Auto Suppliers Need To Ramp Up Global Product Development

April 20, 2007
Only 28% of product development is global says survey.

Automotive suppliers perceive themselves as more global than their operations suggest, according a study entitled, "Global Product Development -- Innovation Never Sleeps." Although 42% of survey participants indicate that they manage product development globally, the same participants stated that just 20%-28% of their product development operations are, in fact, global.

Select areas are global, such as sharing of global CAD data and design best practices; however, other practices and governance remain predominantly regional or local according to the study conducted by Original Equipment Suppliers Association (OESA) and PRTM Management Consultants and presented recently at the SAE 2007 World Congress in Detroit.

In addition to a perception gap, the study found that automotive suppliers face an execution gap. Nearly 50% of respondents indicated that product development infrastructure is a major barrier to globalization. Although 80% cited common product architecture as a key enabler, participants indicated that current OEM strategies and decision-making processes pose challenges to efforts to create common processes.

"Supplier efforts to globalize product development are strongly influenced by OEM strategy. OEMs and suppliers collaborate to globalize their operations for the launch of particular vehicle platforms; however, both OEMs and suppliers are challenged by complex regional requirements, organizational structures and competitive market conditions," noted Neil De Koker, CEO of OESA.

The study found:

  • Suppliers place global "PD Factory" performance management, process integration and resource management at the top of the product development management agenda.
  • Investment needed to globalize product development is expected to increase 40% over the next three years.
  • Cost reduction and proximity to customers are no longer the principal drivers to globalize product development. A significant number of suppliers see new markets as the source for product and process innovation that they can leverage into their existing products.
  • Primary barriers to globalization include underdeveloped local skills and cultural issues.

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