can develop the latest technology. However the capacity of many suppliers to innovate in the medium term is threatened because of the pressure exercised by the OEMs as well as the somewhat oppressive financial situation for SMEs. The EMF therefore calls upon manufacturers at European level to develop a code for fair partnership relations that would enhance potential cooperation and calls for reinforced measures to support the R&D and innovation effort made by the supplying industry.[1]”

Partners will examine the existing best practices in terms of codes of conduct, their actual implementation at national level and their possible exportability on the European level.

·           Automotive supply chain financial recovery: Now more than ever, it is important for auto manufacturer executives assess their supply base risk and construct a viable plan that includes formalizing the financing and supply chain risk tools necessary to secure their supply chain.

·           Access to capital: Related to the need to address liquidity in the automotive supply chain is the manner in which such funding can be secured.

·           The impact of electric vehicles: Still important is the need to deliver innovative and green products that customers are demanding in today's hyper-competitive and volatile environment. The heightened interest in electric vehicles presents a challenge for established automotive companies while at the same time introducing new players that will re-shape the market for personal mobility.

·           Need to support for SMEs in the supply chain and strengthen automotive clusters: The relation between the supply chain and the institutional environment (universities, research institutes, authorities, stakeholders) has proved to be particularly relevant, above all in the case of SMEs.

·           Employment in the value-chain. The debate will comprise an analysis of the impact on:

-          Employment and working conditions, stemming from the pressure exercised by the OEMs

-          Ways to organise social dialog cross-company (cooperation of works-councils)

-          Skills needs

-          Training policies.

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[1] EMF Work program 2007-2011: “Partnership business model between OEMs and suppliers”