Seat shifts to local sourcing strategy

13 August 2020

Seat has announced plans to shift its sourcing strategy to increasingly focus on local supply chains.

The carmarker told 60 of its main suppliers that it planned to increase localisation of components in Spain for current models and future vehicles and invest €5bn by the end of 2025.

Spanish suppliers currently represent 60% of the total turnover of the purchasing area, but Seat said it wanted to shorten the global supply chain in order to “reinforce its strength and boost environmental and financial sustainability at the same time”.

“In this sense, Seat is already working on an analysis plan to determine the current components that could be supplied from Spain in the medium term,” said the company in a statement.

Vice-president for purchasing, Alfonso Sancha, said: “To achieve this, we need everyone’s collaboration. Carmakers and suppliers must invest in new technologies to improve competitiveness and adapt to Industry 4.0, electrification and the connected car.

“Our industry is at a turning point and it is time to transform. If we don’t do it now, we’ll be too late. We need to become more competitive and modernise the Spanish car industry so that Spain remains a European and global automotive powerhouse.”

Like most automotive companies, Seat is grappling with the shift towards electric vehicles and the coronavirus pandemic which is forcing manufacturers and suppliers to restructure operations and strategies.

At the same time, new entrants to the automotive market with lower wage costs than Spain are intensifying competition in the market.

Sancha added Seat was analysing which technologies were required in its Spanish supply chain to help it successfully manufacture connected and electric cars. 

Earlier this year, Volkswagen revealed it faced higher prices from its suppliers as demand for vehicles reduced while overhead costs remained the same.

Seat has also presented an S-Rating (Sustainability Rating) tool to evaluate and encourage the commitment of its suppliers to sustainability.

Under the S-Rating system, the company hopes to motivate its entire supplier network to make additional commitments to corporate social responsibility and any supplier wishing to renew or extend an existing contract, must achieve a positive S-Rating qualification.

“Initially the rating is applied to commercial relations with direct suppliers, although the long-term vision is to reach an optimal level of traceability in terms of sustainability and compliance throughout the supply chain,” Seat said.

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