Automotive manufacturers and their suppliers continue to increase their collaboration in various ways, whether this be through robotic process automation (RPA), data collection and exchange, or other methods that provide insights for scalability. With true, multi-enterprise collaboration, there are cross-training opportunities to convey customer needs and preferences for product innovation, giving manufacturers the ability to make rapid adjustments in real time. Collaborative behavior makes this happen, and it all starts with transparency.

However, building real trust, collaboration, and transparency goes beyond using a specific technology or workflow. At its core, this is about changing the culture of automotive OEMs and throughout their suppliers at every tier. Automotive companies who are true leaders in the industry consider the health of the entire supply network, not just their immediate interests. Making this change—as with almost all substantive transformations—requires change be from the top executive level down.

Disruptions to the supply chain

If any event reveals the need for resilient supply chains, it’s COVID-19. The disruptions shook every industry, including automobile. Early 2020 forecasts projected a significant drop in new vehicle sales, but ultimately turned out much better with only a 15% reduction from the total 2019 sales.

It’s no surprise the pandemic has prompted several automotive companies to embrace new supply chain strategies that allowed them to recover quickly while also setting them up for future growth. Many automotive companies stood up crisis teams and control towers to improve visibility and maintain profitability, which in turn developed into an advanced strategy around predictive risk management and multi tier supplier collaboration.

Even with the automotive industry embracing new supply chain practices, another disruption has risen in the semiconductor chip shortage. With modern vehicles often containing thousands of semiconductors, this crisis underscores another dimension of supply chain risk exposure and highlights the critical need to collaborate with multi tier partners for globally limited supplies.

B2B transaction data from the Infor Nexus network shows a major shift in supplier payment terms following the onset of COVID-19 in March of 2020. In the first three months of last year, the majority of payment terms were 30-45 days. In March, 66% of all orders were on terms less than 60 days.

By July, the buyer-supplier payment dynamic had completely flipped, with 65% of orders on terms greater than 60 days. This trend continued throughout the year with 60 day, 90 day, or even longer payment terms in place as buyers moved to preserve their own capital. As a result, many suppliers found themselves in need of a lifeline. For many buyers and suppliers, supply chain finance programs became that solution, removing risk and stress from supply chains by ensuring suppliers access to early payment.