Understanding the Automotive Supply Chain

Know Where Your Company Stands

When you join an automotive parts company, the first thing you hear is "We are Tier X." This is not just a hierarchy; it decides what is expected of us and what we are responsible for.

Even if you produce the same bolt, if it is supplied directly to Tier1, the drawing, quality, and delivery rules are set at the level of the final vehicle manufacturer. If it is only supplied as a material to Tier3, the requirements are much simpler. If you don't know your position, you won't understand why so many documents are required, and then the documents become just a formality.

4-Level Structure

[OEM] Final Vehicle — Responsible for design, final assembly, sales, and recalls
   ↑ Module level (whole seat, whole door, whole cockpit)
[Tier1] First-tier supplier — Participates in module design, manages sub-suppliers
   ↑ Part level (rail, bracket, harness, molding)
[Tier2] Second-tier supplier — Processes and forms according to drawings
   ↑ Material level (steel plate, sheet metal, resin, plating, heat treatment)
[Tier3] Third-tier supplier / Material and surface treatment

The higher you go, the broader the scope of responsibility, and the lower you go, the greater the pressure on unit prices.

Different Requirements at Each Stage

> The key point is that "responsibility is passed directly from top to bottom." The PPAP, 4M change management, and traceability required by OEM for Tier1 are passed down to Tier2 and Tier3 through contracts. However, the level of certification differs. IATF 16949 is often required for Tier1, while lower-tier suppliers usually have ISO 9001 certification or the minimum quality system requirements set by the customer (such as MAQMSR). The level of requirements must be confirmed through the customer's specifications. Even if the certification level differs, the logic that "we are a small company, so we don't need to follow the documents" does not hold.

The Real Situation in the Busan-Uiwang-Gyeongnam Area

There are final vehicle assembly plants in Ulsan and Busan, and first- and second-tier suppliers are densely located around Gyeongnam (Yangsan, Gimhae, Changwon, Haman). Therefore, manufacturing workers in this region can easily switch jobs or change positions if they understand the rules of the automotive supply chain.

This region has three distinctive features:

• Many companies produce both automotive and ship parts. The same press and welding equipment are used to make automotive brackets and ship parts. However, the quality requirements are much stricter on the automotive side. Using ship manufacturing standards for automotive parts can lead to accidents.
• There are often multiple prime contractors. The document formats, label specifications, and change reporting standards for A company's line and B company's line are all different. Always confirm which customer's order your line is producing.
• There is a high proportion of foreign workers. If the work instructions and labels are only in Korean, errors and mix-ups will keep happening. Using pictures, colors, and numbers for labeling is a practical solution.

A Single Label Supports the Entire Structure

The connection from Tier3 material lot → Tier2 processing lot → Tier1 assembly lot → final vehicle VIN is called traceability.

Problem occurs: 3 bracket cracks found in the final vehicle

With traceability
  VIN → Tier1 lot → Tier2 processing date → material mill sheet
  → Only 2 specific material lots are recovered (hundreds of units)

Without traceability
  Full recall within the period (tens of thousands of units)

Removing the product label or mixing multiple lots in one box breaks this chain right there. This is one of the most expensive mistakes made by new employees.

What New Employees Should Understand in the First Week

• What tier our company is, and who our direct customer is
• Which final vehicle model our line product is used in
• What certification our customer requires (ISO 9001 / IATF 16949)
• What is written on the product label and lot label, when to attach and when to remove them
• Are document and label formats different for each customer