Rethinking the supply chain: an automotive perspective

This paper contends that the description of tiering within automotive supply chains is likely to require redefining in light of the development of modular supply and that a natural consequence of modular supply will be the transfer of value-adding activity throughout the supply chain. Two concepts are presented to illustrate the characteristics that are likely to be required for suppliers to succeed within a modular environment. These concepts are applied to a supply chain currently in the process of accommodating modular supply. The findings suggest that whilst modularity accrues a number of tangible benefits to both the original equipment manufacturer (OEM) buyer and the modular supplier, the skills required to become a modular supplier are likely to result in a number of first-tier suppliers either exiting the industry or becoming second or third-tier suppliers.