Supplier development in Eastern Europe - Delivery problems despite industry 4.0
70% of the degree of value add is contributed by suppliers in the automotive industry, with an increasing tendency. At the same time there has been a reduction of First Tier Suppliers to a few significant system suppliers. The risk relating costs, quality and target dates is getting more and more within the responsibility of some less crucial suppliers.
Cause analysis with IMIG
Due to urgent delivery problems of a system supplier we conducted an on-site system and root cause analysis for a German OEM in Eastern Europe - with remarkable findings.
Fig. 1: Expansion of the model programsexample Mercedes-Benz passenger cars 
Fig. 2: Increase of the share of electronics in component value in the car (*2020 estimated) 
The market requests constantly more individual and multi-variant products with a trend to connectivity. The consequences are new and more complex requirements for products, which strongly affect suppliers. Simultaneously the life cycle of products become constantly shorter, responses for requirements have to be faster and late product modifications become more frequent. This ultimately affects the serial production and the probability of production failures increases.
System analysis with our supplier development program
Within a supplier development program we as IMIG conducted a system analysis at an automotive First Tier system supplier within 8 weeks. The result was a roadmap with more than 100 measures for short-term, mid-term and long-term implementation. The system analysis included on the one hand a top-down approach with focus on processes, organization and sustainable implementation. On the other hand there was a bottom-up approach on precedent cases of line stops (breakdown, quality problem, missing material).
In addition to the improvement of internal procedures and processes, the adjustment of the existing organization to market and customer needs took part. The optimization of the logistics and the supplier programs were regarded as another important point.
Main topics of this project
The focuses of this client project in “Supplier Quality Development” were:
- Crisis response and problem solving
- Prevention and risk analysis
- Development of the quality of suppliers
- Organizational development
The project was carried out in a very fast growing plant for electronics products in Eastern Europe. The production of semiconductor as well as the final assembly takes place there.
The findings were significant. The system supplier had excellent technical solutions with the trend towards a connected factory. However, the implementation of lean and agile methods still required actions. Particularly actions for deviation management and problem solving regarding speed, cause recognition and prevention measures were needed.
In addition to the efficiency of working processes our result included the introduction of an additional level in the organizational structure as well as strengthening the organization with qualified, cross-functional resources e.g. for problem solving on the shopfloor.
Fig. 3: Identified optimization requirements in the context of system analysis
Identified potentials with IMIG
According to our evaluations, we see potentials in
- reducing the number and duration of line stops by 50%,
- reducing the lead time in logistics by 25% and
- increasing the management quality by 25%.
Finally, the system supplier significantly improved in the OEM development program.
 Diez, 2012: The international competitiveness of German automotive industry
 Automotive Week, Roland Berger GmbH
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