Automotive Engineering - July/August 2019 - 6

SUPPLIER EYE
The supplier strategic-planning checklist

hose building OE supplier strategies are
facing difficult decisions. With the industry undergoing significant structural
change, intense global competition,
trade turmoil and elevated political risks, navigating the optimal business route over the next
ten years will be extremely challenging.
A quick scan of the market dynamics underscores the urgency. Today it's all about collaboration-to meet escalating emission standards in
China, the EU and even North America.
OEMs and major Tier 1 suppliers are focused
on shifting towards electrified propulsion (with
an apparent slowing of all-new engine/transmission development), with the addition of automated-and-connected driving capability aimed
at improving safety. Vehicle development and
production cadences are accelerating.
Lightweight remains a priority. And seemingly
ever-present trade-related issues are impacting
the bottom line.
The proposed FCA/Renault linkup was driven
primarily by technology access-the ability to
expand scale and reduce risk as both OEMs electrify their fleet. VW and Ford hope to achieve
similar benefits on the EV and AV fronts.
For those choosing to work together, it is a precarious balance of short and long-term priorities.
Why the sense of urgency now? Are the market dynamics really that different than 1999 or
2009 - periods of volume decline?
It should be apparent to all that the pace of
change altering the rules by which the mobility
industry has operated is swift and unrelenting.
We are at an inflection point. Suppliers should
be completing an intense review of the way forward (if they have not already) to optimize their
path under these new dynamics.
Strategic planning in today's environment
entails more than just projecting future production volumes and ensuring that the enterprise
is profitable with current processes, capabilities

6 July/August 2019

Michael Robinet
Managing Director
IHS Markit
michael.robinet
@ihsmarkit.com

The goal is to
create a living
function within
the enterprise
- one which
can react to
the speed and
inflection that's
disrupting this
industry today.

and manufacturing footprint. Given the factors
outlined earlier, a multi-phase approach which
solicits input from all critical functions within
the enterprise, as well as third-party analysis, is
required.
The resulting process will be a living function
within the enterprise - one which can react to
the speed and inflection that's disrupting this
industry today.
Projecting how these unprecedented secular
changes will impact basic business structures is
paramount. Question everything:
* Are there new competitors you never contemplated?
* Will you be selling to your traditional OEM
customers-or will Tier 1s take responsibility
for your future sourcing?
* What will differentiate your products in the
future? How will the value equation change?
* How will you differentiate your capabilities in
the future? Should you contemplate new
partnerships or affiliations?
* What happens to your current programs - especially those in the powertrain area? If some
development resources are being diverted
away from powertrain, will existing programs
last longer than expected?
* How will you mitigate all these risks - known
and unknown? Do you have the people, processes, channel strategy and relationships
given anticipated changes to be successful
and adapt?
* Are you still structured to handle a product
cycle which lasts five years? What if the industry moves faster? How will you allocate
increasingly scarce resources?
In the end, the supplier industry must approach strategic planning differently than in the
past. Those who decide to proactively embrace
the inflection and the changes it's bringing will
vastly increase their chances for success over
the next decade. It is not business as usual.

AUTOMOTIVE ENGINEERING

Automotive Engineering - July/August 2019

Table of Contents for the Digital Edition of Automotive Engineering - July/August 2019