Supply Chain Management - Automotive Manufacturing

Critical Rule: Never compromise quality or delivery for cost. A cheap part that stops the line costs far more than the savings.

Executive-Level Competencies

Strategic Purchasing

Materials Management

Supplier Quality

Key Metrics & KPIs

Executive Dashboard

Operational Metrics

Supplier Management

Supplier Tiering Strategy

┌─────────────────────────────────────────────────────┐
│  STRATEGIC PARTNERS (Tier 1)                        │
│  • Joint development, shared roadmaps              │
│  • Long-term agreements (3-5 years)                │
│  • Executive relationship management               │
│  • Collaborative cost reduction                    │
└─────────────────────────────────────────────────────┘
                        ↓
┌─────────────────────────────────────────────────────┐
│  PREFERRED SUPPLIERS (Tier 2)                       │
│  • Proven performance, competitive pricing         │
│  • Medium-term agreements (1-3 years)              │
│  • Regular business reviews                        │
│  • Standard cost reduction expectations            │
└─────────────────────────────────────────────────────┘
                        ↓
┌─────────────────────────────────────────────────────┐
│  APPROVED SUPPLIERS (Tier 3)                        │
│  • Qualified but transactional                     │
│  • Spot buy or competitive bid                     │
│  • Annual review                                   │
│  • Performance-based retention                     │
└─────────────────────────────────────────────────────┘
                        ↓
┌─────────────────────────────────────────────────────┐
│  PROBATION / EXIT (Tier 4)                          │
│  • Performance issues, quality concerns            │
│  • Controlled shipping or new business hold        │
│  • Active exit planning                            │
│  • Seek alternatives                               │
└─────────────────────────────────────────────────────┘

Supplier Scorecard Framework

Cost Management Strategies

Total Cost of Ownership (TCO)

PIECE PRICE
    + Tooling (amortized)
    + Logistics (freight, handling, duties)
    + Inventory carrying cost
    + Quality costs (inspection, sorting, returns)
    + Administrative costs (POs, invoices, management)
    + Risk premium (single source, geopolitical)
    ─────────────────────────────
    = TOTAL COST OF OWNERSHIP

Cost Reduction Levers

Should-Cost Model Components

MATERIAL COST
    Raw material × Usage factor × Scrap factor
    + Market pricing or index

CONVERSION COST
    Labor: (Cycle time × Labor rate) / Efficiency
    Machine: (Cycle time × Machine rate) / OEE

OVERHEAD
    SG&A: % of conversion
    Profit: % margin (typically 5-15%)

LOGISTICS
    Packaging + Freight + Duties

Negotiation Framework

Preparation Checklist

• BATNA - Best Alternative to Negotiated Agreement
• ZOPA - Zone of Possible Agreement
• Supplier economics - Their costs, margins, pressures
• Market conditions - Supply/demand, commodity trends
• Leverage points - Volume, specification, competition
• Walk-away point - Clear bottom line
• Value creation opportunities - Win-win possibilities

Multi-Variable Negotiation

Don't negotiate price alone. Trade across multiple variables:

BATNA Development

Always have alternatives:

1. Identify backup suppliers (at least 2)
2. Understand switching costs and timeline
3. Maintain relationships with alternatives
4. Document qualification status
5. Never reveal desperation

IATF 16949 Supplier Requirements

Supplier Quality Management System

Supplier Development Program

Stage Gate Approach:

GATE 1: POTENTIAL
    └── Initial assessment, capability review

GATE 2: QUALIFIED
    └── Audit passed, sample approved

GATE 3: APPROVED
    └── PPAP approved, first articles accepted

GATE 4: PREFERRED
    └── Consistent performance, competitive cost

GATE 5: STRATEGIC
    └── Joint development, innovation partner

Risk Management

Supply Risk Categories

Risk Assessment Matrix

Materials Planning

Inventory Strategy by Part Type

Safety Stock Calculation

Safety Stock = Z × σ × √(LT + Review Period)

Where:
Z = Service level factor (95% = 1.65, 99% = 2.33)
σ = Demand standard deviation
LT = Lead time in periods

MRP Best Practices

• Accurate BOMs (99%+)
• Realistic lead times (include buffer)
• Clean inventory records (cycle count)
• Demand forecast accuracy tracking
• Exception management daily
• Planner workload balancing

Templates Available

Integration Points

With A3CriticalThinking

• Supply disruptions trigger A3 problem solving
• Cost reduction projects use structured analysis
• Priority hierarchy: Quality → Delivery → Cost

With AutomotiveManufacturing

• PPAP documentation requirements
• Control plan supplier inputs
• Work instruction material specifications

With HoshinKanri

• PPV targets cascade from strategic objectives
• Supplier development as improvement priority
• Bowling chart for supply chain KPIs

Key Principles

1. Total Cost Thinking - Never optimize piece price at expense of total cost
2. Supplier Partnership - Best results come from collaboration, not adversarial relationships
3. Risk-Adjusted Decisions - Factor in supply continuity, not just price
4. Data-Driven Negotiation - Use should-cost and market intelligence
5. Continuous Improvement - Year-over-year cost and quality improvement
6. Strategic Alignment - Supply chain supports business objectives
7. Ethical Conduct - Fair dealing, no kickbacks, transparent process

Extended Context

For detailed methodologies, case studies, and advanced strategies: read ~/.claude/skills/SupplyChain/CLAUDE.md

For templates: ls ~/.claude/skills/SupplyChain/templates/