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Supply Chain Stream: Growth in the UK Supply Chain
13:30 – 15:00
OEM Procurement
- Rob Johnson, Purchasing Director, Jaguar Land Rover
- Luis Olivié, Global Business Development Director, Achilles
- Chris Gane, Divisional Managing Director, Caparo
- Ian Henry, Director, AutoAnalysis
Chair: Justin Webb, Broadcaster
London 6th June 2013
Luis Olivie, Achilles Group
SMMT INTERNATIONAL AUTOMOTIVE SUMMIT
© 2012 Achilles Group Limited Confidential 4
Achilles Automotive Supplier Risk Management who we are...
Global, 1000 employees
790+ buyer customers and 100,000+ suppliers each year
what we do...
Supplier information + Supplier risk management
Supply Chain Mapping
how do we do it...
Community
Supplier onboarding + Validation
+ =
© 2012 Achilles Group Limited Confidential 5
The problem
Over the past 24+ months, the Industry has been impacted by a number of events that have caused regional & global supply chain disruptions.
1. Supply chains more complex
2. New risk areas are being added
3. Identify and manage those risks in such a global and increasingly complex environment is a challenge
...What is needed?
One single industry approach
Supply chain Visibility
Risk assessment methodology
Keep SCM related costs low
The ability to quickly understand exposure at Tier N levels of the value chain and assess is critical to enable fast recovery.
© 2012 Achilles Group Limited Confidential 6 © 2012 Achilles Group Limited Confidential 6
Solution: Mapping the core supply chain of Automotive business
© 2012 Achilles Group Limited Confidential 7 © 2012 Achilles Group Limited Confidential 7
Map supply
chain
Clarify impact Study c/m Implement c/m
Incident Current Process
Clarify impact
Study c/m Impl c/m
Incident
1 day
Target
0~3 months (tbc)
Study
c/m
Impl.
c/m
j k
0~6 months 1wk~2mths
Why Supply Chain Mapping?
Achilles Supply Chain Mapping allows “mapping” extended supply chains, and
view supplier info beyond Tier 1 ...
Extend risk identification beyond T1 - Increase visibility into the supply chain
via a system solution for data collection
Reduce reaction lead time - speed containment and response to risk events
Provide ability to take proactive measures to minimize risk (dependencies)
© 2012 Achilles Group Limited Confidential 8 © 2012 Achilles Group Limited Confidential 8
Our approach
Industry collaborative approach vs standalone efforts
Benefiting both buyers and suppliers vs buyer driven
Leveraging on Achilles global resources, tools and expertise
Confidentiality is paramount
First Mapping: Cascading down
Avoid fatigue
Confidentiality and control
Then risk assessment Focus on CSR and Financial information
© 2012 Achilles Group Limited Confidential 9
Mapping the core supply chain of Automotive business
Originating Buyer Buyer selects product Alternator and Supplier
Tier 1 Supplier Alternator
Supplier confirms the product Alternator
Supplier selects their Supplier and product Copper wire and links them to product Alternator
Tier 2 Supplier Copper wire
Supplier confirms the product Copper wire
Tier 3 Supplier Copper
Supplier confirms the product Copper
Supplier selects their Supplier and product Copper and links them to product Copper wire
Invitation >registration > short questionnaire
t1
Tier 2
Tier n
OEM
[Current] [Achilles]
Facilitated by Achilles
© 2012 Achilles Group Limited Confidential 10 © 2012 Achilles Group Limited Confidential 10
Drivers and benefits
If you gain visibility and can act proactively, then ...
Protect your best seller
Are you really sustainable?
Conflict Minerals
Predictability
War in the Korean peninsula
Insurance carriers
Chemical manufacturer
1. Understand gaps and time to recover
down the chain, ...
2. Understand Sustainability issues ...
3. Compliance in general ...
4. Financial situation ...
5. Evaluate overall risk in one region ...
6. Get better support ...
7. Identify points of convergence ...
© 2012 Achilles Group Limited Confidential 11 © 2012 Achilles Group Limited Confidential 11
Thank you.
Achilles.com/LinkedIn Twitter.com/Achillesltd Achilles.com/Facebook
www.achilles.com
Thank you.
Achilles.com/LinkedIn Twitter.com/Achillesltd Achilles.com/Facebook
www.achilles.com
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Markets and Production
Outlook: implications for
suppliers
Ian Henry
AutoAnalysis
June 2013
SMMT Automotive Summit
European car sales have been in decline for
some years …
Ian Henry, AutoAnalysis
[email protected], June 2013
2013 shows small signs of
improvement
• UK apart, major markets down in 4m to April
• UK, Germany and Spain grew in April
• Rate of decline in France and Italy slowing!
Ian Henry, AutoAnalysis
[email protected], June 2013
% change in new car registrations, 5
major markets and EU total
-25
-20
-15
-10
-5
0
5
10
15
20
France
Germany
Italy
Spain UK
EU tota
l
2012 Jan-Apr 2013 April 2013
Variable picture amongst major VMs
% annual change in new car registrations,
major VMs
-30
-20
-10
0
10
20
30
VW
Au
di
PS
A
Ren
ault
Op
el/V
auxh
a
Fo
rd
Fia
t
BM
W/M
ini
Mer
ced
es
Hyu
nd
ai
Kia
JLR
To
yota
Nis
san
2012 Jan-Apr 2013 April 2013
• Major volume VMs, PSA, Renault, Opel/Vauxhall, Ford and Fiat, all severely hit
• Toyota, Nissan, BMW and VW/Audi not immune to market decline
• JLR and Kia remain unscathed by recent decline
• VW/Audi, Mercedes and Toyota/Nissan first to shown signs of recovery?
Ian Henry, AutoAnalysis
[email protected], June 2013
Changes afoot amidst major VMs
• EU27 2012 car market fell 17-year low
– Jan-Apr 2013 showed further decline
– Modest recovery in April …
• Volume brands facing long-run, structural decline in Europe as value brands and premium marques continue to grow:
– Having lost c0.5mn units each over past six years, can the volume VMs really
recover?
• Volume VMs’ European production down significantly:
– 2007-2012: Fiat, Ford, Opel/Vauxhall, PSA and Renault lost c3mn units’ production
– But total European production fell by just 2.1mn
– Main winners = Dacia, Hyundai-Kia, Nissan, Volkswagen/Audi and JLR
– New order for VMs in Europe clearly emerging …
Ian Henry, AutoAnalysis
[email protected], June 2013
VMs’ response to market decline … modest
restructuring by volume VMs … is it enough?
Volume VMs
• GM closing Bochum, PSA closing Aulnay
• Ford closing Southampton & Genk
• Renault and Fiat reorganising footprint, refusing to close plants
• Volkswagen investing in Spain, expanding in China
Premium brands
• BMW Mini increasing capacity (at Nedcar), expanding in China and Brazil …
• Mercedes accelerating expansion in Hungary, adding Valmet as temporary capacity
• Audi adding Mexican plant to ease pressure on German factories
• JLR growing …
Ian Henry, AutoAnalysis
[email protected], June 2013
UK production dynamics
• Substantial commitment to increase UK production by Nissan and JLR especially
• Commitment to maintain UK production by BMW Mini, Honda, Toyota and GM – All underpinned by strong, and rising, export
ratios
• Ford closing Southampton van plant, but still a major engine producer
• 2mn annual vehicle production later in decade is still realistic …
Ian Henry, AutoAnalysis
[email protected], June 2013
Strong exports at all UK VMs: most UK plants
are sole global production locations …
Export ratios, 2007-2013, UK volume producers
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
HONDA NISSAN TOYOTA VAUXHALL/OPEL
2007
2008
2009
2010
2011
2012
Q1 13
Export ratios 2007-2013, UK premium brands
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
MINI JAGUAR LAND ROVER
2007
2008
2009
2010
2011
2012
Q1 13
Export ratios 2007-2013, UK super luxury brands
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
ASTON MARTIN BENTLEY ROLLS-ROYCE
2007
2008
2009
2010
2011
2012
Q1 13
Ian Henry, AutoAnalysis
[email protected], June 2013
Overall and Non-EU export ratio, all UK VMs
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Total Export Ratio Non EU Export Ratio
2007
2008
2009
2010
2011
2012
Q1 13
Substantial recent commitment to UK
vehicle production
• JLR: Halewood/Solihull operating 24/7; F-type production started; several new models imminent; should increase UK component sourcing significantly
• Nissan: two new models added to Sunderland portfolio; increasing UK sourcing; production soon over 600k pa
• BMW Mini: c£750m investment in UK; Oxford at capacity limit; additional Mini production in Netherlands from 2015
• GM: Ellesmere Port = lead plant for new Astra; production in UK “guaranteed” into 2020s, with slowdown in 2012-14
• Honda: completed major investment; adding new engine line; widening Civic range; but will lose Jazz
• Toyota: centralised Auris production at Burnaston
• Ford: closing van plant in Southampton and stampings plant in Dagenham; maintaining engine production …
Ian Henry, AutoAnalysis
[email protected], June 2013
Rising production accompanied by
increased UK component sourcing
• AutoAnalysis/Cambridge Uni/SMMT surveys in 2009-2010 found genuine wish to increase component sourcing in UK
• UK suppliers winning business from sister German plants …
• BIS & Automotive Council identified at least £3bn worth of potential additional sourcing for UK
• JLR: >£2bn UK sourcing for Evoque alone; c£1.5bn for F-type; sourcing for engine plant and higher production volumes will add to this significantly
• Nissan: expanding production line-up could add >£4bn to UK sourcing over new models’ lives
Ian Henry, AutoAnalysis
[email protected], June 2013
You can’t always get what you want …
Components which UK VMs would like to
source in UK
Source: Automotive Council
Ian Henry, AutoAnalysis
[email protected], June 2013
Amidst economic uncertainty, UK vehicle &
engine production has excellent medium-long
prospects
• Most UK models only
made in UK
• Significant exports of
vehicles and engines
• Substantial increases
in local sourcing at
UK VMs expected in
near future
• Suppliers have a
“once in a lifetime”
opportunity to lock
themselves in with
JLR and Nissan in
particular
– This “once in a
lifetime” chance has
a long way to go!
Ian Henry, AutoAnalysis
[email protected], June 2013
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Supply Chain Stream: Growth in the Supply Chain
Finance and the Supply Chain
15:30 – 16:10
- Richard Hill, Head of Automotive, RBS Corporate Bank Division
- John Leech, Head of Automotive, KPMG LLP
- Mike Mychajluk, Purchasing Risk Manager, Jaguar Land Rover,
and Automotive Council UK Supply Chain Group member
Chair: Gary Leitch, Managing Director, Lombard Corporate Asset Finance
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Supply Chain Stream: Growth in the Supply Chain
Visibility in the Supply Chain
16:20 – 17:00
- Ian Henry, Director, AutoAnalysis
- Jeremy Hammant, Supply Chain Practice Leader, CSC
Chair: Chris Gane, Divisional Managing Director, Caparo
The importance
of supply chain
visibility Ian Henry, AutoAnalysis
SMMT Automotive Summit
June 13, 2013
Supply chain visibility
•What is it?
•Why does it matter?
•How to get it?
Ian Henry, AutoAnalysis
[email protected], June 2013
Supply chain visibility –
what and why?
• Knowing who supplies at each stage
• Where each stage takes place
– How do the parts get from stage to stage?
• Need to know for quality control and to
know how to react when chains break:
– Tsunami, Thai floods, recalls …
• Amazing how little VMs and Tier 1s know
about their supply chains
Ian Henry, AutoAnalysis
[email protected], June 2013
Supply chain visibility –
how to get it … • Hard work, detailed research
• Phone calls, emails, form filling, data checking, cross-referencing – Achilles’ new system will help
• But if you want to know suppliers throughout the chain and their geographies: – There’s no substitute for original research …
• Beware: people don’t like releasing information, even inside your own company …
Ian Henry, AutoAnalysis
[email protected], June 2013
AutoAnalysis’ experience in
supply chain mapping • Seats – frames, mechanisms, motors,
foam, fabric/leather:
• Airbags – ECU, ignitor/inflator, housing, cover, bag (including weaving, coating, cut & sew)
• Lighting – bulb, reflector, lens, wiring ..
– Identified suppliers at each stage, locations and models supplied for each VM in Europe
– 3-6 month studies, multi-lingual teams, hundreds of calls, emails …
Ian Henry, AutoAnalysis
[email protected], June 2013
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