View from the top: Building a stronger supply chain

The UK automotive sector is hugely important to the UK economy, employing more than 700,000 people and investing over £1.5 billion in R&D every year. The strength and capability of the automotive supply chain is a critical factor in driving growth and attracting inward investment. According to the SMMT (Society of Motor Manufacturers & Traders), around a quarter of automotive companies in the UK are Tier 1 suppliers supplying directly into UK-based OEMs, and 42% are Tier 2. Over the last two years OEMs have pledged more than £6 billion of investment in the UK automotive market generating huge growth opportunities across the UK supply chain. A recent survey carried out by the Department for Business, Innovation and Skills has revealed that UK-based OEMs want to source £3 billion worth of product from UK suppliers. With the UK being such a high producer of engines, it's hardly surprising that a high proportion of this figure relates to commodities for the engine such as castings, forgings and accessories. So why are UK-based engine manufacturers now looking to localise component suppliers? Ford, for example, produced over 1.7 million engines at its Bridgend and Dagenham plants in 2011 out of a UK production total of 2.5 million. First, it is critical that these companies manage their supply chain inventories and the deliveries of engine components to their UK engine plants. For example, in the case of Ford, having Schaeffler's tappet production plant located just 20 miles from its Bridgend engine plant, means that it can take delivery of graded engine tappets in smaller batches and more frequently, as and when it requires them, with far less supply chain risk than if it had to import from the Far East or South America. This growing interest and commitment from global vehicle manufacturers to source more components in the UK is being supported by the Automotive Council and the SMMT, which has set up and hosted six separate 'Meet the Buyer' events since 2010. These networking events are designed to match OEM- sourcing demand with UK suppliers. As a manufacturer of high-precision mechanical tappets for internal combustion engines, Schaeffler UK is reaping the benefits of this inward investment by the OEMs. It recognised some years ago that it needed to invest in its UK production plant in order to support the major vehicle OEMs, investing heavily in new capital equipment for its plant in Llanelli, South Wales in 2011 and 2012. The company committed several million Euros in new surface coating technology for tappets, as well as a massive 66-tonne deep drawing press, that enables the plant to produce highly repeatable, superior quality mechanical tappets and other automotive engine components for OEMs.The investment in new capital equipment at Llanelli will enable Schaeffler to supply Ford with over 20 million low friction tappets per year if required. These tappets are already helping Ford to improve the fuel efficiency of its engines and to minimise CO2 emissions, particularly evident on Ford's new Ecoboost gasoline range. Schaeffler supplies mechanical tappets for use on Ford's 3-cylinder 1.0 Ecoboost engine, which was recently named 'International Engine of the Year', voted for by more than 75 journalists from 35 countries. As well as tappets for this award-winning engine, Schaeffler supplies the VCT (variable cam timing) system, another technology that improves fuel efficiency and lowers CO2 emissions. For some regions of the world, Schaeffler will also supply an idler for the Front End Accessory Drive. Schaeffler is continuously developing new lightweight, lower friction, more energy-efficient components and systems for vehicle engines, transmissions and chassis. This is helping to reduce the weight of the vehicle, improve fuel consumption and minimise CO2 emissions in order to help OEMs meet ever-tighter European vehicle emissions targets. Innovation and collaborative working with vehicle manufacturers is also important. Ford and Schaeffler have worked together on a number of projects, both within and outside of the UK. As well as supplying tappets to Bridgend and Dagenham in the UK, Schaeffler supplies tappets for Ford's engines built in Spain, Romania, Germany, Brazil, India and China. Schaeffler even has a resident project engineer based at Ford's Dunton Technical Centre in Essex, who is responsible for ensuring the smooth integration of Schaeffler components and systems into Ford engines. Resident engineers work closely with the vehicle manufacturer's design team, resulting in clearer, faster communication. In Schaeffler's case, any new automotive components, modules or system innovations can be communicated quickly and effectively to the design engineers. This usually includes tailoring a specific Schaeffler system or component for the customer. By working in close partnership with vehicle manufacturers, suppliers can react much faster and can quickly identify new business opportunities. By having a resident engineer close to the customer, the supplier gains a deeper understanding of new, relevant R&D projects. Knowing what a vehicle manufacturer is working on now and in the near future is priceless information. This could help to generate more business in the form of more projects, which in turn leads to increased growth and security of jobs for the supplier. This increased business can then cascade down the supply chain to lower tier suppliers, ultimately resulting in benefits for UK plc as a whole. Of course, this close working also benefits the vehicle manufacturer since they can tap into the supplier's knowledge by quickly accessing the relevant areas of expertise within the organisation through the resident engineer.