Every B2B market has a supply chain. Mapping that supply chain during insight can reveal obstacles and opportunities and lead to a winning strategy. If you’ve never mapped your supply chain, here are some tips to help you get started. Then we’ll show you how doing so revealed exciting opportunities for one of our clients.
Mapping the Automotive Supply Chain: a Godfrey Case Study
The automotive supply chain has been clearly defined over the past several decades. The supply chain is divided into distinct tiers, essentially defined by a supplier’s relationship to the vehicle manufacturer. Firms that sell directly to the vehicle manufacturers are Tier 1 suppliers. Those that sell directly to the Tier 1s are Tier 2, and so on.
One of our clients, a component supplier, sells into the $50 billion automotive seating market. By mapping the supply chain, we were able to identify the four Tier 1 automotive seating suppliers as well as the Tier 2 and Tier 3 suppliers. In doing so, we identified that our client was a Tier 3 supplier, but in one relationship was a Tier 2. This opened the discussion of what it would take to become a Tier 2 supplier to all four Tier 1 seating manufacturers. We knew this would be a significant challenge, with a considerable investment and a long lead time.
At the same time, mapping the school bus seating market revealed a similar supply chain, with a concentrated number of school bus manufacturers, a focused number of seating manufacturers and a wide variety of assembly and component manufacturers filling out the tiers. Our client saw a more realistic opportunity, with less investment and a shorter lead time to move up the supply chain and become a strong Tier 2 player.
As plans were developed to pursue this strategy, one of the Tier 1 suppliers became available for acquisition. Our client made the acquisition and became a Tier 1 supplier in the school bus seating market. By successfully mapping the supply chain, our client became aware of obstacles in one market and exciting, new opportunities in another.