Manufacturers and their suppliers will start to move to more localised supply chains to offset issues such as the one caused by the Japanese earthquake.

Richard Gane, PricewaterhouseCoopers lead project director, said the Tier 2 and 3 suppliers were often single sourced, but this would change.
He pointed to the Hitachi plant in Japan which supplies chips that go into modules. Most manufacturers have been affected by supply shortages.

“They have to have alternatives, which means more localisation and less long range manufacturer and supply,” Gane told the ACFO conference at Gaydon on May 17.

“The environment, transportation and inventory in the supply chain – a radical review is under way.”

Volume carmakers would be affected the most as they have been the more willing to move supply out to low cost sources, whereas premium carmakers have tended to keep supply local.
Gane forecasts more supplier collaboration and he said the traditional model whereby manufacturer “beat suppliers up on price” was changing. “Manufacturers are looking at their partners and who they give real margins too,” he added.