The research report takes an in-depth look at the automotive industry and their major participants in the upstream value chain. The different parties involved are the automotive manufacturers (OEMs) and their suppliers. The overall goal of the following report is to identify suitable business models for small to medium sized (SME) automotive suppliers.
As the automotive value chain currently undergoes an evolutionary change towards a diminishing vertical integration of the OEMs, it becomes a challenging issue to reconfigure the responsibilities of the suppliers. Thereby OEMs and their suppliers have to cope with a shift from a functional to a process orientated value chain. During this reorganization of the OEM-supplier interface, enterprises realign their strategic intent towards their core competencies as well. Besides the shifting value chain, both suppliers and OEMs have to cope with a consolidation in their industries. This consolidation is impacted by stagnating traditional markets, an ongoing globalization of the value chain, and an increasing productivity pressure in the automotive industry.
Looking at the automotive supplier, it becomes obvious that the suppliers are on the one hand challenged by productivity pressures and on the other hand have the opportunity to take over more business of the automotive value chain. The growth potential requires changes in the area of supply chain management and new types of collaboration in the supply network. This prospective development is mainly influenced by a trend towards the outsourcing of entire processes by the OEMs and the increasing need for future innovations in the automotive industry.
After discussing the above mentioned issues, the report analyses the role of suppliers with respect to their main customers, the automotive OEMs. Based on the findings business models for suppliers are assessed and key success factors for small to medium sized suppliers are proposed and evaluated. The findings of the evaluation are translated into suggestions for most suitable business models of SMEs. The report concludes with recommendations for the strategy building process indicates problems concerning the shifting value chain, and points out the importance of further research in the field of the small to medium sized automotive supplier industry. [...]
Table of Contents
CHAPTER 1 INTRODUCTION AND STATEMENT OF PROBLEM
1.1. Introduction
1.2. Definition of Terms
1.3. Statement of the Problem
1.4. Assumptions and Delimitation
1.5. Plan of the Study
1.5.1. Literature Study
1.5.2. Expert Interviews
1.5.3. Case Study
CHAPTER 2 TRENDS IN THE AUTOMOTIVE INDUSTRY
2.1. The Automotive Industry
2.2. The Automotive Industry viewed in Processes and Value Streams
2.2.1. Business Process Model
2.2.2. The Value Chain
2.3. The Manufacturer Industry
2.3.1. Current Situation
2.3.2. Core Competencies
2.4. The Supplier Industry
2.4.1. Current Situation
2.4.2. Supply Chain Management
2.4.3. The Supply Network
2.5. Automotive Collaboration
CHAPTER 3 CONCEPTS IN THE AUTOMOTIVE INDUSTRY
3.1. Outsourcing
3.1.1. Definition of term
3.1.2. History of Outsourcing
3.1.3. Reasons and Goals
3.1.4. Outsourcing and the Automotive Industry
3.2. The Innovation Paradox and the Multi-Project-Landscape
3.2.1. Pressure for Innovation
3.2.2. The Innovation Paradox
3.2.3. Mastering Innovation
3.2.3.1. The Framework
3.2.3.2. Disruptive Innovation Model
3.2.3.3. Process and Product Technology
3.2.3.4. Integrated Vehicle Development Process
3.2.3.5. The Project House
CHAPTER 4 SUPPLIER IN THE AUTOMOTIVE INDUSTRY
4.1. Supplier in the Automotive Industry
4.2. Strategy & Competitive Advantage
4.2.1. OEM’s view
4.2.2. Supplier’s Strategy
4.2.2.1. Strategy from a supplier’s point of view
4.2.2.2. The supplier’s resource base
4.2.2.3. The supplier’s role
4.2.2.4. The supplier’s position
4.2.2.5. The supplier’s performance
4.2.2.6. An analytical model of a supplier’s strategic development
4.2.3. A Supplier’s Development
4.3. Overview of Business Concepts for Automotive Suppliers
4.3.1. Introduction
4.3.2. Business Models for the Automotive Parts Industry
4.3.3. Success Factors for Automotive Suppliers
4.3.3.1. Key Success Factors with respect to Outsourcing & Innovation
4.3.3.2. Limitations for small to medium sized Suppliers
4.4. Expert Interviews
4.5. Hans Oetiker GmbH
4.5.1. Introduction
4.5.2. Organisation Situation Analysis
4.5.3. The Hans Oetiker GmbH – What?
4.5.3.1. The Holding – IMC
4.5.3.2. The Business Unit – Production Plant Endingen
4.5.3.3. Strategic Intent
4.5.4. Strategic Issues (SWOT) – So What?
4.5.5. Strategic Activities – Now What?
CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS
5.1. Introduction
5.2. Evaluation of Business Models for SME-Suppliers
5.2.1. Overview of Relative Importance of Success Factors
5.2.2. Match of SME’s Capabilities and Abilities
5.3. The New Role of Suppliers in the Automotive Industry
5.3.1. Future Shape of the Automotive Value Chain
5.3.2. Suppliers in the Automotive Industry’s Future
5.4. Indications for further Research
5.5. Annotations from the Author
Objectives & Core Topics
The research report aims to identify and analyze the challenges and strategic factors influencing small to medium-sized (SME) automotive suppliers. It focuses on the shift in the automotive value chain towards diminished vertical integration by OEMs and the subsequent need for suppliers to reconfigure their roles, capabilities, and business models to remain competitive in a consolidating, globalized market.
- Evolution of the automotive value chain and the role of suppliers.
- Impact of productivity pressures and innovation requirements on SMEs.
- Evaluation of suitable business models for SME automotive parts suppliers.
- Strategic importance of process and product technology integration.
- Development of competitive strategies, including roles like 'Niche' or 'Specialized' component suppliers.
Book Excerpt
3.1.1. Definition of term
The term outsourcing explains the shift of activities within an organisation to an external supplier. Outsourcing can be regarded as the contractual removal of work. In the English language there is also the term „contracting out“. Outsourcing in a strict context is the act of placing ever repeating internal activities including the connected production factors and decision authorities with an external supplier (Greaver II, 1998: 3). Since the removed activities are repeating or periodical activities, outsourcing does go a step further than assistance through consultants.
Outsourcing in its different appearances can be put in context with different levels of activities. Greaver (1998: 4-5) distinguishes here the development of components, as well as individual, functional and process outsourcing. The outsourcing of production components (or the production of modules or systems) is in this definition an independent field of outsourcing, whereas the other three levels built up a hierarchy. Individual outsourcing describes the removal of distinct positions of the organisation. Functional outsourcing relates to the fields of organisation, where the responsibilities are clearly defined. Most of the time those functions are organised in cost centers and often compensation and IT support are involved here. The outsourcing of complete business processes is the third step of activity levels. This also affects sectors such as accounting or IT of an organization.
The extent of outsourcing varies between complete and selective outsourcing (Greaver II, 1998: 64). Complete outsourcing places all involved activities with the external supplier. This leads to a more transparent split of responsibilities as compared to the case of the selective outsourcing, where only a defined set of activities and parts of the process is placed with the external supplier. Here it needs to be clearly defined what the scope, costs and goals of the selectively outsourced activities are.
Summary of Chapters
CHAPTER 1 INTRODUCTION AND STATEMENT OF PROBLEM: Provides the foundation for the report by examining the evolution of production standards like Lean Manufacturing and the resulting impact on manufacturer-supplier interfaces.
CHAPTER 2 TRENDS IN THE AUTOMOTIVE INDUSTRY: Analyzes the macro-economic shifts, including global demand patterns, the consolidation of industry players, and the transformation of the value chain into a process-oriented structure.
CHAPTER 3 CONCEPTS IN THE AUTOMOTIVE INDUSTRY: Explores key theoretical concepts such as outsourcing strategies and the "innovation paradox," highlighting the synchronization required for sustainable product development in a complex multi-project landscape.
CHAPTER 4 SUPPLIER IN THE AUTOMOTIVE INDUSTRY: Details the specific challenges faced by suppliers, establishes an analytical model for supplier strategy based on resource base, role, and position, and provides a case study of Hans Oetiker GmbH.
CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS: Evaluates various business models against the capabilities of SMEs, identifying 'Niche' and 'Specialized' component roles as the most viable strategies, and offers future research directions.
Keywords
Automotive Industry, Outsourcing, Supply Chain Management, SME, Core Competencies, Value Chain, Innovation Paradox, System Integrator, Lean Manufacturing, Strategic Business Model, Production, Competitive Advantage, OEM-Supplier Relationship
Frequently Asked Questions
What is the core focus of this research?
The research primarily investigates the role of small to medium-sized (SME) suppliers within the automotive industry, specifically how they can adapt to the structural changes and outsourcing trends imposed by automotive manufacturers (OEMs).
What are the primary themes covered in the book?
The book covers the evolution of the automotive value chain, the pressure for constant innovation, the strategic importance of core competencies, and the classification of business models for suppliers.
What is the primary goal of the author?
The goal is to provide a strategic framework and identify the most suitable business models that can provide SME automotive suppliers with a competitive advantage in a market dominated by large OEMs.
Which scientific methodology is used?
The study utilizes a combination of an extensive literature review, expert interviews with partners from leading consulting firms, and a practical case study of Hans Oetiker GmbH.
What is covered in the main body of the work?
The main body analyzes the trends in the global automotive industry, theoretical concepts such as the Innovation Paradox, and the strategic positioning of suppliers in the value chain hierarchy.
Which keywords best characterize this work?
The most relevant keywords include Automotive Industry, Outsourcing, Supply Chain Management, SME, Core Competencies, Value Chain, and System Integrator.
What specific findings are presented regarding SME business models?
The research evaluates various business models and concludes that, given the specific resource and capability profiles of SMEs, the 'Niche' and 'Specialized' component supplier models offer the best fit for sustainable competitive growth.
How does the case study of Hans Oetiker GmbH contribute to the findings?
The case study applies the derived strategic frameworks to a real-world company, illustrating how a medium-sized enterprise can leverage tooling equipment services to enhance its market position alongside its core clamp products.
- Quote paper
- Christian Nitschke (Author), 2005, Outsourcing vs. Insourcing in the Automotive Industry. The Role and Concepts of Suppliers, Munich, GRIN Verlag, https://www.grin.com/document/40860
