Organization of Renault's supply chain

Résumé du document

The objective of this study is to develop the international supply chain of Renault, the French car maker. Nevertheless, the diversity of the information and the great number of firms on the market made it difficult for us not to give examples and arguments based on other car makers. Therefore, we will analyze Renault's situation in relation to its competitors.

The automobile industry is one of the most competitive industries in the world and one of the highest export earners. With annual sales of around a trillion dollars, this industry accounts for around one job out of ten in the industrialized countries.

In a century, the automobile industry has evolved from craft work in the 19th century to a very complex industry. This tremendous development has had an impact on the structure and strategy of the dominant companies. Logistics and supply chain management have become key issues and have taken more and more importance as they have played a major role in the development and changes of the industry.

Extraits

[...] Concentration The market of equipment suppliers has been concentrating for many years. Therefore, suppliers are becoming more powerful and car manufacturers have less bargaining power. Let's take the example of Valeo, a French supplier. The share of Renault's purchases has been decreasing for many years. If Renault used to be Valeo's main client, it is not the case anymore and Renault has lost its priority over the other competitors. These suppliers, by getting bigger and bigger, win new markets and have more important clients. [...]

[...] Therefore, we will analyze Renault's situation in relation to its competitors. A few chronological data The automobile industry is one of the most competitive industries in the world and one of the highest export earners. With annual sales of around a trillion dollars, this industry accounts for around one job out of ten in the industrialized countries. In a century, the automobile industry has evolved from craftwork in the 19th century to a very complex industry. This tremendous development has had an impact on the structure and strategy of the dominant companies. [...]

[...] Huge investments will be done in both of those competences. With a strong focus on conception, the car manufacturer can sustain a technologic leadership 2nd choice: to choose modules for producing a car Production complexity is transferred to the first tier suppliers. Conception is focused on how to modularize the car. Suppliers have to increase their knowledge from production to conception and technology. Car manufacturers try to limit costs of investments. Moreover strategy must be shared and applied by the suppliers. [...]

[...] This created a network of suppliers which was hierarchical: The evolution initiated by Toyota was quickly adopted by global automobile industry which today applies these principles in their supply chain. A market divided into strategic groups The automobile market is well-known for its diversity. Each car maker has its own strategy and tries to gain market shares on a defined area. The graph below presents the different strategic groups among the world automobile industry: Therefore, we can see that automobile makers implement a strategy that is linked with several aspects of their international organization, their offer, the market they target We can divide those criteria according to: - Their geographic area they target: national, regional, global - The depth of their model range: narrow, large - The broadness of the line: intermediate, broad . [...]

[...] One supplier delivering a tiny component can make the whole supply chain stop. Therefore, companies have launched a new system called parks of suppliers we will talk as a challenge. Monosourcing This issue is linked with all the other suppliers' issues. Indeed, the fact car manufacturers need a great number of very specific components implies that they have to buy each of them to a different supplier. Therefore, each component has usually only one supplier. This situation makes them very fragile to anything that might happen to a supplier. [...]