With output up, auto suppliers get help, scrutiny

David Sedgwick
AUTOMOTIVE NEWS

Published: July 29, 2013 1:21 pm ET
Updated: July 29, 2013 1:25 pm ET

Related to this story

Topics Automotive
Companies & Associations General Motors Co.

As light-vehicle production in North America approaches a record this summer, automakers are exerting more influence over suppliers to eliminate production bottlenecks.

For instance:

  • General Motors is requiring suppliers to adopt its lean manufacturing system, dubbed Quality System Basics, if they don't have similar systems of their own.
  • Toyota is winnowing its "watch list" of overburdened suppliers, which once included 40 companies, by sending engineering teams to their factories.
  • Chrysler Group has begun testing no-bid contracts to strengthen long-term relationships with suppliers.

"We've had a couple dozen folks who have raised their hands and said that they were willing to take part in this," Scott Kunselman, Chrysler's purchasing chief, told Automotive News last week.

Automakers are walking a tightrope: They seek good relations with suppliers to ensure the best possible technology and prices. But they want to exert more control to ensure a reliable flow of parts at a time when suppliers are preparing for a wave of product launches.

This year automakers have scheduled 23 product launches in North America, according to IHS Automotive. That means suppliers must install new tooling, produce new parts and open new assembly lines.

The troubled launch of the Lincoln MKZ this year, partially because of parts problems, underlined the hazards of flawed procedures.

The need for smooth launches is one reason GM chose Grace Lieblein, the former chief of GM do Brasil, to run GM's global purchasing operation. In 2011 and 2012 Lieblein oversaw nine production launches in Brazil.

"We make sure to learn lessons from each launch and apply them to the next launch," Lieblein said in an interview last week. "Sometimes [the risk] is not at the Tier 1 level but at the Tier 2 or Tier 3 level."

GM has taken a number of steps to ensure smooth launches. The company has hired 100 employees — including some retired GM engineers — to beef up the engineering teams that visit suppliers' factories.

It also issued a new "terms and conditions" contract on July 15 that requires a supplier to provide, on request, "its most current income statements, balance sheets, cash-flow statements and supporting data and schedules."

Watch list

Like GM, Toyota Motor Corp. is closely monitoring suppliers involved in its launches, which this year include the redesigned RAV4, Corolla and Tundra.

Toyota, an industry leader in lean manufacturing, traditionally dispatches engineering teams to supplier factories to monitor their progress, says Bob Young, North American purchasing chief.

Those teams pay special attention to the company's watch list of suppliers that must run their factories around the clock to meet production quotas. As many as 40 suppliers were on that list, but it's down to 25 now, Young says.

The company also is trying to monitor lower-tier suppliers that might pose a bottleneck threat, but that can be difficult to manage, Young says.

So Toyota may introduce an online census next year for North American suppliers.

"An online system has been deployed in Japan, and we are studying whether to employ it in North America," Young says. "To date, we've only [identified suppliers] down to the Tier 3 level. It gets challenging when you go below that."

Beefed-up audit teams

Like its peers, Chrysler is trying to spot potential problems among suppliers before they occur.

Previously, Chrysler's purchasing operation devoted much of its engineering resources to clean up suppliers' quality problems, Kunselman says.

Now Chrysler has beefed up its audit teams that inspect supplier factories before problems occur. The company plans to visit its suppliers' factories at least once a year.

"We've visited more than 2,500 locations since September," Kunselman says. "We insist on meeting their quality people, and we measure it on our scorecards."

And now Chrysler has started teaching its lean production system, called World Class Manufacturing, to key suppliers that produce sequenced components such as instrument panels, door panels, seats and front fascias.

These suppliers are considered key because they must provide components to an assembly plant within 90 minutes of the factory's order.

The first supplier to adopt Chrysler's manufacturing system was Dakkota Integrated Systems, which makes instrument panels for Chrysler's Windsor minivan plant.

In an April interview, Dan Hillock, Dakkota's director of operations, said he runs his factory as if it were a department within Chrysler's minivan plant.

"Every time Windsor goes on break, we go on break," says Dan Hillock, Dakkota's director of operations. "Every time they have lunch, we have lunch. And every time they go home early, we go home early."

A complete version of this story is available at www.autonews.com.


Comments

With output up, auto suppliers get help, scrutiny

David Sedgwick
AUTOMOTIVE NEWS

Published: July 29, 2013 1:21 pm ET
Updated: July 29, 2013 1:25 pm ET

Post Your Comments


Back to story


More stories

Image

Visteon in talks to sell its stake in Halla Visteon Climate Control JV

November 26, 2014 9:07 am ET

Visteon Corp. confirmed this morning that it is in discussions with a private equity firm to sell its stake in South Korean joint venture Halla...    More

Image

Canada's Papp Plastics is eyeing big opportunities with JV in Mexico

November 24, 2014 4:11 pm ET

Canadian injection molder and turnkey solution provider Papp Plastics & Distributing Ltd. will open an $11 million to $12 million joint venture...    More

Image

Indiana injection molder PRD expands

November 24, 2014 1:56 pm ET

Automotive supplier PRD Inc. is expanding its manufacturing facility in Springville, Ind.    More

Image

Can plastics return to the driver's seat?

November 24, 2014 6:00 am ET

When the June 1989 issue of Popular Science introduced three cutting-edge automotive technologies, including the latest Corvette and a powerful...    More

Image

New GM purchasing chief faces big hurdles to improve supplier relations

November 24, 2014 11:11 am ET

Steve Kiefer is moving into the eternal hot seat that is head of GM global purchasing and supply chain.    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 billion plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events