OEMs, Tier 1, 2 & 3 - The Automotive Industry Supply Chain Explained - Returnable & Reusable Packaging | Amatech Inc (2024)

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A single car has about30,000 parts, counting every part down to the smallest screws. One of our recent blog posts explains what Class A surfaces mean 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 inaccurate. While these manufacturers produce some original equipment, their focus is on designing cars, promoting cars, ordering from vendors, and assembling the vehicles. 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 dunnagefor handheld 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 over 30 years. Providing satisfaction in this mature market when it comes to utilizing returnable packaging in its 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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