Announcements around the Geneva Motor Show suggested that carmakers are increasing the amount of standardised components across their platforms. Although shared parts provide a thoroughly developed and cost-competitive solution for vehicle manufacturers, this trend concentrates the supply chain and can encourage OEMs to rely more on single source suppliers, risking supply chain failure.

Although accurate data is hard to obtain, it is understood that up to 70% of components in the automotive industry have the potential to be shared across platforms. The figures vary dramatically between models and carmakers but cost pressures and the development of new markets mean the trend is strongly up. With the reduction in the number of platforms per OEM, it is clear that the parts unique to a model are set to reduce significantly. Some industry commentators are predicting that major carmakers will reduce their platforms by up to two-thirds by 2020.

plane-1Although component sharing offers significant financial advantages, findings detailed in a paper from the World Economic Forum on supply chain risk highlight the dangers of shared platforms. It uses as an example a major airline that made a strategic decision to operate a uniform aircraft type to reduce costs. However, when a major fault was discovered in one aircraft, the entire fleet had to be grounded, highlighting the inherent risk in this strategy and serving as a warning to other companies in search of economies and efficiencies.

Manufacturers may resist the temptation to single-source and instead multi-source components to reduce the risk of a supply chain disruption, in the event of a natural disaster for example. Although this may reduce the impact, it does not remove the risk of disruption, as a deeper analysis of the supply chain shows that multiple tier ones can often rely on a single tier two. When disruption does occur it affects all the production lines that require the part, so the more a component is integrated across platforms, the larger the potential for disruption.

The World Economic Forum paper recognised that supply chain disruption cannot always be foreseen or prevented, so it urged companies to put in place comprehensive contingency plans to minimise the impact. When the inevitable disruptions do occur, they can be solved by rigorous analysis of the supply chain constraints to ensure optimum distribution of scarce components between plants during times of crisis, to satisfy the points of greatest urgency. This analysis is typically carried out by a logistics specialist in partnership with the OEM. This is a powerful technique allowing the location of components to be changed quickly to support the demands of the workflow.

Two major OEMs have recently announced a new modular route to production that facilitates the sharing of components between platforms. Indeed, one carmaker has said it aims to reduce engine and gearbox variants by approximately 90%.

The benefits of global platforms and low-cost manufacturing are too compelling to be abandoned. With sufficiently rigorous analysis of the supply chain, and the planning expertise that emergency logistics specialists offer, the industry can utilise the benefits of platform sharing while keeping the inherent risks under control.