Study by The Automotive Consulting Group Measures the Performance and Processes of 150 North American Automotive Suppliers
February 23, 1998 (DETROIT) -- Automotive suppliers are under pressure from all sides to cut costs, according to a study conducted by The Automotive Consulting Group, Inc. (ACG) but the best-in-class are responding with innovative processes that are letting them survive and even thrive.
A summary of results of the 1997 study, which includes data from 150 automotive suppliers in North America, was announced today at the Society of Automotive Engineers International Congress and Exposition in Detroit.
Automotive suppliers are being asked to assume greater responsibilities in engineering, product development, warranty and global support while meeting stricter standards of quality, technical performance and timing under tighter cost pressures, according to the study.
"The automotive industry’s structure has changed dramatically, with suppliers being squeezed from all sides," said Dennis Virag, ACG's president. "The good news is that suppliers are responding with new product development processes that focus on what we are calling integrated supply-based management. They’re responding with tighter integration, and a very different work environment and management culture."
Based on the performance measures of quality, cost and timing, the study identified those management processes determined best-in-class in comparison to the rest of the field. According to Virag, the best-in-class suppliers exhibit proficiency in five core competencies: senior management involvement and focus; integrated development tools; high-performance cross-functional teams; international leverage; and integrated supply-based management.
For example, senior executives in 70 percent of those deemed best-in-class participate in the concept development phase of product development, compared to only 40 percent in other companies. High-performance suppliers also have greater involvement with their customers and suppliers during the concept development phase. Best-in-class suppliers rely more heavily on active involvement of systems suppliers, with 70 percent of systems suppliers involved, compared to only 10 percent involved in non best-in-class.
"We’ve identified the best performers in the industry," said Virag, "and they will continue to innovate and drive the expectations of the original equipment manufacturers (OEMs); other suppliers will have to really work to catch up. Product development, now and in the future, is the basis for competitive advantage."