Another Force is the Power of Supplier. This does not only
relate to actual materialistic suppliers, but in many cases, reflects on other
parts of the supply chain such as supporting services, financial resources and
know-how. According to Wilkinson (2013),
strong suppliers negatively affect the industry by raising prices, even
lowering product quality and controlling product availability on top of that.
Meanwhile weak suppliers make an industry less competitive and more profit can be
In the automotive industry
the companies are highly dependent on their suppliers. BMW Group (2017) states on their homepage, that their supplier
network makes a major contribution to their success. They have round about
13,000 suppliers in 70 different countries.
The BMW Group has to make sure the supply chain is working
properly at all times. So, they have to limit the risk factors to a minimum.
This means potential disorders and deviations have to be identified, analysed
and managed. Best way is to prevent those instanced to happen.
Since 2009 BMW Group works together with their suppliers to
assess their sustainability management. This highly reduces the risk of major
problems with the suppliers. On top of that, the BMW group collaborates with
their suppliers to strengthen their potential to manage their resource
efficiency and offering training courses to their employees. This management strategy
leads to a strong bound between BMW and their supplier and reduces the risk of
the Supplier to misuse their power by stopping to deliver parts for example and
harm the industry.
There is another problem with the suppliers, that can occur soon.
All these innovative technologies rising up for the automotive industry are
getting more and more difficult to replicate, therefore only a few suppliers
remain. Those can demand horrendous prices for their products, and BMW Group
has to manage this to remain in competition with the other big brands, such as
Mercedes and Audi.