Growth plan for UK automotive supply chain

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There are clear opportunities for UK suppliers to increase their share of work from vehicle makers, according to a study by the Automotive Council UK entitled Growing the automotive supply chain – the road forward.

The study found that the combined UK purchasing spend of the UK-based automotive, commercial vehicle and yellow goods manufacturers is £7.4bn per annum. The amount purchased in the UK equates to about 36 per cent of their global purchasing spend.

However, it also found that uncompetitive logistics was one of the factors holding back UK suppliers.

Using data collected from vehicle manufacturers and supply chain companies, the researchers have assembled a UK sourcing roadmap, setting out the short-term and medium-term opportunities, as well as the areas where critical support is required to support the UK automotive supply chain.

The report says: “Short term opportunities largely arise where OEM sourcing needs match with strategic growth areas of UK suppliers, in other words, where OEMs have a current need that could potentially be met from a UK-based supplier.”

These include:

1. ‘Powertrain & body’ components, where virtually all needs can theoretically be met, with the exception of ‘heavy metals’ processing capabilities (casting, forging, etc) that were identified as supply chain constraint by both OEM and suppliers.

2. ‘Interior and exterior’ components, where virtually all OEM needs can be matched with supplier growth intentions.

3. ‘Electrics & electronics’ components, where some needs can be matched. Critical parts missing are batteries, and electronics in general.

And the report argues that medium to long term opportunities for building the UK supply chain arise from the gradual shift towards a portfolio of powertrain architectures, and the novel components these will require.

“At present, UK suppliers do not feel they are at the forefront of supporting this shift. Here, the ‘Top-10’ most desirable low carbon powertrain suppliers will be identified, to target efforts to entice these to commence operation in the UK,” it says.

Finally, in terms of further critical support areas, the surveys show that UK suppliers are losing out on a unit cost basis, while – paradoxically – proximity was rated as the most important competitive factor. Hence a key opportunity arises to help suppliers conceptually to make their business case on a ‘total supply chain cost’ basis, rather than on a unit cost basis alone.

The report includes a total cost model, aimed at helping UK suppliers to make a more comprehensive business case.

The OEMs said that secondary reasons for not sourcing from UK suppliers were, in order of prevalence:

(1) the general lack of accredited suppliers,

(2) required processing capabilities that were not available,

(3) quality and

(4) logistics that were not competitive.

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