The Automotive Parts Sector In Pakistan Export Performance - TRTA i

Power Buyers: Secrets of the World’s Best Automotive Purchasingand Supply Managers, by Russell HensleyThe article highlights the current challenges faced by global automotive industry suppliers. Thesurvey results paint a bleak picture of the challenges facing the global automotive supplierindustry, which continues to miss its cost–reduction aspirations.The research identifies seven key reasons for this shortfall:• Image problems (very few top talent individuals get attracted to the purchasingfunction)• Mindset and behaviour (majority of companies interviewed in the survey don’tconsistently engage in role model collaboration. Supplier mindsets toward their ownsupplier tend to be quite narrow; with most indicating that they rarely involve their ownsuppliers in areas such as concept/design activities or in cost-reduction exercises).• Total cost approach (purchasing choices are based on price alone, lack of information,i.e. basic facts for making purchasing decision)• Direct and indirect materials (suppliers lack ability to execute these materials. Forexample, while suppliers establish cross-functional commodity teams, few such teamsare able to conduct clean-sheet cost build-ups.)• Global sourcing (suppliers should follow steps taken by their OEM customers to reducecosts and capture value)• Integration with product development (purchasing should take place at early stages ofproduct lifecycle where cost can be controlled)• Improving buyer-seller relationship.Factors driving strong performance for each of the seven areas are:• Making purchasing more attractive to top management,• Allotting high proportion of resources on strategic activities,• Creating and maintaining a comprehensive database of their suppliers having detailedinformation about them,• Having a clear understanding of global supply chain costs,• Putting effective risk strategies into action,• Purchasing during the concept stage of product development,• Setting market–based reliable targets, and• Developing long-term, performance-based collaborative supplier relationships.The study reveals that the industry needs to work at improving these factors. A strongpurchasing performance can make the difference between success and failure. Some keycompanies are also making use of bad practices and also have room for improvement.International Trade Centre Page 27