Supply Chain Alert Dec. 2022
Here you will find an overview of the current situation on the materials market and recommendations for the upcoming months.
More and more customers choose to buy a function instead of components ie finished modules (building elements) instead of the individual components.
The automotive industry changed a long time ago and today consists of assembly lines where they handed over both the development and deliveries to the suppliers of the functions and building elements such as headlights, instrument panels.
The advantage of this is that the company can rationalize the cost by focusing on key skills in their business. The choice of partners is naturally providers who are specialists in their product and usually a category that supplies to other customers with similar needs and many times even to competitors. In this way one can reach both specialized development knowledge and products at competitive prices. This is now reflecting to other industries. A supplier will not be shared with competitors, but rather with other companies with diverse activities but with similar needs making conflicts rare if ever occuring. Martinson reference base shows just that.
The advantages of buying a function instead of components are several but is driven by the key competences the customer sees as strategic in their own business. By purchasing a modular product the supplier handles product maintenance and must deal with “end of life”, design changes, documentation, test systems, aftermarket etc. The quality can be ensured because the supplier mount modules and test the function. Although the material supply becomes more effective when only one article is handled.
What really drives the development of modular products (building elements) is the “total cost of ownership”, which are becoming increasingly common in the context of development- and purchasing processes.
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