New study focuses on lower-tier automotive suppliers

  • 26-Aug-2011 06:10 EDT

There is a fork in the road for the lower tiers of the U.S. automotive supply chain. One road leads to a nice part of town, the other to a not-so-nice part. That is how researchers at Case Western Reserve University see things. In their recent report, "The U.S. Auto Supply Chain at a Crossroads," they recommend the road of greater collaboration among all tiers of the supply chain, "wherein firms share cost savings from identifying and eradicating inefficiencies that they might not have been able to address on their own," said Susan Helper, Weatherhead School of Management Carlton Professor of Economics, who led a research team concentrating on firms with fewer than 500 employees. The other road features firms at each level of the supply chain generating profits by squeezing margins of firms in the tier under them. "This path is a recipe for industrywide stagnation," Helper said. Both roads are traveled today, she noted, but there is evidence of increasing traffic on the road to greater collaboration. The report is available for free.

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