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In traditional supplier sales, automotive suppliers work with one or a few original equipment manufacturers (OEMs) to design and produce parts for a specific program. Sales program managers handle the process from start to finish, including understanding requirements, quarterbacking the RFP process, and maintaining reasonable profit margins.
For “engineer to order” programs, sales excellence means managing high profile, strategic programs with one, or very few OEMs. This approach is still relevant, but three major auto industry trends are forcing it to change.
These foundational shifts mean auto supplier sales organizations need to be more productive, efficient, and collaborative than ever before to stay ahead of the curve and keep up with auto industry trends.
Auto industry trend: The race to electrification
The era of autonomous and electric vehicle manufacturing is here. OEMs are increasingly investing in the production of electric vehicles, leading to opportunities for automotive suppliers to supply new components. Bridgestone aims for EV tires to make up 90% of sales by 2030.
“We’ve invested more than $6 billion dollars in electromobility development and in 2021 our global orders for electromobility surpassed $10 billion dollars for the first time.”
– Mike Mansuetti, President of Bosch, North America
The components needed for electric vehicle are different from those required for a combustion engine vehicle. Electric vehicles typically need fewer components, less hardware, and more software. As demand for new components grows, commercial teams need to have flexible processes to support new business models, like those needed for software development, but also keep them rigid enough to support an existing and profitable business.
The act of balancing innovation and continuity is critical for automotive supplier success
In addition to building new processes, automotive suppliers must also build new relationships in order to take advantage of new EV opportunities. Most OEMs have introduced an electric vehicle division into their organization, which is often entirely separate from the teams that produce traditional combustion engine vehicles.
Automotive suppliers must become adept at navigating OEM organizations to identify teams responsible for electric vehicle manufacturing, establishing relationships with key contacts, and nurturing those new relationships throughout the customer journey.
Supplying components to OEMs for electric vehicles not only changes who suppliers work with, but also how they collaborate. The complexity of designing, producing, and integrating new vehicle components, combined with the need to meet regular standards, cost considerations, and quality requirements, requires collaboration between OEMs and suppliers. This results in constant back-and-forth communication.
If suppliers can respond faster and more accurately to their customers’ requirements throughout the RFP process, they have a better chance at winning and closing that business. Throughout the sales process, suppliers must be better at prioritizing incoming requests, which requires them to tighten up the collaboration between research and development, quality, and sales teams as much as possible.
Globalization of the automotive supply chain
Another automotive industry trend impacting supplier sales is globalization. Many OEMs are expanding their global footprint and suppliers are adapting to support these new international operations.
Becoming part of a globalized supply chain offers opportunities for automotive suppliers to sell their parts to new markets, as well as source materials from around the world based on quality, cost, and availability.
With access to raw materials sourced from around the globe and more visibility into this supply chain than ever before, automotive suppliers have the opportunity to become trusted, proactive partners to their customers by quickly anticipating and solving supply chain issues.
Automotive suppliers who equip their sales managers with supply chain insights at the right time will be best positioned to take advantage of this trend.
Sales managers are often involved in every step of the customer journey — from RFP to program planning and project management. Sales managers with supply chain visibility can play a key role in maximizing demand and anticipating issues that may impact customers.
To illustrate this, let’s consider a supplier who sells seats. The supplier’s customer is an OEM that prioritizes sustainability and environmental considerations in its supply chain. The sales manager on the account, in collaboration with the team managing the supply chain, detects that one of their leather suppliers is unable to comply with local environmental regulations. Consequently, the seat manufacturer won’t be able to comply with the OEM’s requirements.
With this information, the sales manager can create a plan to identify alternatives made available by the global supply chain. Armed with the plan, the supplier can proactively address the issue and reduce impact to the program schedule.
By uniting the right data, processes, and people, the seat supplier was able to take advantage of the globalized supply chain to achieve the customer’s desired business outcomes and contribute to building a long-term relationship beneficial to both parties. Without this visibility, the supplier would have been forced to react and wouldn’t have been able to fully take advantage of the breadth of players available to help overcome the shortage.
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Demand for high-quality products + cost efficiency
Today’s automotive suppliers are tasked with developing high quality products while finding ways to create cost efficiencies. Financial impact from the pandemic and rising input costs, combined with slower sales and pressure from OEMs, have resulted in tight margins.
Creating efficiencies in the sales process presents an opportunity for automotive suppliers to minimize costs without sacrificing product quality.
During the pandemic, automotive suppliers needed to borrow money, putting many in significant debt. Now, they need to invest research and development resources into emerging trends, like vehicle electrification and meeting carbon emissions targets. High debt levels and the high cost to borrow money make this R&D effort even more expensive.
On top of this, due to inflated costs of goods, OEMs are looking for ways to lower the price of vehicles. This puts further pressure on automotive suppliers to find ways to maintain the quality of products sold, for both internal combustion engine vehicles and electric vehicles, while creating efficiencies wherever possible to reduce costs.
Faced with these challenges, the supplier sales process needs to be as efficient as possible. However, creating a streamlined sales process can be difficult due to the collaboration necessary between OEMs and supplier sales, manufacturing, R&D, and quality teams to design, schedule, and deliver the parts needed.
Take the RFP process, for example. When an OEM issues an RFP for a new program, the automotive supplier must assemble a cross-functional response team:
- Sales
- R&D
- Manufacturing
- Quality
This team is responsible for understanding the requirements and creating a proposal that includes the quote, terms, and conditions of the agreement. But when each of these teams works in a different system with various levels of access to customer and supply chain data, the process of responding to an RFP is time-consuming, inefficient, and potentially ineffective due to the lack of holistic oversight, visibility, and coordination across teams.
Automotive suppliers that enable teams with supply chain visibility, a singular view of the customer, and sales automation support will be able to reduce cost of sales while accelerating sales performance. With a more streamlined process, the automotive supplier in the example above would be efficient at responding to an RFP and more likely to deliver a more competitive bid.
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Keeping up with auto industry trends
Vehicle electrification, supply chasing globalization, and the demand to balance high quality products with cost efficiencies are leading to fundamental changes in the automotive industry —and also creating new opportunities for automotive suppliers to grow their business.
The global supply chain and race to electrification opens doors for automotive suppliers to become a trusted, proactive partner to their customers while growing their business by supplying the parts needed to manufacture electric vehicles.
But to successfully take advantage of these opportunities, automotive suppliers must be able to unite data, processes, and people to deliver effective engagements that create efficiency within the organization and drive revenue with new and existing customers.
