Rethinking the supply chain: an automotive perspective

Abstract

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.