Auto suppliers call for dialogue as global supply chain uncertainties increase

The automotive industry is certainly no stranger to navigating supply-chain risk and unforeseen disruption. Years of trusted partnerships and collaboration along the entire supply chain have led to principles such as just-in-time manufacturing, designed to reduce supply chain cost and improve productivity and response time.

Another joint initiative came in the wake of the COVID-19 outbreak. When production came to a complete standstill, manufacturers and suppliers worked together to define a code of business conduct.

But today’s challenges have put the industry in uncharted waters. The current factors affecting the industry are converging to impact the ecosystem, and consequently, how companies work together to create a supply chain that is more responsive to changing market dynamics and to better support alternatively powered vehicles, and other service-related business.

These new ways of working deserve collaboration with a long view. More than ever, dialogue is needed.

We are leaving behind decades of relative stability, which enabled an integrated supply chain, for a situation that brings high volatility, inflation and compromised models of sourcing, deliveries and planning. What we need now is a partnership approach to sustain the mobility ecosystem, making it fit for purpose also in the future.

Such an approach should exclude behaviors that insulate only one part of the chain against any cost increases that hit our economies and societies alike. By extension, contractual relations cannot be subject to change without room for negotiation prior to implementation. Such an attitude, in effect, turns a cold shoulder to impacts reverberating throughout an already stressed supply chain.

A healthy ecosystem thrives on innovation and competition, as well as on collaboration, to contribute to the success of all parties, where each player acts as an integrated member of the system.

At present, there is an extreme need to balance cost increases and operational efficiencies with greater supply chain resilience. This rebalancing will not be easy and will most certainly come with additional growing pains. All of these challenges bring a very real risk of immobilizing a sector trying to transform.

The issues of sustainability, carbon-neutral mobility, and supply-chain resilience are far too large for any one company or industry to tackle alone. At such critical moments of profound change, the industry needs solidarity, not division, dialogue, not confrontation.

Automakers need a healthy supply base to thrive, and vice versa. Our industry has to persist, adapt and transform in the face of change. Therefore, trust is imperative.

This is exactly why now is the time for open and fair communication between partners in the chain. The industry should continue in the spirit of its long-established fruitful collaboration to shape the value chain of the future.

After all, whether it’s a business or personal partnership, any bond is built on trust. Without it, you have nothing. With it, you can do great things.