If you’ve ever wondered why buying tools and equipment for car manufacturing feels like a whole different ball game compared to other sectors, you’re about to find out. 

On the surface, procurement seems like an easily understood process: you require tools, so you buy them. Fortunately, tooling procurement in the automotive sector is a complex process driven by specific requirements, time constraints, and risk factors. 

In this blog, you’ll understand why this process is special and what it means for manufacturers passing through this extremely important phase.

Understanding Tooling Procurement in Automotive

Each car on the highway starts life in a factory, formed and assembled using very specialized tools. In the auto industry, “tooling procurement” is the purchasing and management of the dies, molds, jigs, fixtures, and cutting tools that allow mass production. Different from general-purpose equipment, these tools are designed to precise tolerances to accommodate the tight tolerances and repetitiveness of vehicle production.

The contribution of tooling to the car lifecycle is indispensable. It starts at the design stage, where prototypes are produced with the help of custom-made molds and jigs. After a design is settled, mass production needs a huge set of tools that can manufacture millions of identical pieces with consistent quality. From the blanking literature that forms sheet metal panels to the injection molds for dashboards and assembly line fixtures, all phases in the automotive production process rely on successful automotive tooling procurement. Without strong planning and dependable suppliers, the best new car design can’t reach the shop floor.

Differences Between Automotive and Other Industries

On the surface, tooling buying may be no different from one industry to another. The auto industry has some unique characteristics that differentiate it from other industries:

1. Production Scale and Volume

Automotive production is characterized by bulk, repetitive manufacturing. Automakers consistently make hundreds of thousands, if not millions, of the same units yearly. The tooling necessary must thus endure extended usage while producing uniform results. The aerospace industry, on the other hand, works in smaller numbers and extended cycles of production, where the focus is more on precision at the limits rather than volume.

2. Speed of Design Cycles

The car industry brings new models or versions every two to three years, with the need for constant retooling. Every new release requires new dies, molds, and fixtures that conform to the new designs. Compared to business areas like construction equipment or heavy machinery, they might use the same tooling for a decade or even more.

3. Regulatory and Safety Standards

Automotive tooling must adhere to highly stringent global standards, such as ISO 26262 and IATF 16949, that specify quality management and operating safety.  These standards make procurement even more difficult, compelling vendors to prove compliance at every stage. On the contrary, the criteria for compliance are less stringent for consumer goods or smaller industrial businesses.

4. Tiered Supplier Ecosystem

In the automotive industry’s tiered supply chain model, finished equipment are delivered by Tier 1 vendors, sub-tools by Tier 2, and lastly, the raw materials by Tier 3 suppliers. Due to the layered model in the procurement of tooling, it gets more challenging, as the procurement needs to be executed and planned across many distinct sectors, regions, and time intervals.

Special Challenges in Automotive Tooling Procurement

The automotive manufacturing process generates a number of procurement challenges that are less evident in other industries.

1. Heavy Capital Investment

Tooling for a new automobile model can cost millions, including not only tools but design, prototype, and testing. Controlling this expense is important through close supplier assessment, fiscal planning, and tight budgeting to avoid cost overrun. 

2. Lead Time Constraints

Accuracy tooling, such as dies and molds, may take months to manufacture. Automotive companies have to coordinate procurement with rigorous production plans, with little space for delays or mistakes that can delay launches and cause serious financial damage. 

3. Supply Chain Risks

Many automakers depend on international tooling vendors. This makes their production vulnerable to geopolitical crises, supply chain challenges, and trade restrictions. COVID-19 had a major direct impact on the automotive industry, which eventually led companies to consider their sourcing strategies.

4. Integration of Technology

Technologies like CAD/CAM, digital twins, and simulations are transforming procurement. However, global integration is difficult when smaller suppliers lack digital maturity, creating gaps in consistency, collaboration, and innovation across the supply chain.

Localization vs Globalization in Tooling Supply Chains

Historically, automobile manufacturers have relied very much on international suppliers, frequently importing specialized tooling from high-capability nations. Globalization has significantly enabled access to low prices and advanced technologies. However, recent global events highlighted the drawbacks of globalization. 

Global supply chains are always vulnerable to lockdowns, trade disputes, and rising logistical costs. Thus, the majority of automobile companies are adopting localization schemes and programs. This modification will surely lead to meeting deadlines soon, reducing reliance on global shipping channels, and creating a resistance barrier towards geopolitical volatility.

Meanwhile, localization is also not trouble-free. There is no uniform level of sophistication in high-end tooling across all locations, and increasing local capacity means investment and lead time. The best approach is usually a hybrid: the utilization of global suppliers to meet specialized demands and local suppliers for volume and robustness. Automotive procurement chiefs must consequently trade cost, capability, and risk when planning their tooling supply chain.

The Future of Automotive Tooling Procurement

The automotive industry is experiencing deep change, and procurement of tooling is changing along with it. A number of trends will characterize the future landscape:

1.  Electrification and EV Tooling

The advent of electric vehicles (EVs) is changing tooling needs. Conventional tools for engine and transmission parts are being replaced by battery housing, electric drive unit, and lightweight aluminum structure molds and dies. Procurement teams need to learn to adapt rapidly to these new needs.

2. Industry 4.0 and Digitalization

Smart manufacturing is launching IoT-equipped machines which track tooling wear in real-time. AI-based predictive maintenance will enable producers to foresee tooling failures before they happen, minimizing downtime. Digital twins, virtual copies of actual tools, will enable prototyping and optimization in a shorter time.

3. Additive Manufacturing

In manufacturing specific types of tooling and rapid prototyping, 3D printing is being extensively used. It can even reduce lead times and costs for some exclusive and specialized commodities. While additive manufacturing remains far from traditional tooling, it is still playing a major role in the automotive industry. 

4. Sustainability as a Core Requirement

Sustainability will always revolve around procurement decisions. Automakers are making aggressive carbon-reduction targets, which are applied to their suppliers too. Sustainability will become standard practice in sourcing tools for automotives supporting efficient production and recyclable solutions.

5. Resilient Supply Chains

 Procurement thinking will focus increasingly on resilience rather than mere cost reduction. This entails diversifying suppliers, investing in local capacity, and using digital platforms for openness and collaboration along the supply chain.

Conclusion

Tooling purchasing within the automotive sector differs from other industries due to its massive size, compressed innovation cycles, rigorous compliance requirements, and multi-tiered supplier base. The risks are all singular: slowness or failure in tooling purchasing can affect entire vehicle launches, affecting revenue, reputation, and competitiveness.

With the sector transforming into electric vehicles, digital manufacturing, and green practices, tooling buying will become increasingly sophisticated and strategic. Are you ready for it?

At Moglix Business, we have a significant relationship with tooling buying in the automotive industry, providing digital supply chain solutions, vendor consolidation, and direct material buying for automobile manufacturers. Our platform facilitates procurement, increases efficiency, provides real-time tracking, and reduces costs, making it a trustworthy partner for automotive tooling and supply chain optimization.