Automotive purchasing revs up

Electronics Sourcing asked Smith’s VP of business development, Renato Souza, to explore the evolution of automotive supply chains during the move to electric vehicles

Q: With European countries fast-tracking the switch to electric vehicles, how will an automobile’s bill-of-materials evolve, especially as manufacturers move away from internal combustion engine production? Also, how will this change impact automakers’ purchasing departments?

While Smith is not directly involved in the production of semiconductors or final products, our global partnerships give us vast insights into part-price and demand data, which are often key indicators of market trends. We’re currently seeing strong demand from our automotive customers for the most innovative chips, which they engineer into their builds to get ahead of their competitors. The most innovative electronic components typically carry the most current date codes and are a manufacturer’s latest-generation model. Europe’s switch from ICE to EV models is expected to follow this sourcing trend and will more than likely require larger part-requirement lists. Adapting sourcing processes in the wake of this engine modification should be informed by reliable market intelligence. Market intelligence data can help an automaker’s purchasing department by providing comprehensive insights into both procurement trends and supply chain solutions.


Q: Traditionally, automotive manufacturers dealt directly with OEMs. However, that model became an Achilles’ heel during the pandemic. How is the automotive supply chain evolving in response?

The pandemic situation—exacerbated by other geopolitical factors—has greatly influenced the ongoing electronic-component shortage, causing many of our automotive customers to struggle with sourcing supply directly from their usual channels. Over the past few years, we have seen many automotive manufacturers begin to implement supplier diversification and fast-track approval processes into their workflows. We expect this response to continue and expand as auto manufacturers look to keep their lines active in the long term.


Q: Could you provide insight into some of the innovations that will be appearing on automotive customers’ BoMs soon?

Along with strong demand for the most innovative chips, we are also witnessing automotive customers incorporating fast-track approvals for alternate component options to help their BoMs have more flexibility in the future. In the current market, we are working with a wide range of automotive BoMs—from OEMs to subcontractors and in-between—to help all parties manage their supply chain goals. While Smith does not play a direct role in the product design, engineering or manufacturing processes, its position as a leading independent semiconductor distributor allows us to help support builds for innovations in the automotive industry, such as ADAS systems, autonomous-driving capabilities and much more to come.


Q: Finally, what general advice would you give to automotive purchasing teams over the coming 12-months?

Our guidance to customers right now is to continue engaging with trusted, open-market distributors that can stand behind the quality and delivery of their product. Throughout the ongoing shortage situations, OEMs have learned the importance of building strong and long-term relationships with open-market leaders. We encourage automotive purchasing teams to expand their sourcing models and partner with supply chain professionals who can help navigate the fluctuating market.