The Alps Structure for Procurement

As described earlier, there is extensive delegation between the OEMs and the first-tier supply base for produa designs. In addition, the same supplier may occupy different positions across tiers for example a first-tier subcontractor to Honda may be a second-tier subcontractor for Nissan. Similarly a second-tier subcontractor to Nissan may be a first-tier supplier to Hitachi for computer components. This su ests that the tiered supply base is linked across many OEMs and products, thus generating an Alps structure. 

The ability of suppliers to have a portfolio of customers enables flexibility of the supply base to absorb downturns in individual OEM volumes, thus providing the capacity adjustment flexibility for the OEMs. In addition, the ability for the base of smaller companies to easily adjust their production capacity by working longer hours and so on provides the ability to rapidly adjust upwards to demand increases. 

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