Harbour Consulting Says North American Suppliers Must Broaden Focus to Include Asian Automakers and Productivity
TROY, Mich., July 1 -- Aggressive actions must be made now by North American suppliers to win future business with Asian automakers, who are projected to capture an unprecedented 37 percent market share in North America by 2008.
Harbour Consulting (formally Harbour and Associates) Vice President Laurie Felax warns significant supplier performance gains will be absolutely required to continue to attract business from Japanese and Korean automakers in the near future. Felax addressed Tier One and Tier Two suppliers this week at the firm's first ever Manufacturing Forum for suppliers.
"We know all automakers are continually demanding that suppliers improve the efficiency of their operations and realize further cost savings," Felax said. "Some suppliers are now pushing back aggressively, saying there are no more efficiencies to be made. In truth, there is room to better align product design, process design and manufacturing to find the necessary quality and cost gains that will be needed to secure Asian OE business."
Such productivity gains also will help protect future Big Three component sales from being re-sourced by the automakers. Felax stressed, however, suppliers should not count on significant sales growth through General Motors Corp., Ford Motor Co. and DaimlerChrysler AG. Those that do are treading a slippery slope of continued declining Big Three sales market share during the next few years.
Based on supplier plant visits and discussions, as well as input from automakers, Harbour recommends North American suppliers focus attention on the following key areas to improve the performance of their operations:
* Developing unique products and/or processes that differentiate them in the market and reduce the reliance on price competition
* Eliminating waste through lean processes and tools
* Using flexible manufacturing processes to negate capacity issues and lessen the effect of product launch delays by including common, reusable systems
* Commencing involvement in product development as early as possible
* Establishing robust quality systems that include upfront error-proofing of product, processes
* Implementing cultural change to better align hourly and salaried personnel
To better manage component design, process and production costs, as well as pricing requirements, Felax says North American suppliers also need to form more collaborative relationships with the world's automakers, much like a number of Asian-based suppliers have established with Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.
In many instances, the Japanese automakers begin working with preferred suppliers up to four years from the launch of a new product, enabling them to meet their customers' expectations and target launch dates more frequently, while still maintaining profitability. Contrast this to the general practices of Big Three automakers that typically engage suppliers later in the process.
"Supplier efficiencies and lower component costs upstream in the vehicle production process almost always have a favorable impact on the total cost to produce a vehicle, improving the overall efficiency of the automaker," Felax said. "The best automakers in the business take these cost savings and reinvest them into product development, the lifeblood of the automotive industry. Robust product development leads to greater customer satisfaction, increased sales, higher quality, improved market share and increased profits."
Since 1989, Harbour Consulting (formally Harbour and Associates) has provided manufacturing management consulting services focused on strengthening the overall competitiveness of manufacturers through improvements in quality, productivity and lower total cost. The company continues to research and service manufacturing organizations throughout the world in a variety of industries. It annually publishes The Harbour Report, the influential scorecard for worldwide manufacturers in the automotive industry.