As the number of planned full-electric and hybrid models rises, so is the complexity facing supplier program managers — a new reality that is translating to higher costs and missed timelines for companies already reeling from supply chain woes.
With the influx of new electrified vehicle programs, the average supplier is between 30 percent and 50 percent behind schedule, or running above cost targets, or both, said Dave Opsahl, CEO of Actify, a Detroit-based program management solutions provider. Opsahl drew the findings from a supplier study it conducted with ABI Research last year.
"If you're an automotive supplier and you have a situation like that, it's hard to run a predictable business because you just don't know how things stand at any one time," he said.
The bottleneck is compounding the cost pressures suppliers have been under over the past two years as they grapple with unstable raw material prices and parts shortages. According to a recent PwC report, about 42 percent of suppliers worldwide reported being in some level of financial distress in the first half of 2022, up from 27 percent in 2021.
The number of distinct programs a typical automotive supplier now manages has risen dramatically as automakers increase the number of EV and hybrid models. According to the Actify-ABI study, suppliers were working on 1.66 million automotive and parts programs in 2021. A program could be a single trim piece for a specific cup holder. And there's a whole lot of them.
The study found that with the influx of new EVs, programs are increasing at a high speed. From 2021 to 2025, the jobs will increase by about 66 percent to a total of 2.75 million programs, according to the study.
That sharp rise is putting a strain on the individual program managers who are tasked with tracking and coordinating highly complex programs, ensuring they meet customer quality and durability standards, as well as delivery and internal profit goals.