Trends In Automotive Industry Implication On Supply Chain Management

2234 Words Feb 26th, 2011 9 Pages
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Trends in the Automotive Industry Implications on Supply Chain Management

Author Michael Schwarz

February 2008

Cisco Internet Business Solutions Group (IBSG)

Cisco IBSG Copyright © 2008 Cisco Systems, Inc. All rights reserved.

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Trends in the Automotive Industry
Implications on Supply Chain Management
Recent emphasis on global climate change is increasing pressure on automotive executives to make the right decisions in many areas, including R&D and manufacturing. In fact, emission-level targets, currently in question, threaten to alter the entire structure of the auto industry. These challenges hit an industry already plagued with high costs, low profit margins, and accelerating competition. New entrants from
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For example, sourcing processes from local suppliers must be aligned with global quality-assurance guidelines and procedures.

Fragmentation
Traditional car segments such as sedans, vans, hatchbacks, and pick-up trucks are fragmenting more and more into niches. Derivative car segments, on the other hand— such as coupes, roadsters, minivans, and two-seaters, as well as cross-over vehicles such as four-door coupes, SUV coupes, “soft”1 SUVs, and sport vans—are growing. A combination of customer demand for personalization—the right product for their specific use at the right time—and manufacturers conquering new customer segments is causing automakers to grow their product offerings. The environmental or “green” movement is encouraging fragmentation even further, by shifting demand away from large and/or high-consumption vehicles to smaller and/or more fuel-efficient cars, giving birth to even newer segments, such as city or microcars2, and new propulsion technologies, such as hybrids, clean diesels, and diesel hybrids. Despite measures to control incremental costs resulting from fragmentation—such as platform, module, and component sharing across models and brands—segmentation results in a more complex supply chain that needs to be managed. Hence, the supply chain requires integrated capabilities and flexible tools based on real-time information to address this increasing