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SOURED OEM SUPPLY TIES

PTA News Bureau

At a time when the global auto industry is set for higher growth, there is heightening friction between auto manufacturers and OEM suppliers, mostly on cost reduction factors.Fini,-Matteo-2011-400

A survey by IHS Automotive, a world leader in critical business information, insight and analytics, showed deterioration in their of relations that saw unwelcome practices, such as annual price reduction targets, which suppliers consider as unsustainable.

IHS Automotive analyst Matteo Fini, considered the mastermind behind the SuRe index (Supplier Relations index), a unique measure of the quality of relations between OEMs and suppliers around the globe, said in an interview that pressure on cost reduction is one of the reasons for the soured relations.

But it does not result per se in a reduction of growth opportunities for the auto industry, he told Polymers & Tyre Asia. “Rather it means that suppliers have to find innovative ways to protect their margins. Sustaining key R&D activities when your margins are constantly eroded in some component areas makes suppliers’ life much more difficult.”

Matteo, who leads the IHS annual OEM-supplier relations study and the additional services that IHS offers in this area, has been conducting OEM strategy and supply chain analysis since 2004. He has headed Supplier Business – IHS Automotive’s procurement strategy research centre from 2009, and has authored numerous studies on OEM procurement strategy and automotive technology.

(Full Text in PTA Dec/Jan issue)

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