Ogle's Eye
Collaboration – manifest or mythical?

Welcome once again to Ogle’s Eye, my weekly blog on automotive supply chain issues. I look forward to receiving your contributions and comments, either on what I’ve written or on whatever subject takes your fancy.

For years now the automotive industry has been talking about collaboration. At conference after conference, seminar after seminar, whole sessions have been devoted to the discussion of this most elusive of concepts. What is collaboration? Who needs to espouse it? On what levels should it function? Are we any nearer to achieving it than we ever were?

Collaboration in the British automotive industry can be traced back to the 1980s, when manufacturers began to realise that complex bespoke supply chains and development processes had become too expensive, and they could share resources with rivals without compromising product integrity. Rover and Honda began to work together to develop new technology, with Rover incorporating Honda engines in its models. The partnership lasted 15 years.

More recently, we have seen the emergence of the Renault/Nissan alliance, a joint venture to share processes and technology and to develop new vehicles. There are many other examples of how auto manufacturers, once the deadliest of enemies, have collaborated in, for example, the globalisation of platforms to reduce production and procurement costs.

So, yes there is solid evidence of collaboration in action you might say. And at this level it certainly seems to be the case. But what about the supply chain? Where is the evidence of companies working together to maximise efficiencies and reduce costs? We hear plenty about diminishing margins but little concerning genuine attempts to find solutions to mutual challenges.

It is time the lip service stopped. Only by collectively addressing the difficulties we face will they be overcome. Both the manufacturing and the supply sides of the industry need to redouble their efforts to combat waste and inefficiency. Standardisation must be introduced where possible – packaging would be a good place to start - and ways found to eliminate double handling and restrictive practices. Longer-term contracts would allow greater investment in equipment and provide some respite for hard-pressed providers.

There is a school of thought which says that efficient supply chain logistics offer a competitive advantage which collaboration would only give away. This philosophy misses the point that those companies which fail to collaborate will bear higher costs than those which do and, therefore, will lose their competitive advantage anyway. In difficult economic circumstances volumes decrease and fixed costs are exposed. Either the fixed cost is taken out, which means dismantling part of your transport operation or part of your business, or volumes are increased by collaboration with other people. When times are tough, very few companies achieve incremental volume entirely through their own efforts.

It is surely a nonsense that there are still car manufacturers which insist on new vehicles being delivered exclusively on their own-brand transporters and not being combined with other makes. Where is the spirit of collaboration here? Car transporters are expensive assets and empty running is one of the biggest challenges facing this particular sector. This is only one example and doubtless you can think of many more. Don’t keep them to yourselves. Let me know of them and I will feature them in a future blog.

Don’t forget, if you haven’t already done so, to register for the Automotive Supply Chain Europe conference in the Hyatt Regency hotel in Mainz, Germany on November 29 and 30. Day One will deal with inbound issues and purchasing and Day Two with finished vehicle distribution. You can register for either day or for both, and everyone is welcome to the gala dinner in the hotel on the first evening.

Every sector of the supply chain will be discussed by expert panelists and presenters. Full details of the conference can be found by clicking here

Tweet