Lack of communication between upper and lower supply chains

The lack of communication between automakers and the low visibility of the supply chain is putting tremendous pressure on logistic products and service providers to respond to economic downturns. Suppliers of transportation products and services criticized the original equipment manufacturers for their lack of openness to the dramatic decline in car sales caused by the economic crisis...

The lack of communication between automakers and the low visibility of the supply chain is putting tremendous pressure on logistic products and service providers to respond to economic downturns. At the same time, the growth in car sales and global production before the economic downturn has caused the supply chain to become lengthy and complex, and in some cases it can be said that it has become unsustainable.

This is the latest news from the Automotive Logistics Europe 2009 event in Switzerland last week. Nearly 200 representatives of the European automotive logistics industry participated in the conference, including executives from original equipment manufacturers such as Ford, Renault-Nissan and Audi, as well as Tier 1 suppliers of all categories. Business and logistics service providers.

Transport product and service providers criticized the original equipment makers for not being honest about the sharp drop in car sales caused by the economic crisis. Vega’s Franz Blum said that the company’s sales have not been notified to commercial vehicles from 26,000 to 600 in one month. He said: "The word 'cooperation' seems ridiculous. Just like a 'wine and meat friend', there is no communication with the manufacturer at all."

Honeywell's Manuel Formis, a Tier One supplier, said that even when car manufacturers delay the launch of new models, they rarely communicate with other partners in the supply chain, allowing suppliers to manufacture or transport parts in vain. Collaborating with other levels of suppliers to reduce costs does not solve the problem. Formis said: "We tried this way but did not work." He added: "Logistics costs must be adjusted to 100% with demand, not the current 70%."

Whether it is to respond better to demand or reduce the risk of supplier recession, both manufacturers and suppliers need to respond more quickly and improve communication in the supply chain so that this goal can be achieved. Michael Druml of contract manufacturer Magna Steyr said that although he is very worried about supplier bankruptcy, his team is doing so. He said: "If it is really bankruptcy, the official receiver will come in, increase the price by 80%, and turn the payment terms into a cash delivery. I'm not sure if our IT system can handle such transactions."

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