Business integration could ease auto industry supply chain pain

     

Long a pillar of the American and global economy, the auto manufacturing business has undergone drastic changes during the past several years. And neither the trials nor tribulations have been lost on the supply chains of companies throughout the sector.

Research from the Case Western Reserve University Weatherhead School of Management in Cleveland, Ohio, pointed to an impending transformation for the supply chain community management among auto industry organizations. A focus on business integration to seed greater collaboration among members is one way to ease this transition, researchers said.

"Throughout our research, we find evidence of two possible futures for America's automotive industry," Susan Helper, Weatherhead School of Management Carlton professor of economics, said. "One future is characterized by collaborative relationships between firms at all tiers of the supply chain, wherein firms share cost savings from identifying and eradicating inefficiencies that they might not have been able to address on their own."

With greater collaboration among members of an auto industry supply chain will come lower costs and greater efficiencies. That's because companies will be working together and sharing the challenges associated with completing the manufacturing process and reducing their effects.

On the other hand, the second scenario identified by researchers will lead to further struggles for the industry, Helper said. In this instance, companies squeeze out better profits by putting pressure on the margins of firms beneath them instead of making better products and seeking out means for eliminating inefficiency and waste.

"This path is a recipe for industry-wide stagnation," she said.

Fortunately, researchers found that many companies are already heading down the collaborative path to better supply chain community management. Today, it discovered, more companies acknowledge that their main customers are more willing and likely to work with them to reduce costs than during the years before the recession hit.

Similar findings to this latest report were also discovered in a pair of surveys conducted by the news provider CIO U.K. Initial polls of nearly 200 respondents in the U.K. revealed a greater need for B2B business integration solutions to foster collaboration throughout supply chains. Follow-up interviews revealed that 58 percent of companies said implementing collaboration initiatives with business partners is a top strategic priority for 2011.