Unchanged for 25 Years: The 10 Biggest Challenges in Automotive Supplier Sales

What are the lessons learned from the 10 things that haven't changed in the last 25 years?

1. Price competition

Price pressure on suppliers is still a dominant factor today. Back in the mid-1990s, the "Lopez era" at Volkswagen set the standard for tough negotiations and enormous competitive intensity. Since the early 2000s, this model has become the industry standard. Price was and is the decisive issue in automotive sales.

Lesson learned: The pressure on margins remains high, which further reinforces the need for transparent processes and strong negotiation skills.

2. Supplier insolvencies and market shakeout

There have always been supplier insolvencies. 25 years ago, just as today, a lack of professionalism in sales often meant the end of a company. Lack of transparency in costing, pricing and tendering, deficiencies in change and claim management are often the cause of massive project losses. If these occur across the board, the end result is insolvency.

Lesson learned: Over the entire project life cycle, sales professionalism is a matter of survival.

3. Long-term customer relationships

Despite the digital transformation, personal relationships are still of enormous importance in sales. Maintaining long-term partnerships is a key to success and remains a cornerstone in the automotive supplier industry.

Lesson learned: Human relationships and trust are irreplaceable, even in the age of digitalization. This requirespeople who have these skills and a culture that promotes relationships.

4. Core competence negotiation skills

Good negotiation skills were and are essential for concluding lucrative contracts.

Lesson learned: Successful negotiations require systematic training, excellent preparation and, most importantly, unity throughout the organization.

5. Complex acquisition phase (RfQ)

The path to an order has always been and still is long and complex: numerous specifications, technical drawings, scenarios and details, many versions and calculations, the submission of customer offer forms, business plans, negotiation rounds and management approvals are necessary before an order is awarded.

Lesson learned: This complex and time-consuming process must be managed transparently and efficiently in order to be successful. Of course, the best way to do this is digitally.

6. Change management

The process of change management has been established since the early 2000s. The detailed pricing of every technical change has become a standard process - unfortunately often inefficient and not profit-oriented.

Lesson learned: Although change management is standard, many companies still need to make it much more efficient and, above all, more profit-oriented.

7 Excel in price management - with all the disadvantages

Despite advances in software technology, Excel is still used in price management. It remains prone to errors, inefficient and non-transparent. Although prices are at the end of the process in ERP (SAP), they are created and managed in Excel.

Lesson learned: Digitization can solve these problems, and suppliers need to address the pricing issue, too many costly mistakes happen.

8 Forgotten invoices and underpayments

Even today, non-transparent processes mean that billable services, such as tooling or development services, are simply forgotten. Similarly, there is often a lack of control over the originally agreed amortization quantities.

Lesson learned: Transparent and automated processes are crucial in order to avoid costly errors.

9 Reporting requirements

The need for evaluations has remained the same: from incoming orders and change overviews to sales forecasts. The problem? Many suppliers still work in the same way as they did 25 years ago: with Excel and PowerPoint. The manual effort remains enormous, even though digitalization offers the solution to these inefficient processes.

Lesson learned: Automation of reporting processes is long overdue in order to save resources and provide management with a standardized, real-time basis for decision-making .

10 Sales performance and transparency

Then as now: supplier sales can only be brought to peak performance with transparency. The crucial areas of acquisition, change and claim management require compliance-compliant processes and a focus on results. Only when top performance becomes transparent does a performance culture emerge.

Lesson learned: Transparency is the key to establishing a performance-oriented sales culture and ensuring long-term success.

Suppliers must also continue to develop in sales in order to act as equals with their customers and remain competitive. Digitalization is the key to success for many of the challenges mentioned above. The technology is available today - it just needs to be used. Otherwise, the same article may be written again in 25 years' time.

Are you curious to see how these challenges are solved in the leading solution for sales planning and sales management? Make an appointment for a live demo with Digital Automotive today!