Jaguar is increasingly working with suppliers who can develop entire systems for its cars. In some cases on the new S-type, a single first tier supplier has replaced 10. 'That gives massive quality benefits, because they're accountable for the interaction of all those components,' says Jaguar's purchasing director Steven Armstrong. He was interviewed by Edmund Chew.
How has the way Jaguar works with suppliers changed?
Part of the strategy that we run with the material planning and logistics people is to have suppliers deliver certain components trackside. That is something we're keen to develop. We have a number of suppliers who are sequenced to vehicle build here (at Castle Bromwich, Birmingham, UK), so they get up to a five-hour trigger time on what we want. They supply from new facilities in Coventry or the surrounding area in the West Midlands.
For instance, Magna Interior Systems has an instrument panel assembly facility in Coventry. The panels go straight into the plant and into the vehicle. That is important, because it takes out time and inventory.
Vehicles like the S-type are complicated because they are sold in many different markets. We have to bear in mind different legislations and customer tastes. That has driven a number of changes to our suppliers' businesses. We have ended up working with them to almost re-engineer their operations to cope with the complexities and the relatively short trigger times we want.
Has your supply base altered?
You need to concentrate your efforts on suppliers with the core skills you require. For instance, we have moved to a much more system-based supply on interior trim. We used to have 30 to 40 suppliers of interior parts. Now maybe three or four are responsible for big chunks of the operation. That gives massive quality benefits, because they're accountable for the interaction of all those components.
But it's not all one way. We have brought in a number of new suppliers in the past few years, driven by changes in technology.
Do currencies influence Jaguar's purchasing?
Whatever we buy, it must be the right quality for Jaguar. We need to understand exchange rate effects, but it is naive to think you can jump from currency to currency. If you are going to build up a relationship with a supplier base you can't buy in Portugal one week, and Korea the next. But if there is a choice and it helps us, then we'll look to do it.
What about quality or cost targets?
On the new model programs, the suppliers are involved in the target-setting process. We source the product from a supplier without having a specific cost on the table, or a specific quality figure. You take money out of certain areas and put it into others to get to a product that is truly Jaguar, but is also affordable. We're looking for suppliers who say, 'We understand what you want the product to be, we understand it is a Jaguar, it needs to have this, and this is how we can deliver it.'
What about systems?
We have a lot of system sourcing, because it gives you the ability to deal with one supplier who has ownership for the system. Then, when you do have a problem, you know who owns the system and who can solve it. For instance, all the wiring looms are done by one supplier, so we don't have three or four harness suppliers for each model.
More added value to fewer suppliers makes our business more attractive, and gives us more opportunity to work with them to reduce costs.