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A Better Partnership

Ahead of the Curve Auto Supplier Blog

August 14, 2013

More Sales, More Capacity Problems? Not necessarily!

Everywhere you look these days, there is some news about record car sales. We have covered the issue before in this blog, as well. As car sales rise to new highs, there’s a fine line between celebration and concern for auto suppliers. For some, the upward trend comes with production challenges. Where do you find the people and the time to accommodate the new demands? While some automakers have met this challenge by hiring new employees and adding production shifts, the supplier side of the story can be quite different. For instance, recent figures show that nearly 25% of suppliers are running at nearly 100% capacity. This means that there is very little room for errors or hiccups. If you are in the industry, you know there is no greater sin than shutting down a production line. Do you know your obligations and liabilities when it comes to capacity? This might be a good time to review those contracts and the terms and conditions, and an even more crucial time to negotiate the terms before entering into new supply agreements. Here are a few things to consider: • Review all of your current supply agreements, and the relevant terms and conditions, to understand your obligations • Seek opportunities to renegotiate terms of any current agreements before they become problematic • Pay careful attention to capacity requirements when entering new agreement You can read more about the trend here:  http://usat.ly/17hGBMJ

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