The auto parts supply chain in North America is changing like never before as domestic auto makers attempt to source more parts overseas and the foreign transplants seek more parts within the region.
Ward's interviews with North America's top six auto makers demonstrate that every auto maker has a different approach to purchasing, but they all share the same goal of bolstering the bottom line, with the help of creative suppliers.
, in its pursuit of the best component prices globally, is experimenting with a 7-day fixed production schedule, allowing large parts such as seats to be sourced long distances.
now has 47 suppliers enrolled in its Aligned Business Framework, a 2-year-old initiative to achieve long-term relationships and closer collaboration with fewer parts makers.
, soon to separate from parent DaimlerChrysler, plans to continue collaborating with Mercedes-Benz in purchasing. The auto maker also is preparing to launch its first vehicle next year as part of a new “full interior” strategy.
's new North American purchasing chief has been focused on the rollout of the new San Antonio Tundra plant, at which suppliers play a key role.
Likewise,purchasing is preparing suppliers for Civic assembly at an all-new plant in Greensburg, IN, while is aggressively partnering with Mexican suppliers as part of a plan to increase sourcing within North America.
GM Considers Asian Windshield Sourcing
Purchasing — By The Numbers
- $86 billion annual global budget for OEM parts, including $61 billion for North America.
- 3,200 suppliers globally, including 1,800 in North America.
- 4,000 staffers globally.
- 29 Tech World supplier technology expos held globally since March 1998.
Two years ago, General Motors Corp. purchasing chief Bo Andersson was enthralled with the possibilities of sourcing components from various low-wage regions of the world for GM vehicles assembled in North America.
He told Ward's, for instance, it was possible to buy headliners from suppliers in China and fly them first-class to the U.S. for less money than producing them locally.
Today, he admits he was “a bit aggressive in my tone when we talked at that time.” The economics of such shipments have changed, as have GM's demand for quality materials and better interiors in general.
“Headliners became very, very expensive and became much more than just headliners,” says Andersson, group vice president-global purchasing and supply chain, referring to the growing popularity of overhead consoles.
In addition, at the time, Andersson was talking about “a very basic type of sandwich construction headliner, very easy to package.” Today, the auto maker no longer wants to do headliners on the cheap and has been upgrading them in new vehicles as part of GM's overall mission to make its passenger compartments more appealing.
Perhaps the headliner experiment didn't work out, but Andersson and his globally deployed staff of 4,000 are constantly watching for innovative products and creative ways to ship them to the U.S.
“We think it's feasible to ship glass from China, and it's easy to package and get it here on a competitive basis,” Andersson says. “And we have made some decisions in getting door trims in from Europe to the U.S.”
GM could source windshields for North American vehicle assembly from Asia at a logistics cost to the auto maker of a mere $3 apiece, Andersson says.
Although a seemingly fragile component for long-distance shipping, Andersson says automotive glass, particularly windshields, actually is extremely sturdy and ships well, thanks to innovative packaging.
Andersson says the price quotes from Chinese suppliers for good quality automotive glass are too appealing to ignore: about 10% cheaper than North American suppliers, based on total landed cost, which factors in logistics. “In some cases, it's attractive to ship it from China,” he says. “In other cases, it's not.”
That's because the U.S. supply base in automotive glass is becoming more competitive with global sources and is attempting to wipe out that 10% price disadvantage.
As GM attempts to streamline its manufacturing processes, it is finding it possible to ship other large parts that for many years have been produced close to the vehicle assembly plant.
Take seats. For two decades, large suppliers such as Lear Corp. and Johnson Controls Inc. have set up assembly plants close enough to respond immediately to auto makers' constantly changing build plans.
The OEMs broadcast an order for a certain number of seats, in various colors, with fabric or leather and with different levels of functionality. The suppliers have a few hours to deliver the necessary seats “just in time” and generally in sequence.
In Europe, however, Andersson says GM is experimenting with a 7-day fixed vehicle production schedule. “That means if it's fixed for seven days, you can have seat suppliers far away as well,” he says.
The 7-day fixed production schedule is merely a concept for GM, Andersson says, and there are no immediate plans for widespread implementation.
“It's something we have tested and something that works, but it requires a lot of discipline in the system,” he says.
If even seats can be transported long distances, does that mean it is becoming possible to source virtually any part from anywhere in the world?
“Yes and no,” Andersson says. “There are a lot of things (where that) would not make sense from a total cost perspective. But if you can solve that equation and you have a fixed schedule for, say, seven days; and you know exactly what you want to do, I think it's feasible.”
Andersson says GM wants to buy more parts in the regions of the world where the auto maker is growing: Latin America, Eastern Europe and Asia/Pacific. “We are manufacturing more vehicles in these countries,” he says.
— Tom Murphy
's Aligned Business Framework on Track
Ford Purchasing — By The Numbers
- $90 billion annual purchasing budget, including $4.1 billion dedicated to suppliers in Ford's Aligned Business Framework.
- 2,300 global production suppliers.
Ford Motor Co. garnered high marks in this year's J.D. Power and Associates 2007 Initial Quality Study but ranked dead last on Planning Perspectives Inc.'s Working Relations Study, which measures the level of trust between auto makers and their suppliers.
How an auto maker can rank tops in quality while suffering from allegedly poor supplier relations is a contradiction that needs further examination, says Andrew Hinkly, Ford's executive director-Americas production purchasing operations.
“I think collaboration with suppliers is key to providing quality as well as innovation,” Hinkly tells Ward's. “There does seem to be, at least on the surface, somewhat of a disconnect between the results that we see in work product of our suppliers and our joint collaboration and what the (Planning Perspectives) survey on its surface might suggest.”
Ford has been attempting to solidify its collaboration with suppliers through its “Aligned Business Framework” program, which was announced in September 2005 to “develop a sustainable business model to drive mutual profitability and technology advancement.”
The program also was intended to cut Ford's key supplier base 50% while strengthening relationships with select preferred suppliers and improving quality.
“Having fewer suppliers means you can concentrate more of your time and effort on those you intend to grow,” Hinkly says. “It is a significant change, though, not only for the procurement and purchasing side of the organization that I represent, but it expands across Ford's manufacturing and engineering groups as well.”
To date, there are 47 ABF suppliers, with the latest additions including Cooper-Standard Automotive, Siemens VDO Automotive and Kuka Flexible Production Systems. Hinkly says the program is progressing nicely and producing the desired results.
Although Ford previously said the downsizing of its supply base would occur by July 2006, Hinkly now says there is no timeline for completing the ABF structure or quota.
“I think it would be inappropriate to put a timeline on the development of a relationship,” he says. “Enrolling suppliers (in ABF) is a big piece of the program as we look to rationalize the suppliers that we work with.”
Despite the rise of the ABF, companies on the list represent but a fraction of Ford's 2,300 global production suppliers. The auto maker's annual purchasing budget is $90 billion, $70 billion of which is for production materials, a spokeswoman says. As of last December, ABF suppliers accounted for $4.1 billion of Ford's total purchasing budget.
In addition to fostering long-term relationships and closer collaboration with suppliers, the ABF is meant to encourage suppliers to get involved earlier in product-development cycles and to introduce their own innovations into certain projects.
That aspect of the ABF also is on track, Hinkly says, although he declines to reveal specific supplier innovations on Ford's newer products.
“We have some great innovations coming, and the expansion across the vehicles will be significant,” he says. “The penetration will be very rapid, but we're not ready to unveil specifics.”
A strong proponent of ABF is recently appointed President and CEO Alan Mulally. A veteran of the aerospace industry, Mulally is no stranger to forging strong ties with suppliers. In fact, Hinkly says Mulally sometimes meets with Ford's key parts producers.
Hinkly bristles when told that some Ford suppliers have complained to Ward's about the ABF as being too rigid, overly bureaucratic and onerous.
He defends ABF by saying it is largely a “non-binding agreement” and more of an “aspirational document.” He says he has yet to hear any complaints from suppliers concerning ABF, but welcomes their input.
“ABF is a set of 16 principles,” he says. “There are multiple levels in an organization to determine whether we have a common view that these are the right principles to do business. I will need to understand those types of concerns further, because they sound very much misaligned with what our view of the ABF agreements actually are.”
The influx of private-equity investors into the automotive industry is something Ford also is watching closely, Hinkly says, although it's a bit too early to determine the impact.
“I think the generic statement is the fact that capital interested in investing in the automotive industry, whether it's the supply base or in the OEMs, must be a good thing,” Hinkly says. “I think the jury is out, it is still early, and we don't know which phase we're in of the private-equity investment cycle.”
— Byron Pope
Confident in Mercedes, Interiors Collaborations
DaimlerChrysler Purchasing — By The Numbers
- $105 billion budget for Global Procurement & Supply, including $84 billion for production material (includes Freightliner, Mercedes-Benz and Chrysler Group).
- 70% of content in Chrysler vehicles comes from suppliers; the rest is produced internally.
It took nearly a decade for the former Chrysler Corp. and-Benz AG to form a consolidated, globally engaged procurement organization after the German parent acquired the Detroit auto maker in 1998.
As the two companies prepare to go their own way in the coming months, unraveling the purchasing group may prove extremely difficult — and may not occur at all. That's because the two achieved certain efficiencies as a single entity and ditching them now just because the “merger of equals” is ending makes little sense.
“Where we have been able to have common programs or sharing things, we don't see why that wouldn't stay,” Robert Schott, vice president-procurement for Chrysler Group, tells Ward's.
“Whether we can do that (with) new contracts or not is another story,” he says. “To say we are the same organization on a go-forward basis isn't necessarily the case, but we don't see any immediate negative effects at all.”
Schott says Chrysler and Mercedes-Benz, despite the forthcoming separation, will remain under a “global procurement umbrella.” He says Chrysler will continue using the External Balanced Scorecard to rate suppliers based on their performance in quality, technology, delivery and price.
Meanwhile, Mercedes has adopted a similar process for evaluating its suppliers. “So it's conceivable they would use the same process going forward, and we just use it out of two databases,” Schott says. “I don't see a radical change in the management of the supply base from what we've done in the past. I think we will leverage where we can going forward… with Mercedes.”
There is good reason for Chrysler to maintain a sense of unity with its former parent as it navigates through difficult restructuring and contract talks with the United Auto Workers union.
Chrysler wants to convey a sense of stability to its suppliers even though its top purchasing executives are leaving.
Peter Rosenfeld, who has been in charge of Chrysler Group purchasing since 2003, resigned shortly after Cerberus Capital Management LP announced in May it is purchasing 80% of Chrysler.
And Thomas Sidlik will retire from DaimlerChrysler AG's management board when the sale is complete in the third quarter. Cerberus plans to eliminate Sidlik's duties as head of global procurement and supply.
Chrysler's new executive vice president-procurement and supply is Simon Boag, who rejoins Chrysler following a 15-month stint as head of production planning for the Mercedes Car Group. Before joining Mercedes, Boag was vice president-assembly and stamping operations for Chrysler. Boag came to Chrysler in 2005 from General Motors Corp.
It's too early to say whether a new purchasing chief foreshadows a round of painful price cuts for Chrysler suppliers. For now, Schott says the top priority is carrying out Chrysler's Recovery and Transformation Plan.
Schott returned to the Auburn Hills, MI, headquarters in 2004 from a 4-year purchasing assignment in Germany with Mercedes and is confident the two auto makers can continue to cooperate effectively in procurement.
“How can Chrysler and Mercedes-Benz purchasing work together?” he asks. “I think my relationship with (Mercedes), because I lived there, will help bridge that.” From the logistical side, Schott says Chrysler and Mercedes will continue to process routine purchase orders separately, as they have for years.
As of early June, Schott said the details needed to be worked out with regard to Chrysler and Mercedes continuing to share technology and collaborating on purchasing. If a supplier presented a new technology that both auto makers wanted, would one contract serve both or would the deal require individual contracts?
“Legally, I don't know,” he says. “We would need to run that scrimmage with the attorneys to see if, in fact, we could be sitting at the same table having one negotiation with a supplier. But there will be some technology sharing on a go-forward basis.”
He says Chrysler intends to keep its 10-member supplier advisory council, which serves as a sort of test bench for purchasing initiatives the auto maker is considering. The council has been in place for three years, with rotating membership.
In the area of interiors, Chrysler is attempting to bring suppliers on board earlier in vehicle development, and the design staff is steering more interior purchasing decisions to certain suppliers they favor, according to a speech by Ralph Gilles, Chrysler design vice president with responsibility for color and trim, at the recent Ward's Auto Interiors Show in Detroit.
As part of that strategy, Chrysler is pursuing the “full interior,” which Schott says entails one company producing the seats and another supplier being responsible for the rest of the interior. Schott says Chrysler has been attempting to source vehicle interiors in this manner for the past three years, but the process now is being formalized and could be deployed globally.
The first vehicle employing the strategy — a high-volume program for North America — launches next summer, and Schott says interiors from that point forward could be sourced in that manner.
“We as a company and we as a procurement operation have changed our process because we need to change with the times,” Schott says of Chrysler purchasing, design and engineering working more closely with suppliers.
The lines of responsibility still need to be more clearly defined, but Schott says it is conceivable a Tier 1 supplier, such as Lear Corp. or Johnson Controls Inc., could be called in to help design an interior for a future vehicle.
“Those suppliers — the JCIs and Lears — sell to more customers and have a good insight into what the technology is and what the customers want,” Schott says. “They have a lot of research and market study, so we want to leverage that.”
Other suppliers likely in the running for such business include Magna International Inc.'s Intier Automotive and Faurecia SA.
The supplier chosen to oversee the rest of the interior beyond the seats would not necessarily produce all the door trim, headliner, flooring or instrument panel, but likely would play a role in sourcing those parts and integrating them into the finished product.
The key benefit, Schott says, is a pleasing, aesthetically harmonious passenger compartment with excellent fit and finish and color consistency.
Oddly, competitor General Motors Corp. is moving in the opposite direction. The auto maker tried several years ago to outsource interiors to suppliers, only to find it had lost too much control of interior development. That design oversight now rests with GM.
“I think it all gets down to different philosophies. I don't know GM's that well,” Schott says. “I'm comfortable with our philosophy.”
— Tom Murphy
Redefines JIT With Tundra Program
Toyota Purchasing — By The Numbers
- $29 billion spent on OEM parts for North American operations in 2006.
- 500 suppliers, including 300 working on the new Tundra program.
- More than $1 billion spent with minority suppliers in 2006, more than 7.5% of the annual buy.
Chris Nielsen, the new vice president-purchasing, vehicle parts and materials for Toyota Motor Engineering & Mfg. North America Inc., keeps his office near Cincinnati in Erlanger, KY, but in recent years his home away from home has been in San Antonio.
As Toyota geared up for the launch earlier this year of the third-generation Tundra pickup at its new plant in the heart of the Texas truck market, Nielsen oversaw the clustering of 21 parts producers on the San Antonio campus. He helped lay out the supplier park and position each facility for the maximum benefit of the overall enterprise.
Every day, a logistical ballet plays out as parts are transported from on-campus suppliers to the truck assembly plant. Nielsen had to make sure this delivery process would go smoothly — to the minute.
“For all the onsite suppliers, we didn't just locate them off in a corner of the property,” Nielsen tells Ward's. “Some of them are on the north side of the plant, and some are on the south side, as close as possible to where the parts will go to the (truck assembly) line.”
He had to factor in a maddening array of potential disruptions that would break the flow.
“We had to avoid problems of conveyance because you could have traffic jams,” says Nielsen, who in December became the first American to lead North American purchasing for Toyota, replacing Osamu “Simon” Nagata, who has returned to Japan. “We spent a lot of time optimizing those locations.”
One solution was to place four of the suppliers in the park even closer than the rest: under the same roof as the Tundra assembly plant. Those four suppliers are:
- Hero Logistics LLP, a minority-business joint venture between Valiente International Ventures and Toyota Tsusho America.
- Hero Assemblers LLP, another JV between Ventures and TAI, for assembly of wheels.
- Vutex Inc., a Texas assembly services company that is a minority-business JV between Operation Technologies Corp. and Vuteq, a producer of interior trim.
- Avanzar Interior Technologies Ltd., a JV between Johnson Controls Inc. and SAT Auto Technologies Ltd., for front and rear seats, headliners and door panels.
Avanzar set up shop inside the plant, and seats are completed a mere 30 ft. (9 m) from the point on the Tundra assembly line where they are installed.
“The seat has to be physically close (to the assembly line) because it is expensive to move, even if it's a short distance,” Nielsen says. In addition, the seats must be produced and delivered in sequence based on lead times measured in minutes from the time the truck exits the paint shop.
Count this as another example of Toyota raising the bar for manufacturing efficiency.
The arrangement redefines “just-in-time” delivery, which has been used widely since the 1980s to produce seats at nearby facilities for quick delivery by truck, eliminating the need for warehousing. “This is a most extreme case of JIT production,” Nielsen says. “It's a model we felt was necessary and also achievable due to the location of the plant in Texas, far from our existing supply base.”
A big bonus was avoiding the expense of constructing a separate plant in San Antonio to build the seats, although he declines to quantify the cost savings achieved.
Toyota has some 300 suppliers working on the new Tundra program, including four additional companies in Texas beyond the 21 at the production campus, says Dana Hargitt, executive program manager-product development at the Toyota Technical Center in Ann Arbor, MI.
Hargitt credits several suppliers for their contributions to the Tundra, including Magna International Inc. (mirrors), Valeo SA (flat-blade windshield wipers), Key Plastics (tailgate handle), AVM Inc. (liftgate dampers), Asahi Glass Co. Ltd. (rear windows in B- and C-cabs) and Delphi Corp. (wiring harnesses).
Frames for the Tundra are dual sourced from Mexico's Metalsa S. de R.L. for the San Antonio plant and from Dana Corp. for truck production in Princeton, IN.
There have been hiccups in the Tundra launch. For instance, Toyota has struggled with the sales mix so far. With high fuel prices, for instance, the auto maker expected to sell plenty of V-6 models. Instead, the two V-8s comprise more than 80% of sales.
— Tom Murphy
Beefs Up Midwest Purchasing
Honda Purchasing — By The Numbers
- $17.5 billion worth of parts annually purchased for Honda vehicles built in North America (a $1.5 billion increase over 2006).
- $6.4 billion of the total is purchased from Ohio suppliers.
- 610 suppliers, including 525 in the U.S.
All you have to do is check in at the front desk at Honda of America Mfg. Inc.'s North American Purchasing Office in Raymond, OH, and you know the idea of continuous improvement gets more than lip service.
The peaceful setting amid Ohio farm country northwest of Columbus belies an almost fanatical obsession with the concept.
Instead of signing in and taking a badge, the receptionist directs visitors to a computer where they input their e-mail address and company name. Then it takes their picture and prints out a photo ID with bar-coded information.
Next time, the visitor inputs his e-mail address, and the system prints out a new photo stick-on ID. Nothing is wasted here. Instead of being thrown out, used badges are molded like Play Dough into artwork.
Jeff Tomko, assistant vice president-purchasing and North American cost planning for HAM, happily swings open doors leading from the lobby to reveal several hundred purchasing agents crowded into a bullpen of open cubicles.
They work almost elbow-to-elbow with HAM's purchasing chiefs who, in typical Honda fashion, have equally modest open-area workstations.
They all are furiously purchasing what soon will amount to $17.5 billion worth of parts this year for Honda vehicles built in North America. That's a $1.5 billion increase over last year, thanks to a new $550 million, 200,000-unit annual-capacity assembly plant being built in Greensburg, IN, and scheduled to start producing Civic sedans in fall 2008.
HAM's budget may look small compared with General Motors Corp.'s $61 billion of purchases in North America or Ford Motor Co.'s $90 billion globally, but unlike them, Honda rapidly is increasing production capacity and purchases in North America.
Last year, American Honda Motor Co. Inc. achieved a 77/23 North American-built/import ratio despite an increase in sales of imported cars and light trucks. Even so, Honda Motor Co. Ltd. CEO Takeo Fukui said earlier this year he was not satisfied and wants at least 80% of the vehicles Honda sells in the U.S. to be built in North America, if not more.
Fukui then went on to criticize rival Toyota Motor Sales U.S.A. Inc. for having only a 53.6%/46.4% domestic/import mix.
Honda also is considered by suppliers to be one of the most desirable auto makers to work with, according to the annual Planning Perspectives Inc. study of OEM/supplier working relations.
When HAM registered a significant drop on a question regarding supplier trust of OEMs compared with previous years in the 2006 Planning Perspectives study, company officials vowed to improve.
Honda did just that, scoring a 3.9 on a 5-point scale, just behind Toyota's 4.0 rating and far ahead of Detroit's Big Three.
Tomko declines to be specific about exactly what went wrong or how the issue with suppliers was mended, except to say it related mostly to communications issues and perhaps some glitches in the auto maker's recent heavy new product launch schedule that included the Acura RDX cross/utility vehicle in Marysville, OH, the Honda CR-V at East Liberty, OH, and a completely redesigned Acura MDX in Alliston, ON, Canada.
While Honda is a very global auto maker, with highly flexible vehicle architectures and factories, Tomko predicts the launch of the new Civic plant in Greensburg will not cause major upheavals in HAM's existing U.S. supply chain.
The Greensburg plant is situated deliberately in the midst of the auto maker's current supply base, and near major arteries.
There will be no big supplier parks surrounding the plant or a lot of components pouring in from outside North America.
Instead, the $1.5 billion in additional purchases mostly will be spread among Honda's current suppliers in Ohio, Michigan, Indiana and Kentucky. They will expand their facilities to accommodate the additional business, Tomko says.
“There will be very few new supplier facilities created for the new Indiana plant,” Tomko emphasizes.
Honda is attempting to globally source standardized components when it makes sense. For instance, on the new Honda CR-V CUV, Tomko points out the seatbelts are sourced from
— Drew Winter
Looks to Increase Parts Purchases From Mexico
Nissan Purchasing — By The Numbers
- $10 billion spent on parts procurement in fiscal 2006.
- 17% of overall purchases in “leading competitive countries” in 2006.
- 24% of overall purchases in “leading competitive countries” planned this year.
Nissan North America Inc. this year is targeting an increase in the percentage of parts it buys from low-cost countries, a company official tells Ward's.
John Miller, vice president-purchasing for NNA, says while the auto maker made 17% of its overall purchases from what it calls “leading competitive countries” in fiscal 2006, this year it is shooting for 24% of total purchases.
“Mexico would be the No.1 portion of that increase,” Miller tells Ward's.
Nissan purchases from U.S.-based suppliers the vast majority of parts for vehicles it builds in the U.S. However, for certain parts that come from the Japanese home market, Nissan is considering re-sourcing from Mexico to save cost.
“For example, the transmissions have historically come from Japan,” Miller says, adding Nissan's supplier of continuously variable transmissions, JATCO Corp., will begin providing CVTs from Mexico for the 6-cyl. Altima midsize sedan and coupe. It already supplies CVTs for 4-cyl. Altimas from Mexico.
While exchange rates factor into the decision to source more parts from Mexico, Miller says total cost is the main reason for the switch.
“When you think about bringing a transmission from Japan to Mexico vs. making it in Mexico, the ‘logistic-ality’ is pretty great,” Miller says. “We do all the calculations, and we use a standard exchange rate for the localization decisions.”
In July, Nissan will relocate its Mexican purchasing team from Mexico City to Toluca to be near the auto maker's engineering group at its design center there, he adds.
Miller says Nissan feels it should be more economical to build engines and transmissions in North America, but at the same time the auto maker wants to balance its global investment, careful not to idle any plants overseas.
Nissan is not yet sourcing many components for U.S.-built vehicles from China, Miller says, with the exception of some parts procurement by Tier 1 suppliers for its global Versa/Tiida B-car.
“To reduce investment, there are some parts we were able to bring from China,” Miller says, adding some of Nissan's Tier 2 and Tier 3 suppliers are sourcing from the country, as well.
Miller says being in an alliance with French auto makerSA is advantageous in procurement because of the combined companies' vast global footprint.
“We have a lot of data points we can check between Eastern Europe, Southeast Asia, the Mercosur (South American trade region), and now Russia and India, so we're building a very good base of knowledge about where things are more competitive or less competitive,” Miller says.
A challenge for the auto maker is making sure its suppliers remain successful in an environment where a number of parts makers are in or flirting with bankruptcy.
To this end, the auto maker has an Alliance Supplier Improvement Program, in which suppliers pair up with Nissan and/or outside kaizen (continuous-improvement) firms to streamline manufacturing.
In the past, Nissan purchasing had no coordinated approach to cope with the many facets of suppliers in trouble. As a result, two years ago, Nissan started its Supplier Revival Group (NSRG), which consists of Tier 1 and Tier 2 parts makers considered distressed. Miller says up to 15% of Nissan's suppliers are on the list.
“When I meet with the CEOs of these companies, my point is always, ‘I want to see your plan; how you're going to get from where you are now to where you want to be. And what is it you want to be; what are your milestones?’” Miller says.
“If there's no plan, or the milestones are missed wildly, that sends off a big signal to us that we should have some backup plans to deal with these suppliers. But if the suppliers are very genuine and open and honest and transparent with us, we'll work very closely with them. And we have.”
He says no vehicle production line has gone down because of recent supplier woes, and that NSRG has been a success because very little business (less than 10% over the past two years) has been re-sourced.
There have been instances when Nissan had no choice but to find new suppliers. “In some cases, the supplier said, ‘We're just going to quit. We're no longer going to be a supplier in existence anymore. Please tell us where you want us to send the tools,’” Miller says.
— Christie Schweinsberg
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