Communication Key to the Supply Chain

From the bolts to the axles to the finished product, Alabama’s economy depends on the automotive industry. Original Equipment Manufacturer plants (OEMs) such as Honda, Mercedes, Hyundai and Toyota are the last link in a chain of suppliers. Before the consumer can hop in the car and drive to work, men and women work behind the scenes, paying close attention to the smallest details.

With parts coming from all over the world, one of the complexities in managing the supply chain is logistics. Inventory has to be kept as low as possible to help keep costs down. When faced with delays in shipments of parts, each link in the chain has to have a plan in place to deal with these delays so that the rest of the chain doesn’t come to a halt. One weak link in the chain can be felt throughout the industry.

“As an axle supplier, we get axles to the Mercedes plant just in time, when they need the part, ” says Ron Davis, plant manager at ZF Lemforder Corp. in Tuscaloosa, a focused factory for axle systems for Mercedes in Vance. “It is very important to manage the supply chain from concept to full volume production.” 

The Toyota plant in Huntsville provides four-cylinder, V-6 and V-8 engines to its other North American automotive plants. 

Part of ZF Lemforder’s job as a tier 1 link in the supply chain is to ensure that the OEM plants receive a good product. In order to do this, the employees at ZF Lemforder must make sure the suppliers they purchase from give them a high quality product to use for building axles.

- Sponsor -

Tier 1 suppliers go directly into the finished vehicles. Tier 2 supplies tier 1, tier 3 supplies tier 2 and tier 4 supplies tier 3. A breakdown in the chain at any level affects the automotive industry, which in turn affects the entire economy of Alabama.

“Mercedes expects me to manage the supply base without hurting quality, ” Davis says.

Transparent communications are crucial in maintaining the supply chain. The customer expects to know as soon as possible if there is a problem. Without a robust control plan, a breakdown in communications, even when dealing with the smallest part, can cause a real problem. Davis says checking frequently and containing the problem where it occurs can help to make sure the mistakes never happen again. When it comes to design, quality can be affected if a job is too difficult to assemble. Once again, communication is key.

“No defects should ever leave a supplier and go into a car, ” Davis says.

Delivery also is an important component in the supply chain. Suppliers must deliver the right quantity at the right time. Failure to do so affects the whole industry, which in turn affects the economy of the state. OEMs can lose sales if they can’t get the parts they need.

Changes in the economy can put a strain on the automotive industry. When times are tough, sales of vehicles decline. The OEMs affect the supply chain just as the suppliers on the other side can. If sales of vehicles decline, fewer parts are needed and the effect is felt throughout the industry. Suppliers only build what is needed. In 2009, Davis says, the employees at ZF Lemforder only worked four days each week. Now, sales are on the rise and the work week is six days.

Honda Manufacturing of Alabama produces both vehicles and engines at its Lincoln plant. 

The automotive industry in Alabama prides itself on working together as a team. The Alabama Automotive Manufacturers Association (AAMA) provides training and networking opportunities. Companies may compete in the marketplace, but they still come together for conferences through the AAMA to learn new tools from each other to help handle any problems that may arise. Honda, Hyundai, Toyota and Mercedes all share their experiences and techniques so others can improve. By sharing the best practices and ideas, the automotive industry is strengthened. Many other states look to Alabama as a best practice state.

With good problem solving skills, including robust control plans, transparent communications, capable processes and equipment and designs that are easy to manufacture, quality issues can be prevented.

Says Davis, “We are only as good as the worst product in the chain.”

Click here to download the 2012 AAMA Membership Directory.

By Laura Stakelum

The latest Alabama business news delivered to your inbox