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09/29/2017

OEMs, Tier 1, 2 & 3 - The Automotive Industry Supply Chain Explained

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Our blend of innovation in product development and high level of technical knowledge and customer support, allows us to satisfy our customers' needs with industry leading packaging solutions and superior service. Identifying needs, constructing solutions, and standing behind them. We are expanding our reach into new markets all the time. Our most recent addition is Aerospace. Our customer was looking for a particular advanced solution, at a low volume production rate and we could move that solution forward for them. Within the Automotive industry, we handle the flip side of that coin, and most often provide high volume production. 90% of the automotive market we serve are OEMs, Tier 1 and Tier 2 suppliers. Let's take a look at the automotive supply chain and how returnable packaging fits into the picture. 

A single car has about 30,000 parts, counting every part down to the smallest screws. One of our recent blog posts explains what Class A surfaces means when it comes to automotive parts - these are only part of the equation when automakers and auto suppliers come to us for returnable packaging solutions. Their entire supply chain factors into this equation heavily. There are OEMs and a tier system that is involved and layered. First, let's talk about the manufacturers. These firms are commonly referred to as OEMs (original equipment manufacturers), which is somewhat of a misnomer. While these manufacturers produce some original equipment, their real strength is in designing cars, marketing cars, ordering the parts from suppliers, and assembling the final product. Enter the tier system. Tier 1, 2 and 3 suppliers. Tier 1 suppliers are companies that supply parts or systems directly to OEMs. These suppliers usually work with a variety of car companies, but they’re often tightly coupled with one or two OEMs, and have more of an arms-length relationship with other OEMs. Many firms supply parts that wind up in cars, even though these firms themselves do not sell directly to OEMs. These firms are called Tier 2 suppliers. Tier 2 suppliers are often experts in their specific domain, but they also support a lot of non-automotive customers and so they don’t have the ability or desire to produce automotive-grade parts. In the automotive industry, the term Tier 3 refers to suppliers of raw, or close-to-raw, materials like metal or plastic. OEMs, Tier 1, and Tier 2 companies all need raw materials, so the Tier 3s supply all levels.

Where does Amatech come in? We serve the OEM level, with reusable packaging mainly used in work in progress (WIP) applications. For example, we may provide a steel rack or sleeve pack that contains parts for an operator to utilize during assembly.  For Tier 1 and Tier 2 levels we provide returnable packaging for the parts that will be shipped to the OEMs for assembly. This may be dividers and foam dunnage for hand held totes, providing protection for the parts while in transit to the plant. All products across our entire offerings touch the solutions we provide to automotive.

We have been moving solutions forward for the automotive industry for years and years now. Providing satisfaction in this mature market when it comes to utilizing returnable packaging in their supply chain. They have a well educated understanding of the benefits these kinds of programs provide to their operational efficiency. We are here to educate the masses in our industry and beyond about how returnable packaging has not only served this market but how reusables have swiftly entered many other markets as well. We will continue to serve all of our verticals ensuring they have the best solution for their returnable packaging programs. 

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Our Vision

Amatech, Inc. will continue to build long term financial stability through growth in diversified markets, innovative products, and operational excellence with continuing commitment to our customers and employees.

Our Mission

The central focus of our business is our customer. We are consistent by honing our process to revolve around their needs, expectations and vision. Innovation, customization, and adaptability is the formula we use to provide satisfaction to each customer year over year.

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