OESA Automotive Supplier Barometer: Positive but Guarded

The March 2014 OESA Automotive Supplier Barometer: Focus on Supply Chain was recently published. The 96 survey respondents told a story of an industry still feeling good about itself, but with a little more concern than in 2013. Pessimism increased and inventory levels were up (for finished goods and raw materials). However, overall, the survey paints a relatively positive view of the Automotive industry. 

Some highlights:

• The March Supplier Sentiment Index declined slightly to 56 from a January 2014 level of 60. This included a “modest shift in opinions from somewhat more optimistic to someone more pessimistic.” Optimism arises from new business and an expectedly better European economy. Conversely, global political unrest, higher inventories and the tapering of new model programs fed pessimism.
• Just over half (51%) of suppliers saw finished good inventory levels increasing. Just under half (44%) saw the same issue with raw materials inventory levels.
• Suppliers noted that capacity, customer requirements, manpower, capital and equipment, and materials all led to internal risks with meeting production requirements. On the flip side, their own supply chain risk concerns focused on capacity, raw material and component availability, lead times and deliveries, customer and supplier requirements, tooling and equipment, financials, quality and weather.
• To manage supply chain risks, companies are increasing inventory, increasing dual sourcing, increasing investments in IT and technologies and validating alternate materials. While none of these activities are new, the survey showed them to be more predominate now than in 2013.
• Lastly, companies no longer consider traditional “low cost countries” to be the actual lowest cost to source from – 69% of suppliers noted this trend.  Regionalization and localization are taking root. As noted in this blog recently, Mexico will soon be the No. 2 supplier of vehicles to the U.S., in part due to its regional location.