Subaru’s New Procurement Strategy

Japanese automaker Subaru is currently reviewing the procurement method for advanced technologies such as electric parts and driving support parts. In the past, information on advanced technology was collected by the organization. However, in April 2019, Subaru established the Advanced Technology Procurement Department, which is a specialized unit which strengthens the company’s ability to collect information on advanced technology and contacts with suppliers. Since technology in the advanced technology field is evolving rapidly, Subaru is considering making contract contents more flexible compared to those of existing parts in terms of sharing development costs.

Under these circumstances, Subaru has changed the procurement source of the core parts of the new-generation EyeSight, a collection of advanced driving assistance and collision avoidance systems, to be installed in the new Levorg released in October 2020. EyeSight has been using Hitachi Automotive Systems’ stereo cameras since its commercialization in 2008, but the new-generation EyeSight will be supplied by Veoneer. Apparently the change in procurement source was due to the fact that Hitachi Automotive Systems’ new technology could not support the mechanism that uses the parallax of the left and right stereo cameras of EyeSight.

Subaru: Recent Major Procurement-related Trends and Supplier Policies

Procurement of Advanced Technology

Establishing advanced technology procurement department

・In April 2019, Subaru set up an advanced technology procurement department – The department procures advanced technologies such as electric parts, infotainment systems, and driving support parts by an approach different from that of traditional parts. – By establishing a specialized department, Subaru strengthened its ability to collect information on advanced technologies and contacts with suppliers. – Prior to the establishment of the new department, information on advanced technology was collected within the existing organization. – The number of employees at the time of establishment was about 10. The workforce is planned to be increased in the future.

Revision of contract method with suppliers

・By September 2019, Subaru begun to consider revising the contract method with suppliers regarding the procurement of advanced technology. – Since technology in the advanced technology field is evolving rapidly, Subaru is considering making contract contents more flexible compared to those of existing parts in terms of sharing development costs.

Changing the supplier of EyeSight

・The suppliers of the core parts of the new-generation EyeSight, a collection of advanced driving assistance and collision avoidance systems, to be installed in the new Levorg released on October 15, 2020 has been changed. – The stereo cameras will be supplied by Veoneer, the semiconductors by Xilinx and the CMOS image sensor by ON Semiconductor. – Since the first-generation EyeSight (commercialized in 2008), Hitachi Automotive Systems has supplied the stereo cameras and Renesas Electronics has supplied semiconductors for data processing. – Hitachi Automotive Systems is developing a new stereo camera (announced in December 2019), which has achieved a wide angle three times that of conventional products. However, since the image range detected by the left and right cameras is shifted to the left and right, it is not possible to obtain parallax in the range that cannot be captured by both cameras. Since Subaru’s EyeSight is a mechanism that uses the left and right parallax of the stereo camera, the company has changed the supplier of the technology.

Strengthening Cooperation with Suppliers

Creating blueprints that take into consideration of the production process

・From the second half of 2018, Subaru has strengthened suppliers’ involvement in the upstream process of parts development. – Subaru works with suppliers to formulate important quality points for parts. At the stage where suppliers design the drawing of parts, Subaru advises on the production requirements to improve quality. – Subaru prioritizes involvement in upstream processes for new suppliers and existing suppliers with many defects. The automaker plans to expand the scope further in the future. – Subaru established the Establishment of Supplier Quality Improvement Promotion Department in April 2017, surveying 329 suppliers’ bases in one year. As a result, Subaru has recognized that defects in the production process cause large-scale quality problems. For this reason, from the second half of 2018, Subaru has started to make drawings of parts in cooperation with suppliers.

Established a specialized team for disaster response

・At the end of August 2020, a specialized team was established to support the early recovery of business partners in the event of a natural disaster. – Subaru has established a system that can promptly mobilize the necessary personnel in the event of a disaster by assigning a dedicated person in charge for each business partner. – In the past, personnel were assigned after a disaster occurred. As a result, delays in the initial response led to delays in the recovery period. – Subaru believes that securing multiple procurement routes (second sources) in preparation for supply chain disruption is not realistic in terms of development and costs. Instead, early recovery of business partners is the basis of BCP (business continuity plan). – Subaru is investigating the location of each business partner and is creating a hazard map to understand the disaster risk of its suppliers. The automaker is collecting data on past disasters.

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