a source of competitive advantage
Automotive Industry Perspective
2010 promises to be another challenging year for automotive companies, as survivors must be prepared to compete in a highly volatile economic environment.
Unprecedented Challenges
Volatile raw materials costs and fuel prices, tighter regulations, capacity and sourcing challenges and the need to satisfy consumer demand for cleaner, environmentally friendlier products, make for a difficult business environment for the global automotive industry. Add to this tightened credit markets, declining consumer confidence, increased government involvement. While the industry is well accustomed to change and complexity, the combination of these new realties requires a renewed focus on carefully balance extreme supply and demand variability.
Controlling Critical Cost Drivers
Raw material cost and availability is consistently cited as the leading factor for missed earnings and shrinking profits. OEM’s need to ensure that they are managing sub-tier spend on parts and commodities. At the same time, they need to manage risks of supply interruptions caused by the credit risk of their external partners and suppliers, and the subsequent interruption of supply by upstream material producers. With raw material inputs representing anywhere from 25 percent to 75 percent of finished part costs, it’s imperative to understand the cost drivers affecting the materials that flow into their purchased parts, and actively control and coordinate how materials are selected, sourced, and processed by throughout the extended supplier network.
How Newview can help
OEM’s can re-capture control of their part purchasing process with Newview’s Coordinated Network Procurement product featuring the ‘Buy-Sell’ or ‘Resale’ solution. This web-based technology solution allows OEM’s to leverage their aggregate spend on behalf of their value chain by purchasing the raw materials or parts directly from the primary source source and resell the volume to their external partner and suppliers. This is achieved without the OEM assuming physical or financial inventory exposure. CNP provides for payment by “netting” or “setting off” payments against deliveries of finished parts, components and assemblies from their sub-tier suppliers. This process returns visibility to the purchasing process, and eliminates the adverse cost and risk of deteriorating supplier credit.
Newview’s Coordinated Network Procurement & ‘Buy-Sell’ Process.
Newview provides this capability through a variety of options. CNP can be delivered as a traditional software product, as a hosted ‘on demand’ (SaaS) solution, or as a Business Processing Outsourcing solution as a fully outsourced service through one of our business partners. CNP is proven product that has been successfully implemented and in operation for leading Automotive OEM’s and Tier 1 Integrators for over a decade.
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