Auto Supply Chains Facing Increased Scrutiny
Expanding environmental compliance requirements, ecological mandates and nongovernmental organization watch groups are all increasing scrutiny on the environmental practices of the industry, the column says. Meanwhile, the automotive industry’s entire supply chain is being affected by legislation including the European Union’s end-of-life vehicles directive and the EU waste electrical and electronic equipment directive, the restriction of hazardous substances protocols, as well as US legislation on conflict minerals and corporate average fuel economy standards.
Specific challenges facing the industry include:
- Meeting rising demands on automotive efficiency.
- Meeting expanding compliance requirements.
- Evaluating, and possibly implementing, new technologies, chemistries and engineering and the impacts they may have on supply chain.
Major manufacturers have implemented strong supply chain frameworks aimed specifically at such compliance. Under such frameworks, top-tier suppliers will often be given lists of restricted materials and will enforce such policies with their own suppliers further down the chain, Blake writes.
However, such supply chain conformance can help to maintain accounts and open up new markets, whereas poor conformance can limit market access and put existing accounts at risk, according to Blake. As a result, competitive suppliers will now demonstrate their ability to provide critical information — including material declarations and verification of work practices — quickly and efficiently.
Ford’s supply chain contributes 87 percent of its total emissions, according to analysis by Trucost released in 2012. At that time the carmaker had engaged with 30 percent of its direct suppliers on carbon impacts, and found variability in supplier readiness to measure and report greenhouse gas emissions. Such engagement also delivered valuable insight into risk management opportunities for the broader automotive supply base, Trucost said.
With a $65 billion value chain, encouraging better measurement and management of materials and carbon could have a significant impact on the company’s raw material and environmental footprint. Ford could be better equipped to manage growth sustainably than the two competitors analyzed, Trucost said.
Photo Credit: Buick Regal via Flickr
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