German Portal



 About RMP

About themanager



The Internet: Redefining relationships in the supply chain


By Hanns Günther Bollig ©


- Executive Summary -


The Internet will redefine relationships in the Supply Chain in more than one way. Whilst the automotive core business becomes less and less attractive, the true asset of the vehicle manufacturers - the global customer base – needs to be exploited. The Internet will be the vehicle for achieving this. Unfortunately for the OEMs, this asset base is currently owned by the dealerships. If the Block Exemption for the automotive industry is lifted in Europe, access to the customer base is becoming even more remote.  In the attempt to enhance shareholder value by exploiting the customer base, the vehicle industry is likely to undergo significant change:


  1. The automotive industry will use the Internet to gain direct access to more than 250 million customers worldwide. In order to achieve this, they will seek to turn the currently infrequent purchasing patterns of cars into continuous sales streams, using products ranging from insurances to in-car and out-car entertainment and business electronics. Altogether they will have to build a largely extended B2C business with their customers. In support of this move, the vehicle manufacturers are likely to relieve themselves from the actual production process in a new wave of outsourcing activities.


  1. The vehicle manufacturers will have to tackle the market by adopting distribution patterns similar to the computer industry. It is likely that three market types will emerge:


a.“Cash & carry”: low cost mass production vehicles which are built to stock and pushed into the market via various types of retail outlets including free distribution channels. 


b.“Built to order”: traditionally built, medium to high value monocoque vehicles. Built to order with a customer order lead-time of below one month.


c.“Assembled to order”: space frame technology will be the common technology for most of the increasing number of niche vehicles with production volumes below 100.000 to 150.000 units per year.  Pre-manufactured modules and body panels will allow assembly to order within one week.


  1. The current procurement and planning processes in the automotive industry will undergo significant change:


a.The B2B platforms of the OEMs will allow feeding market data directly through to the last echelon of suppliers. This will help extending synchronised production to some extent. However, euphoric expectations should be muted. The negative impact of faults in the production chain and the individual optimisation processes of OEMs and suppliers will still exceed the positive impact of improved communication chains.


b.Production to order and assembly to order will produce very short supplier lead-times. The current practice of issuing continuously updated forecasts to suppliers will become useless and is likely to be abolished. Instead of forecasts, order books or filled production slots could be fed through to those suppliers, which can be included in the production to order cycle. The other echelons would operate on capacity plans and historical data only.


  1. Despite extended production to order processes, the supply chains are likely to be globalised further. Producing at the cheapest location will remain to be more important than supplying from a supplier park. Supplier parks may shrink.



This article was provided by courtesy of Mr. Hanns Günther Bollig,

Automotive Advisors & Associates


Full Text Article

Back to Articles