With economic crises and a succession of natural disasters hitting the industry, times have been tough in the automotive world recently. Necessity is the mother of invention, however, and many claim that the sector has emerged the stronger for it. But has everyone emerged on a level pegging? At the recent Automotive Logistics Europe conference in Germany, delegates were asked whether the relationship between carmakers and the LSPs had improved and become less adversarial. Sixty percent of those canvassed said ‘no’. So what is to blame?
“In a lot of ways, it is a failure of the whole risk and reward relationship,” said Bruce Arlinghaus, senior advisor and owner of EurBeacon Consulting. Having previously served as group director, European supply chain solutions at Ryder System, Arlinghaus has an insight into the service provider end of the deal. “Certainly, during the crisis period service providers were not only asked to take a larger portion of the risk but we were told they were going to take a larger portion of the risk,” he observed.
According to Arlinghaus, promises were made and the impression given that once the crisis was bridged, that logistics service providers and suppliers would be rewarded for the sacrifices they made to ensure cars were delivered and that plants stayed open. Unfortunately, the perception is that some OEMs reneged on the promise and have gone back to business as usual, including the fierce competition over prices. That has led to frustration on the part of LSPs.
But Arlinghaus acknowledged that those heading the logistics providers affected have few illusions about their commercial relationships with OEMs, and that they would adapt their businesses. He added that this difficulity might even drive innovation.
“But when times do get tough, when the next tsunami hits, and we are all asked to step up to the line and take a risk, then the quid pro quo has got to be there,” he said. “The reward has got to be there for the service providers, the parts suppliers and all the people in the food chain.”