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AGENDA

Supply Chain Stream: Growth in the UK Supply Chain

13:30 – 15:00

OEM Procurement

- Rob Johnson, Purchasing Director, Jaguar Land Rover

- Luis Olivié, Global Business Development Director, Achilles

- Chris Gane, Divisional Managing Director, Caparo

- Ian Henry, Director, AutoAnalysis

Chair: Justin Webb, Broadcaster

London 6th June 2013

Luis Olivie, Achilles Group

SMMT INTERNATIONAL AUTOMOTIVE SUMMIT

http://www.achilles.com/


© 2012 Achilles Group Limited Confidential 4

Achilles Automotive Supplier Risk Management who we are...

Global, 1000 employees

790+ buyer customers and 100,000+ suppliers each year

what we do...

Supplier information + Supplier risk management

Supply Chain Mapping

how do we do it...

Community

Supplier onboarding + Validation

+ =



The problem

Over the past 24+ months, the Industry has been impacted by a number of events that have caused regional & global supply chain disruptions.

1. Supply chains more complex

2. New risk areas are being added

3. Identify and manage those risks in such a global and increasingly complex environment is a challenge

...What is needed?

One single industry approach

Supply chain Visibility

Risk assessment methodology

Keep SCM related costs low

The ability to quickly understand exposure at Tier N levels of the value chain and assess is critical to enable fast recovery.


© 2012 Achilles Group Limited Confidential 6 © 2012 Achilles Group Limited Confidential 6

Solution: Mapping the core supply chain of Automotive business




Map supply

chain

Clarify impact Study c/m Implement c/m

Incident Current Process

Clarify impact

Study c/m Impl c/m

Incident

1 day

Target

0~3 months (tbc)

Study

c/m

Impl.

c/m

j k

0~6 months 1wk~2mths

Why Supply Chain Mapping?

Achilles Supply Chain Mapping allows “mapping” extended supply chains, and

view supplier info beyond Tier 1 ...

Extend risk identification beyond T1 - Increase visibility into the supply chain

via a system solution for data collection

Reduce reaction lead time - speed containment and response to risk events

Provide ability to take proactive measures to minimize risk (dependencies)




Our approach

Industry collaborative approach vs standalone efforts

Benefiting both buyers and suppliers vs buyer driven

Leveraging on Achilles global resources, tools and expertise

Confidentiality is paramount

First Mapping: Cascading down

Avoid fatigue

Confidentiality and control

Then risk assessment Focus on CSR and Financial information




Mapping the core supply chain of Automotive business

Originating Buyer Buyer selects product Alternator and Supplier

Tier 1 Supplier Alternator

Supplier confirms the product Alternator

Supplier selects their Supplier and product Copper wire and links them to product Alternator

Tier 2 Supplier Copper wire

Supplier confirms the product Copper wire

Tier 3 Supplier Copper

Supplier confirms the product Copper

Supplier selects their Supplier and product Copper and links them to product Copper wire

Invitation >registration > short questionnaire

t1

Tier 2

Tier n

OEM

[Current] [Achilles]

Facilitated by Achilles



Drivers and benefits

If you gain visibility and can act proactively, then ...

Protect your best seller

Are you really sustainable?

Conflict Minerals

Predictability

War in the Korean peninsula

Insurance carriers

Chemical manufacturer

1. Understand gaps and time to recover

down the chain, ...

2. Understand Sustainability issues ...

3. Compliance in general ...

4. Financial situation ...

5. Evaluate overall risk in one region ...

6. Get better support ...

7. Identify points of convergence ...




Thank you.

Achilles.com/LinkedIn Twitter.com/Achillesltd Achilles.com/Facebook

www.achilles.com

Thank you.

Achilles.com/LinkedIn Twitter.com/Achillesltd Achilles.com/Facebook

www.achilles.com




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Markets and Production

Outlook: implications for

suppliers

Ian Henry

AutoAnalysis

June 2013

SMMT Automotive Summit

European car sales have been in decline for

some years …

Ian Henry, AutoAnalysis

[email protected], June 2013

2013 shows small signs of

improvement

• UK apart, major markets down in 4m to April

• UK, Germany and Spain grew in April

• Rate of decline in France and Italy slowing!



% change in new car registrations, 5

major markets and EU total

-25

-20

-15

-10

-5

0

5

10

15

20

France

Germany

Italy

Spain UK

EU tota

l

2012 Jan-Apr 2013 April 2013

Variable picture amongst major VMs

% annual change in new car registrations,

major VMs

-30

-20

-10

0

10

20

30

VW

Au

di

PS

A

Ren

ault

Op

el/V

auxh

a

Fo

rd

Fia

t

BM

W/M

ini

Mer

ced

es

Hyu

nd

ai

Kia

JLR

To

yota

Nis

san

2012 Jan-Apr 2013 April 2013

• Major volume VMs, PSA, Renault, Opel/Vauxhall, Ford and Fiat, all severely hit

• Toyota, Nissan, BMW and VW/Audi not immune to market decline

• JLR and Kia remain unscathed by recent decline

• VW/Audi, Mercedes and Toyota/Nissan first to shown signs of recovery?



Changes afoot amidst major VMs

• EU27 2012 car market fell 17-year low

– Jan-Apr 2013 showed further decline

– Modest recovery in April …

• Volume brands facing long-run, structural decline in Europe as value brands and premium marques continue to grow:

– Having lost c0.5mn units each over past six years, can the volume VMs really

recover?

• Volume VMs’ European production down significantly:

– 2007-2012: Fiat, Ford, Opel/Vauxhall, PSA and Renault lost c3mn units’ production

– But total European production fell by just 2.1mn

– Main winners = Dacia, Hyundai-Kia, Nissan, Volkswagen/Audi and JLR

– New order for VMs in Europe clearly emerging …



VMs’ response to market decline … modest

restructuring by volume VMs … is it enough?

Volume VMs

• GM closing Bochum, PSA closing Aulnay

• Ford closing Southampton & Genk

• Renault and Fiat reorganising footprint, refusing to close plants

• Volkswagen investing in Spain, expanding in China

Premium brands

• BMW Mini increasing capacity (at Nedcar), expanding in China and Brazil …

• Mercedes accelerating expansion in Hungary, adding Valmet as temporary capacity

• Audi adding Mexican plant to ease pressure on German factories

• JLR growing …



UK production dynamics

• Substantial commitment to increase UK production by Nissan and JLR especially

• Commitment to maintain UK production by BMW Mini, Honda, Toyota and GM – All underpinned by strong, and rising, export

ratios

• Ford closing Southampton van plant, but still a major engine producer

• 2mn annual vehicle production later in decade is still realistic …



Strong exports at all UK VMs: most UK plants

are sole global production locations …

Export ratios, 2007-2013, UK volume producers

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

HONDA NISSAN TOYOTA VAUXHALL/OPEL

2007

2008

2009

2010

2011

2012

Q1 13

Export ratios 2007-2013, UK premium brands

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

MINI JAGUAR LAND ROVER

2007

2008

2009

2010

2011

2012

Q1 13

Export ratios 2007-2013, UK super luxury brands

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

ASTON MARTIN BENTLEY ROLLS-ROYCE

2007

2008

2009

2010

2011

2012

Q1 13



Overall and Non-EU export ratio, all UK VMs

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Total Export Ratio Non EU Export Ratio

2007

2008

2009

2010

2011

2012

Q1 13

Substantial recent commitment to UK

vehicle production

• JLR: Halewood/Solihull operating 24/7; F-type production started; several new models imminent; should increase UK component sourcing significantly

• Nissan: two new models added to Sunderland portfolio; increasing UK sourcing; production soon over 600k pa

• BMW Mini: c£750m investment in UK; Oxford at capacity limit; additional Mini production in Netherlands from 2015

• GM: Ellesmere Port = lead plant for new Astra; production in UK “guaranteed” into 2020s, with slowdown in 2012-14

• Honda: completed major investment; adding new engine line; widening Civic range; but will lose Jazz

• Toyota: centralised Auris production at Burnaston

• Ford: closing van plant in Southampton and stampings plant in Dagenham; maintaining engine production …



Rising production accompanied by

increased UK component sourcing

• AutoAnalysis/Cambridge Uni/SMMT surveys in 2009-2010 found genuine wish to increase component sourcing in UK

• UK suppliers winning business from sister German plants …

• BIS & Automotive Council identified at least £3bn worth of potential additional sourcing for UK

• JLR: >£2bn UK sourcing for Evoque alone; c£1.5bn for F-type; sourcing for engine plant and higher production volumes will add to this significantly

• Nissan: expanding production line-up could add >£4bn to UK sourcing over new models’ lives



You can’t always get what you want …

Components which UK VMs would like to

source in UK

Source: Automotive Council



Amidst economic uncertainty, UK vehicle &

engine production has excellent medium-long

prospects

• Most UK models only

made in UK

• Significant exports of

vehicles and engines

• Substantial increases

in local sourcing at

UK VMs expected in

near future

• Suppliers have a

“once in a lifetime”

opportunity to lock

themselves in with

JLR and Nissan in

particular

– This “once in a

lifetime” chance has

a long way to go!




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AGENDA

Supply Chain Stream: Growth in the Supply Chain

Finance and the Supply Chain

15:30 – 16:10

- Richard Hill, Head of Automotive, RBS Corporate Bank Division

- John Leech, Head of Automotive, KPMG LLP

- Mike Mychajluk, Purchasing Risk Manager, Jaguar Land Rover,

and Automotive Council UK Supply Chain Group member

Chair: Gary Leitch, Managing Director, Lombard Corporate Asset Finance


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AGENDA

Supply Chain Stream: Growth in the Supply Chain

Visibility in the Supply Chain

16:20 – 17:00

- Ian Henry, Director, AutoAnalysis

- Jeremy Hammant, Supply Chain Practice Leader, CSC

Chair: Chris Gane, Divisional Managing Director, Caparo

The importance

of supply chain

visibility Ian Henry, AutoAnalysis

SMMT Automotive Summit

June 13, 2013

Supply chain visibility

•What is it?

•Why does it matter?

•How to get it?



Supply chain visibility –

what and why?

• Knowing who supplies at each stage

• Where each stage takes place

– How do the parts get from stage to stage?

• Need to know for quality control and to

know how to react when chains break:

– Tsunami, Thai floods, recalls …

• Amazing how little VMs and Tier 1s know

about their supply chains



Supply chain visibility –

how to get it … • Hard work, detailed research

• Phone calls, emails, form filling, data checking, cross-referencing – Achilles’ new system will help

• But if you want to know suppliers throughout the chain and their geographies: – There’s no substitute for original research …

• Beware: people don’t like releasing information, even inside your own company …



AutoAnalysis’ experience in

supply chain mapping • Seats – frames, mechanisms, motors,

foam, fabric/leather:

• Airbags – ECU, ignitor/inflator, housing, cover, bag (including weaving, coating, cut & sew)

• Lighting – bulb, reflector, lens, wiring ..

– Identified suppliers at each stage, locations and models supplied for each VM in Europe

– 3-6 month studies, multi-lingual teams, hundreds of calls, emails …




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