<img src="https://d5nxst8fruw4z.cloudfront.net/atrk.gif?account=Wfzuj1agkg00y6" style="display:none" height="1" width="1" alt="">

3 Things You Can Learn from Subaru's Supply Chain

Posted by Gesuina Puangco | June 13, 2016

Subaru’s problem is a decidedly sweet one: where most automotive companies find themselves scrambling for orders (especially in a post-emissions scandal era), the Japanese car-maker has had to invest millions to expand its supply.

subaru.jpeg

Sales have burgeoned to the point that in late 2015, Yasuyuki Yoshinaga, Fuji Heavy Industries’ President and CEO announced plans to cap the brand’s annual sales at a little over a million vehicles in the interest of maintaining niche standards.

Subaru has had its greatest success thus far in the United States where it’s attained a record 54 months of consistent month-over-month growth as of June 1, 2016. The company has invested US $140M in production at its Lafayette, Indiana plant (which produces their Outback and Legacy models) to be able to meet US demand. While other car companies have faced supply struggles as well in recent months, Subaru is set apart by the fact that theirs is one born out of success and not scandal. Here are three things we can learn from their scramble to meet demand:

1. Streamlining isn’t a luxury, it’s a necessity. 

One of the reasons for Subaru’s success is that the company has stuck to what it’s good at: providing efficient, no-frills cars. Where other automakers have tried to outdo competitors by exploring a range of novelty features, Subaru has stuck to its guns over the years: turning itself into an ace among jacks. Focusing on perfecting its all-wheel drive, Subaru is one of the few standing automakers amongst its colleagues in the 90s (namely, Suzuki, Saab and Isuzu). In the same vein, they’ve also kept their supply chain fairly simple and close to where the demand for their products is largest; while the company sells its units in numerous countries, the majority of its manufacturing takes place at its Lafayette facility.

2. Preparing for success is just as important as preparing for failure. 

Subaru’s strengths may also very well have influenced its current weakness: where most companies start out with an emergency exit plan, there’s little written about what to do with a boom in sales. Striking whilst the iron is hot has become difficult from manufacturing to sales: there is a need to make more cars in a short amount of time and also pressure to sell them but the lack in supply has made it hard to incentivize sales. With their present stock in most US dealerships lasting only around three weeks on average, Subaru’s predicament has become whether or not it can survive its own own success.

3. Timing is the name of the game. 

Twenty years ago, Subaru seemed far away from being ranked among companies such as BMW or Volkswagen, but they’ve learned to make the most of their timing. Especially amidst the failure of bigger, industry-standard names like GM or VW to deliver not just safety but the transparency required to gain consumers’ trust, Subaru has made its brand less about going out and getting a car and more about living a comfortable, smart lifestyle. Whereas the auto industry had previously been about going big and flashy, Subaru has provided a modern alternative that is eco-aware (it is headquartered in a no-landfill facility) and functional. In a recent interview, Mr. Yoshinaga has said that because Subaru is such a compact operation, no matter how tiny the auto industry eventually gets, its business will remain unscathed. Whether or not that holds true will depend on the company’s ability to weather the current demand spike.

 

Sign Up: Elementum News Digest