Suppliers must develop their parts globally

By April Wortham, Automotive News

It's not enough to be global in manufacturing. Product development must follow.

Most auto suppliers realise this, but they run into barriers in their own companies and at automaker customers, a new study finds.

Of the more than 50 suppliers surveyed by US-based PRTM Management Consultants and the Original Equipment Suppliers Association, less than half said they develop products globally.

Survey respondents reported plans to boost investment in global product development by an average of 40 percent within three to five years.

In-house engineering

They also are rethinking their need for in-house engineering, saying they expect external product development spending to rise an average of 50 percent by 2010.

Obstacles exist. At least 80 percent of survey respondents said common product architecture is key to their global product development strategy. But they say the message from customers often is unclear.

“Supplier efforts to globalise product development are strongly influenced by OEM strategy,” says Original Equipment Suppliers Association President Neil De Koker. “OEMs and suppliers collaborate to globalise their operations for the launch of particular vehicle platforms. However, both OEMs and suppliers are challenged by complex regional requirements, organisational structures and competitive market conditions.”

Moving product development

Amid these challenges, some suppliers are expanding their product development and manufacturing operations separately. This de-coupling is taken a step further by suppliers that move some product-development tasks to low-cost countries.

At the same time, they conduct concept design, selection and approval in-house and in the area where final products are sold.

“It seems to be that everyone is saying, 'I just followed my customer,'” says Robert Chwalik, a principal in PRTM Management Consultants' automotive industry group. “But now what we're seeing is, for some of those tasks, it doesn't have to be tied to manufacturing.”

From Automotive News Europe (A Crain publication)