Month: June 2022

Commercial activity is very important in the Automotive Industry.Technical and Commercial both are the two sides of a coin and complement each other.Commercial are used every where in the Automotive Industry.It starts with marketing Department’s in OEM where they have to make a Business case on what is the right price for any product and what will be the features in case they are going to launch a new product.

In OEM’s Procurement & Supply Chain Departments are connected through Marketing Department directly or in some companies through PMO offices.Procurement Department is very skilled in terms of estimating the product price on the basis of technical features as they are aware of raw material prices, process cost ,logistics cost etc.If a Procurement Professional is having technical knowledge then he will be an asset to any organisation.

In Tier1 companies who supply parts to the OEM’s ,Marketing Department takes care of commercial and they are responsible for finalising the business with the customers.They work purely on the commercial knowledge and they are an asset if they possess technical knowledge.They can persuade customers with their negotiation skills on pricing and product features.

In Automotive world there are three major Business Areas ,one is Dealers who are in direct contact with customers,OEM who take care of Assembling and Distribution of Vehicles to Dealer end and big number of Suppliers who supply the raw materials.Normally dealers engaged in selling and servicing of the vehicles and they don’t have huge departments and manpower. There can be slight variation of OEM’s and Supplier organisations.

OEM’s have two major departments of Product Development and Procurement and Supply Chain.There can be subdivision of the Product Development in terms of Chassis, cab, suspension,Engine team etc and Procurement and Supply chain have sub division in terms of Forging,Casting,Plastic ,Rubber and Supplier Designed parts.Product & Supply chain are mainly responsible for Quality,Delivery,Cost and right features required as per the customers and accordingly work to achieve the objectives.Product Development is engaged in designing ,development and the testing of individual parts provided by the supplier and the overall vehicle.There is more Departments also considering the efficiency of the organisation.

At the supplier end ,They also have Product Development Department but their Marketing Department mainly deals with Procurement and Supply chain Department of OEM’s.If Procurement and Supply chain Professionals are given the job of Marketing Department at Supplier end they can do a very good job as they know what OEM’s want.Manufacturing is another major department as they need to have very good Quality Control along with Procurement and Supply Chain Department.

There is lot of requirement of Automation in the Supply Chain ,however we need to have an integrated approach. Let’s understand traditionally how Supply chain works ,As we know that we have buyer and the seller for any product.Lets understand this by an example of OEM who sells car in the market.This OEM will buy lot of products from other suppliers ,so OEM is buyer and Supplier is Seller.In Automotive we have many suppliers and we can imagine how much co-ordination is required between buyer and seller.

Buyer has to give the volume estimate and accordingly keep the inventory of the vehicles at his end along with communication with manufacturing department.Manufacturing department of OEM has to plan the number of vehicles and accordingly he needs to plan for resources, operators, machine readiness and minimum material availability.Once assembly of vehicles starts then there will be continuously supply of material from various suppliers.These material supply can be locally ,from different cities and now a days in the complex scenario it can be from different country also.There is involvement of many companies,Many departments and many people and any miscommunication can lead to non-delivery of product at the right location and at the right time.

Automation helps to achieve the efficiency in the overall supply chain management.This needs to be done in a systematic way and accordingly we need to identify the non value added activities or repeated task on which we are dependent on the human being.Automation can be achieved by the combination of hardware and software devices.Traditionally operator or supervisor count the no of components produced but as per the latest technology machine will inform us the no of parts produced and even inform us in which hour we have achieved high production and even provide us the trend of production over a period of time which can helps us to take corrective measures to improve production.

We can do the integration the requirements and Project Management tools can help us to understand and documents and requirements and according business case can be made to achieve the objective,After that we can work systematically to identify the solution and implement it by doing Risk Management and making time plan.