Impending price round takes suppliers to optimisation limits in production – Automotive industry

September 3, 2014 | News Germany

For the next round of negotiations with their suppliers, German automotive companies have already set the course with their recently announced cost-cutting programmes amounting to billions of euros. The problem: In recent years, many suppliers have already fully exploited the potential for productivity increase in the operational sector. In order to remain competitive in the future, suppliers can no longer avoid a more productive organisation of all processes along the value creation chain. In addition to the main processes of development, sales and distribution, procurement and administration, this also includes support processes such as logistics and maintenance, thus the result of a market observation study by the Staufen business consultancy. “Under normal circumstances, these annual rounds of negotiation of automotive companies with their suppliers are a well-practised ritual, at the end of which suppliers accept a more or less moderate price reduction,” explains Axel Schüle, Senior Manager of the Staufen AG consultancy. “Up to now, most suppliers have been able to offset this price reduction entirely or at least to a large extent with increases in productivity.” As an additional factor, suppliers have to be far more adaptable as the result of the ever growing range of models with numerous custom and niche vehicles. This greater level of complexity requires an improved ability to respond as well as significantly reduced lead times. “Against this backdrop, many suppliers have already done very well in recent years in improving their operational processes. In many of these companies, there is thus only very limited improvement potential in the production process”, observes automotive expert Schüle. In the next round of price negotiations, past successes will therefore be of little help to suppliers in the future. “In order to remain competitive, companies should widen their focus from production to encompass organisation and leadership performance as a whole,” advises Staufen AG consultant Schüle. “A holistic view of the entire value creation process makes it possible to increase productivity in development, procurement, sales and distribution as well as administration using the same methods as in production.” Staufen consultant Axel Schüle is happy to talk to journalists for interviews and background information concerning the automotive industry.

Management Dialogue “Industry 4.0 and Lean” – Next step robot factory?
on 17 September 2014 in Köngen and on 25 September 2014 in Cologne
As in the case of all previous standardisation and automation initiatives, Industry 4.0 is not about man or machine, but about a clear commitment to man and machine. Discuss with Johann Soder, Managing Director Technology at SEW-Eurodrive GmbH & Co KG, and others why it will continue to be the responsibility of experienced managers and experts to question processes, recognise and assess deviations and look for ever new solutions to problems together with their employees in regular and open dialogue. To register, please contact Stephanie Acker at

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