“It takes 2,500 parts to build a car,” Peter Hasenkamp, former head of supply chain strategy for the Tesla Model S, once said, “but only one not to.”
The Semiconductor Crisis Should Change Your Long-Term Supply Chain Strategy
The auto and other industries have been brought to their knees by the scarcity of a tiny, and normally ubiquitous, piece of technology: the semiconductor. Plans for millions of cars have been cancelled and the damage will continue for years to come. How can business leaders prevent this from ever happening again? They need to transform their business by putting suppliers at the center. Currently, CEOs typically spend a tiny fraction of their time with suppliers. Instead, they need to follow the procurement-centric model of Apple and other Big Tech companies by reengineering and rebalancing the way they collaborate with direct and indirect suppliers, specifically: initiating one-on-one conversations with supplier CEOs; working with suppliers to develop mutually profitable joint business opportunities; making commitments about loyalty during future semiconductor and other crises – in general taking procurement to a more strategic level. Tesla is an example of a company that has done this phenomenally well. One or two tactics won’t work; to ensure resilience and success, what’s needed is a systemic approach that puts procurement at the core.