- 21 pages on the crucial role of procurement in navigating automotive’s challenges
- Emerging profit pools & the power of (new) suppliers
- Procurement’s role in the auto evolution
- A new Strategic Procurement Model for the auto industry:
- The six automotive procurement categories: Components, xEV, Software & Application, ADASA/AV, Extinction, Service & After Sales
- The six dimensions of a future-facing procurement strategy
- Applying the KGM Strategy Strategic Procurement Model
Blueprint: Unveiling the future of automotive procurement
As the automotive industry faces the triple challenge of electrification, autonomous driving, and innovative mobility models, the role of procurement has never been more critical. Our white paper unveils the pivotal role that procurement plays in steering automotive companies – OEMs and n-tier suppliers – through this transformative era. It introduces a groundbreaking Strategic Procurement Model meticulously designed for industry professionals. A turnkey solution to revamp and supercharge automotive procurement functions.
The centrality of procurement in automotive transformation
// Preview | Table of contents & text extract
In an era marked by rapid and unprecedented transformation within the automotive industry, the key to not just surviving but thriving lies in redefining the core of business operations: procurement.
The sharp increase in value-add accounted for by suppliers in next-generation electric vehicles has far-reaching implications for the industry and for the strategic importance of the procurement function. Procurement is at the sharp end of many of the industry’s most pressing challenges: being the main lever in response to huge cost pressures, being able to manage more effectively along the value chain and identifying new players on the market. Equally, with an increase in outsourced value-add, new opportunities are opening up for suppliers to expand their relationships with major customers.
Why this white paper is a must-read for automotive leaders
Alarmingly, more than 60% of original equipment manufacturers and suppliers have yet to begin adapting their operations to this new reality, a delay that poses significant risks to their competitive standing and long-term viability.
In navigating the electric vehicle (EV) transition, OEMs must abandon the idea that, even though many of the components and systems they use have changed the way their organisation operates can remain the same. The “business as usual” mindset represents a serious liability for companies attempting to migrate to emerging profit pools. Procurement will need to change across all dimensions including management structures, risk management, supplier relationship management, the contracting model and so on.
To reflect the new market realities and create a stronger engagement with suppliers, the automotive industry needs a new strategic procurement model. At its core is the idea that industry players – OEMs and n-tier suppliers – must adopt a more flexible approach to procurement that does not depend for its success on their established market power.
To guide the approach as companies transition to EV procurement and help them to decide the best way to address different procurement needs and suppliers, KGM Strategy has developed a Strategic Procurement Model offering guidance.
For established original equipment manufacturers (OEMs), the challenges of the shift to electric vehicles (EV), particularly battery EVs (BEVs), are crystallised in the transformation of the industry’s supply chain. Thousands of components required to produce Internal Combustion Engine (ICE) vehicles are replaced by batteries, electric motors, and software. The resulting change in the supplier landscape is profound.
OEMs must develop partnerships with new suppliers from outside their industry. With much of their user experience – and therefore brand and product differentiation – now dependent on software and user interfaces, automotive manufacturers must secure access to the technology expertise that will determine their future success.
With KGM Strategy’s guidance, transform your procurement into a high-performance engine that propels your company into a new era of efficiency, innovation, and strategic prowess.
Download the white paper today to unlock the insights and strategies that will place your procurement team at the heart of your company’s transformation journey.
// The supply chain’s share in vehicle value soars
*Selected OEMs with deep integration into main components
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