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Int. J. Automotive Technology and Management, Vol. 1, No. 1, 2001
Implementing technological and organizational innovations and management of core competencies: lessons from the automotive industry Jean-Jacques Chanaron CNRS-GATE, University of Lyon and Professor ESC Grenoble E-mail:
[email protected] Abstract: The paper is focused on the new features of the OEM-supplier relationship in the context of the so-called modular assembly approach, presented as a major change in the design of the vehicle and its manufacturing process, with transfer of key responsibilities to the suppliers. This is largely considered as the current unavoidable best practice in Europe and in the USA. Such evolution shows an in-depth transformation of the industrial organization, thus of the rules of the game within the whole value chain. The paper is based on an in-depth case study of the Japanese industry carried out through interviews with key decision makers and academic researchers during two visits to Japan in May and November 1999. Keywords: Automobile; modularization; strategy; technology management. Reference to this paper should be made as follows: Chanaron, J-J. (2001) ‘Implementing technological and organizational innovations and management of core competencies: lessons from the automotive industry’, Int. J. Automotive Technology and Management, Vol. 1, No. 1, pp.128–144. Biographical notes: Jean-Jacques Chanaron is Research Director within the French National Center for Scientific Research and professor in Technology Management and Economics at the Grenoble Graduate School of Business where he is also Director of Doctoral Programs. He has published extensively books, articles and conference papers in industrial economics and technology management since 1973 when he received his PhD at the University of Grenoble. He is Associated Professor and Researcher with Henley Management College and Manchester University in the UK. He is a consultant to international organizations (EU, OECD, ILO, UNIDO), professional organizations (CCFA, FIEV, JAMA), OEMs (PSA, Renault, Toyota, etc.) and component manufacturers. He is a member of the French Society of Automotive Engineers (SIA) and the GERPISA International Network of Researchers on the Auto Industry and Director of FUTURAUTO (a jointventure formed between GATE-CNRS and Grenoble Graduate School of Business for research, training and education related to the automotive system).
1
Introduction
Professional and academic experts from the automotive industry are today paying attention to two major strategic questions:
Copyright © 2001 Inderscience Enterprises Ltd.
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1
The mega-mergers, mega-acquisitions and large-scale strategic alliances (M&A&A) between OEMs (vehicle manufacturers), between first tier system suppliers and between OEMs and internet specialists.
2
The new features of the OEM-supplier relationship in the context of the so-called modular assembly approach, presented as a major change in the design of the vehicle and its manufacturing process, with transfer of key responsibilities to the suppliers: the vehicle is designed in slices built independently by a separate unit or a supplier and then assembled together.
These two evolutions – horizontal concentration and vertical disintegration [1,2] – show an in-depth transformation of the industrial organization, thus of the rules of the game within the whole value chain. The main consequence of such a double process is obviously a reinforcement of the bargaining power of the largest corporations leading the competitive game, while contributing to the rise of ever more powerful and global OEMs and first tier system and component manufacturers. Facing such a context, the OEMs [3] might develop alternative strategies: •
Some have explicitly decided to grow through M&A&A and extensive modularization: Daimler merging with Chrysler, Ford acquiring Volvo and controlling Mazda, General Motors taking over Suzuki and Isuzu, and Renault partly acquiring Nissan, for instance;
•
others have chosen a much more cautious approach: Toyota, PSA or Volkswagen [4], for instance.
During a seminar held in Toyota City (Japan) in 1997 and organized by the Institute for International Economic Studies [5], most participants pinpointed that the Japanese OEMs were much more reluctant when facing the choice for modularization and technological innovation than their US and European competitors. Such an important statement has been used to justify a more scientifically-based research in order to explain the recorded differences in strategy and practice. The current paper is based on an in-depth case study of the Japanese industry carried out through dozens of interviews of key decision makers (OEMs, component suppliers, government bodies, professional associations) and academic researchers developed during two visits in Japan in May and November 1999. In industry, interviews were carried out mainly with senior executives in long-term technology and product planning, purchasing, R&D, product and process strategy, marketing, quality and manufacturing. The research mainly targeted Toyota, because there is a large consensus amongst academic researchers all over the world, within the MIT group and the GERPISA network, that this enterprise could be considered as the worldwide leader as far as the efficiency and innovative character of its industrial organization is concerned. So far, Toyota is not yet engaged in a major alliance or acquisition even if some agreements are crucial such as fuel cell cooperation with GM and is still delaying the modular philosophy if not entirely controlled by internal competencies. On the other hand, Toyota has posted impressive economic and financial results, often better than its main competitors and is enjoying a huge cash flow which will eventually enable risk-taking behaviour such as innovation. This paper is not dedicated to speculation on the superiority of a new model of strategic management developed by Toyota which would be analysed as ‘THE’ ultimate
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one best way. According to the GERPISA approach developed in the two books released by the network, One Best Way? and Coping with Variety [6,7], there are always several alternative efficient strategies. As far as modularization is concerned, the research is based on two assumptions: •
In order to fill the gap with their Japanese competitors, or more simply to increase their competitive advantages, the European and US OEMs have chosen to implement major strategic changes, largely inspired by the most well-known US management gurus: in particular, promoting a modular approach to vehicle design and manufacturing and recentring on three competencies: vehicle architecture, final assembly, and marketing. Therefore, other responsibilities are outsourced and transferred to system and module suppliers.
•
Toyota has decided not to adopt such strategic options, largely considered as the current unavoidable best practice in Europe and in the USA, but to give its preference to a global vision and management of an automobile manufacturer and to protect the OEMs’ dominant role in the value chain (also formulated by Fine, [2]), as far as styling and design, technological choice and quality are concerned.
Table 1
Hypothesis on the two strategic alternatives
Dominant standard in Europe and the USA
Toyota
Specialization in a limited number of core competencies
Protection of all strategic competencies
Delegation of responsibilities to first tier suppliers
Maintain OEMs’ responsibilities for quality control and design
Decentralized management of the value chain
Overall control of the value chain
Technology transfer from the IT sectors and call for new specialized suppliers
Internal technology development and competence acquisition in IT
Cautious and step-by-step approach to technological innovation
Leadership through innovation: hybrid vehicles and in-board navigation systems
This research is fully in line with previous investigations carried out within the GERPISA framework dealing with the different historic steps in the evolution of the automotive supply chain [8,9]: •
From sub-contracting to partnership in the 1980 and early 1990s [10,11].
•
From partnership in manufacturing, quality control and logistics to co-makership, i.e. partnership in design, product development and innovation since the mid 1990s [12,9,13].
2
Towards a set of definitions
There is no unique definition for a module which would be accepted by both the OEMs and the suppliers. In professional magazines, some are using a module for a brake system, others for a chassis with wheels, others even for a complete vehicle assembled by a sub-contractor. A module could be defined as a set of components and/or sub-systems which are pre-assembled offline and delivered to the final assembly line ready to be fitted
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on the vehicle or the engine in one single operation, i.e. on a ‘plug and play’ approach. Such an approach is named modular assembly. Therefore, a module is characterized by a ‘geographical’ and a logistical. A module is also different from a sub-assembly since it needs a specific structural design in itself as well as a particular interface with the vehicle. A system (or a function) is a set of components and sub-systems which provide the vehicle with a set of particular expected performances: braking, heating and air conditioning, lighting, etc. A system might be pre-assembled but only partly since it has components in different parts of the vehicle. A system is then defined by its performances and quality. Figure 1
Different but complementary definitions
Development
Description
Examples Front-end
Sub-assemblies
Simple pre-assembled sets requiring no specific development
Systems
Doors Seats
System development
Modules
As complete pre-assembled units
Definition
Pre-assembled sets requiring structural modifications of their elements Delivered in separate elements but designed as comprehensive systems
Cockpit Admission system Braking Steering Engine control Interior panels
Delivery Source: Toyota
Finally, the module is granted to a module supplier, either external or internal, which is supposed to deliver it on a synchronized basis to the very place where it will be assembled in the vehicle. The functional systems must be designed and optimized before it can be cut into separate parts to be integrated in the various modules. For instance, elements of the braking system will be included in different pre-assembled modules: the front end, the driving train, the rear end, the cockpit, etc. The integration with other systems should be granted ex ante as well. Therefore, the key role is with the systemarchitect and integrator. The ‘cutting into slices’ which is the principle of modularization can only be done when the integration is given [14,15]. The modular philosophy requires a complete reengineering of the manufacturing process. Three options are available: the just-in-time option where trucks deliver the
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modules; the supplier park option where conveyors bring the modules to the final assembly line; and the modular factory option, which is a specially designed building where suppliers and the OEM are located in the same premises. So far, the modular factory option has two versions: the traditional fishbone shape, which is simply an adaptation of the so-called fractal organization [16] with lateral preassembly lines or shops [17], and a more innovative shape such as the Smart [18] factory in Hambach, France, in which the module production is integrated within the assembly line. Figure 2
Geography of modules and systems
Systems functions
Modules
Figure 3
Module and final assembly
Off-line parallel shops FRONT TRAIN
COCKPIT
DOORS
Vehicle assembly lines
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Smart City (Hambach, France)
Body Panels Dynamit Nobel Front Axle Bosch
Doors Magna
Logistics Small Components Schenker
Seats Faurecia etc.
Rear Axle Krupp-Hoesch Cockpit VDO
Systems & Components Tanks
Body in White Magna
3
Systems & components
Painting Eisenmann
Different strategies towards modularization
Historically, modularization was born in the USA during the Second World War in order to speed up the process of manufacturing war planes and landing ships. According to Automobile International [19], the concept has been rediscovered by Fiat at its Melfi plant with the Tipo and its 14 modules pre-assembled by Fiat’s subsidiaries such as Magneti Marelli and Teksid. Fiat then generalized the modular approach to the Punto and the Palio. GM, which initially designed a modular front-end for the Saturn, finally cancelled the project. In 1991, Ford introduced four modules on the Contour: cooling, front train supplied by TRW, rear suspensions supplied by Eaton and the braking module designed by ITT. During the 1970s and 1980s, most OEMs outsourced progressively and ‘modularized’ the seat and door production at the same time. Also, since the end of the 1990s, several experiments of modular production have been or soon will be carried out. The move is so popular that Automobile International [19] called it ‘a modular mania’. Table 2
Modular factories (existing and under construction)
OEM
Country/City
Date/Model/Capacity
DaimlerChrysler
France/Hambach
1998/Smart (MMC)/capacity: 200,000/year
Brazil/Curitiba (Parana)
1998/Pick up Dakota/capacity: 40,000/year
GM
Brazil/Gravatai (Porto Allegre)
2000/Blue Macaw/small car/200,000/year
Ford
Brazil/Camaçari (Bahia)
2001/Amazon/small car/250,000/year
Volkswagen
Brazil/Resende (Rio)
1996/Trucks/30,000/year
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On the other hand, the largest component manufacturers are involved in supplying modules to the OEMs. Most of the time, this is at the supplier’s initiative. In some cases, such as Calsonic for Nissan, this is at the OEM’s request. Figure 5
Leading module suppliers
MODULE CHASSIS COCKPIT FRONT-END POWERTRAIN REAR-END
SUPPLIERS Dana, Visteon Sommer/Allibert Siemens, Delphi, Faurecia, Textron, Lear, Becker, Mannesmann-VDO, Valeo/Plastic Omnium, Calsonic. Delphi, Visteon, TRW, Dana, ZF, Valeo Faurecia, Hella/Behr, Bosch, Magneti Marelli ZF, TRW, Krupp/Hoesch
DOOR MODULE & REAR HATCH
Meritor, Johnson Control, Magna, Lear, Brose, Valeo/Plastic Omnium, UTA, Sommer Allibert, Magna-Ymos, Peguform, Toyota-Araco
FRONT FACE
Plastic Omnium, Faurecia
INTERIOR MODULE
Sommer Allibert, Magna
DRIVING TRAIN
Dana, Bosch
Theoretically, the key criteria for moving towards modularization are of an economic nature, i.e. potential gains through cost reduction by outsourcing and externalizing the cost of design, manufacturing, quality insurance and logistics and by decreasing the number of elements as well as simplifying the assembly process. Modularization is also technically attractive, since it could substantially increase the coherence between the thousands of single elements making up a car. In that case, the product and process engineering vision might dominate. In such a configuration, modularization is associated with a significant delegation of responsibilities in design and manufacturing, and therefore of added value, from the OEM to the module supplier. Such economic advantages are obviously appealing to any OEM or potential module supplier. But in practice, there are three different positions: 1
OEMs which are very much ‘pro module’ such as DaimlerChrysler, GM, Fiat, Ford or Renault.
2
Those which are ‘against module’ such as Toyota and Honda.
3
Those which are more cautious, i.e. adopting a wait and see position such as PSA and Nissan.
Implementing technological and organizational innovations Figure 6
Obstacles to modularization in Japan
Stakeholder
Socio-economic
OEM
• Job protection • Marginal gap in wages • Common Trade Unionism • Limited cost differential • Distribution control
Module supplier
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Technical
• Relatively old factories • Physical space shortages
• Relatively old factories • Physical space shortages • Limited financial resources • Common Trade Unionism • Weak development capabilities •Limited managerial competences • Limited manufacturing capacity
Cultural/Strategic • Black box syndrome • 'Intel Inside' syndrome • R&D-oriented strategy • Obsession with total quality • Limited choice of suppliers • Long term relationships • Missing supplier evaluation
• Opposition to M&A (*) • R&D-oriented strategy
(*) M&A: mergers and acquisitions
The key factors against modularization are the following: According to Japanese experts, the two key obstacles to modularization are related to the management of cost, competencies and innovation: •
First of all, there is yet no solid evidence that modularization leads systematically to cost reduction. Extra cost in synchronization between the OEM and the module supplier might even be generated as well as non-quality cost. This issue has been raised for MMC-Smart during the early months of volume production when 10%–15% of the cars were not delivered properly due to significant defects, MMC blaming the module suppliers for most of these failures [20]. Extra transaction cost could also be created when a change of supplier [21] is requested as well as extra direct cost when a significant change in the design is required. Such extra costs are obviously associated with the choice for single sourcing which is basically required by modularization.
1
The second crucial obstacle is linked to the management of competencies, i.e. to the so-called black box syndrome in which the OEM loses its traditional total knowledge of real costs, development lead time, technical performances and quality levels. The ‘Intel Inside’ syndrome, translated into ‘Bosch, Delphi, Visteon, Denso or Sony Inside’ syndrome in the automotive industry, would then be the extreme limit of such a move. In that case, the risk would be a complete reversal of image and brand from the OEM to a particular supplier.
2
Thirdly, there is a risk of being trapped through single sourcing and long-term commitment to the less innovative module supplier in its industry. Organizing competition through tender is often a major incentive for R&D and innovation from suppliers.
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As usual, the strategy of the major Japanese OEMs is changing rapidly, according to their own strategic needs and learning capabilities. Basically, most of them did choose a stepby-step approach towards modularization, avoiding carefully a major reengineering of their manufacturing facilities as well as a reorganization of their supply chain, in particular where affiliated suppliers are concerned. Toyota and Honda have adopted a very cautious approach, experimenting with partial modularization under their full control. In other words, they develop and manufacture their own modules, which they will later eventually outsource from an affiliated supplier (Toyota) or a long-term partner (Honda). For example, for the Prius, its hybrid vehicle, Toyota has developed a module integrating several electronic devices: heating, air conditioning, audio and navigation, electric and gas engine control. Toyota did also design and manufacture the cockpit for the Yaris, carrying out a feasibility survey for sub-contracting to a venture between Denso and Toyoda Gosei. Automobile International [19] quoted Toyota as using a Becker cockpit, a Lear headliner and seats by Jonhson Control in its US manufacturing units. Toyota and Honda are clearly willing to lead and control the process, keeping full responsibility for the design and quality insurance to the final customers. The sine qua non condition is to maintain the OEMs’ control over the strategic knowledge and knowhow and therefore over the core competencies in all crucial domains: •
the technological constraints – performances, quality, reliability and then price – since they shape customer satisfaction;
•
the industrial constraints – expressed in cost and productive efficiency;
•
the strategic constraints, related to the styling and to the brand image on the one hand, and to the OEM’s positioning within the value chain, on the other hand.
Such control might be organized through partial or total shareholding or explicit contracting [22].
4
Innovation and the management of core competencies
Since the pioneering work by Penrose [23] on the resource-based view of the firm, the concept of core competencies has gained a central position in strategic management. Hamel and Pralahad [24,25] and Leonard-Barton [26] contributed to popularize the notion in the business world. The core competence strategy is today considered as very efficient – and a very convenient analysis and decision making tool. But there are two main difficulties when implementing a core competence strategy because the concept suffers from its own complexity: •
It is not so easy to identify core competencies since the notion confuses skills, technologies, learning capabilities and channels, as well as synergies.
•
It is not so easy to make the difference clearly between the individual and the collective dimension of the competence.
Above all, some very recent research [27] strongly challenges the model since specializing on core competencies could lead to non-efficient choices and decisions. The
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core competence theory is considered as ‘prescriptive and normative’ and ‘selfconfirming’, leading corporate managers to eliminate better solutions when choosing the under-optimal solution. From the research, Toyota could be characterized by the following core competences: Table 3
Toyota’s view of its own strategic competencies Function
Technological competencies
Managerial competencies
Integration
Architect and integrator of thousands of components to be assembled under total quality management
Coordination of an integrated system of industrial and commercial subsidiaries
Technologies
Electronic components and systems, including software
R&D and innovation capabilities
New power train (hybrid vehicle) Investment and support
Financial support to customer Corporate finance
As far as technology is concerned, electronics and information technology are the key competencies. In the middle of the 1980s, the Toyota Motor Corporation (TMC) decided that on-board electronics would be the leading technology for the new millennium in order to generate competitive advantages through market differentiation and that the corporation should get the relevant competencies in hardware as well as in software. The main decision has been the creation of its own R&D, design and manufacturing [28] capabilities for components and electronic modules. Toyota has four divisions in electric and electronic engineering: electronic components, semi-conductors, ABS and navigation systems. The explicit objectives are the following: •
Building an internal system of knowledge and know-how even if the volumes are no competitive (when compared to external suppliers from the IT industry).
•
Building internal assessment capabilities avoiding the so-called black box dependence with external suppliers for electronic systems heavily impacting on the final price (from 10% in 1995-96 to 30% in 2005).
•
Creating the capability of internally monitoring technological change in a domain which is not within the traditional competencies of automotive engineers and of detaining its own patenting capacity.
•
Diversifying its own supply chain, generating competition amongst suppliers in order to get the best value and provoke potential innovative behaviour.
The Toyota Motor Corporation could also use the R&D and innovation capabilities of its affiliated suppliers: •
Denso, producing ABS, navigation systems, engine and steering control systems, intelligent cruise control systems.
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•
Aisin AW, non listed subsidiary of Aisin Seiki and Koito Manufacturing, which has competencies in automation, navigation systems and computer aided transmissions.
•
Koito Manufacturing, developing research in microwave and laser radar, infra-red vision, ultra-violet head lamps.
Two domains for major technological innovation are a strong incentive for developing such core competencies in electronics: •
Hybrid and fuel cell electric vehicles since they are a mix of several technologies and therefore require very sophisticated electronic management devices and
•
Intelligent transportation systems (ITS).
Table 4
Toyota’s recent decisions regarding IT
Date
Operation
April 1998
Joint venture with Toshiba and Fujitsu for satellite information provision
April 1999
Crayon Project: 35 electric cars e-com in self-service for headquarters staff with a global GPS running from a smart card.
July 1999
Standard protocol with several Japanese corporations, such as NEC and Sharp, to link navigation systems with the internet (POIX: Point Of Interest Exchange language)
December 1999
Merger of IDO, Toyota’s mobile phone subsidiary (62.8%) and DDI, subsidiary of Kyocera (25.2%), with KDD, in which Toyota holds a 8.4% share in order to create a second Japanese telecommunication group.
December 1999
Strategic alliance of marketing subsidiaries of Toyota (Nambokusha) and Sony (Intervision) for launching and promoting new products.
February 2000
Joint venture with i2 Technologies for providing spare parts through the internet in the USA
March 2000
Internet Initiative Japan (IIJ), a joint venture with Sony and Tokyu (33.3% each) to develop cable network for large-scale fast and cheap internet access.
March 2000
Joining the web-based consortium for trade exchange of parts procurement created by Ford, GM and DaimlerChrysler.
Sources: Nihon Keizai Shimbun, Herald Tribune, Financial Times, CCFA
The major R&D targets are the following: •
Integrating micro-computers in order to reduce their number. There are 40 units on a Lexus LS 400 and this number is increasing with each generation of a new model which led to a significant rise in complexity and failure risks as well as price.
•
Multiplexing technology in order to reduce the complexity and length of wires.
•
Electronic modules for the management of new power train (hybrid or electric).
•
Integrated navigation and communication systems.
Toyota’s technology and innovation strategy is targeted to the following goals: •
Gaining a position allowing the corporation to set local (Japan) and if possible worldwide technological and economics standards, including languages and protocol, from its own research or at least with solutions that are under the full control of its research units.
Implementing technological and organizational innovations •
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Teaming with the most dynamic and innovative companies outside the ‘automotive system’: Sony, Matsushita, Toshiba, KDD, Sumitomo, etc.
Figure 7
Toyota’s R&D and innovation strategy
Purchase to affiliated companies
Affiliated companies R&D
Manufacturing
Toyota R & D
Suppliers R & D
Validate by Toyota
Worldwide or local standards and norms
Purchase to suppliers
Joint ventures
Competitors R & D
Toyota has organized corporate R&D, including its subsidiaries and affiliated suppliers accordingly, i.e. under the full control of the headquarters: Figure 8
Organization of R&D at Toyota
Basic Components Basic Research
Source: Toyota [29]
Vehicles
Toyota Central R& D Laboratories, Inc. Future Project Division Component & System Development Centre
Advanced Development
Commercial Development
Systems
Vehicle Development Centres
Component Suppliers
Body and Assembly subcontractors
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All Toyota’s units, departments and subsidiaries are concerned and involved in a strategy which is dedicated to achieve competitive advantages through research, development and innovation.
5
Towards an interpretation
From a clear definition of the key core competencies for the next ten years and with nearly unlimited resources, Toyota’s strategy towards modularization and innovation is focused on three principles which determine in fine customer satisfaction and loyalty, and then the future of the corporation: 1
Any change should be undertaken with absolute control by the OEM which should protect the competencies that shape its recognition by the customer, i.e. its function of architect and integrator of components and systems as well as the overall styling preventing the brand from being transferred to external suppliers.
2
Any change should be undertaken at a total cost which is equivalent or even reduced when compared to the other alternatives.
3
Any change should be undertaken at a superior, or at least an equal quality and reliability level.
Such a strategy obviously relies on Toyota’s second main core competence: its ability to control its system of affiliated suppliers, subcontractors, financial institutions, etc. Over the last 30 years, while preaching the lean system, Toyota has built up a tremendous network of thousands of subsidiaries on which Toyota has a total and so far unchallenged leadership [30]. Apparently, this is the key ingredient in Toyota’s success story. Instead of ‘leaning’ the value chain as argued by the MIT, Toyota reinforced its control over the system to its extreme limit! When comparing the options of the leading Japanese OEMs to the strategy developed by their European and US competitors, they look quite different. 1
The Japanese OEMs, in particular Toyota and Honda, give their preference to functional modules with standardized interfaces and prioritize the optimization of the vehicle global design. Outsourcing is only one of the available methods to reach such goals. They prefer affiliated suppliers (Toyota) or suppliers with long-term relationships (Honda).
2
The European and US OEMs give their preference to structural modules within a global coherence at the assembly level. They prioritize cost reduction through externalization of supply and resource allocation to a limited number of core competencies. Suppliers should have R&D and innovation capabilities: therefore, they are large and global corporations.
Implementing technological and organizational innovations Figure 9
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Competence and added value transfer through modularization OEM
MARKETING MANAGEMENT INTEGRATION VEHICLE STYLING R&D
STYLING
DESIGN
R&D DESIGN MANUFACTURING QUALITY CONTROL LOGISTICS MODULE MANUFACTURER
According to Shimokawa [31], the Japanese option could be named ‘design-in configuration’, i.e. a strategy guided by the overall design of the vehicle. In that case, the leadership is in the OEMs’ hands. The Western approach could be named ‘cost-driven configuration’, i.e. a strategy driven by cost control. In this case, the leadership could eventually slip into the global first tier suppliers. Both strategies aim at gaining competitive advantages. While apparently totally opposed, will they lead to the same result, i.e. the top of the mountain?
References and Notes 1 2
Also analysed by Fine [2]. Fine, C. (1997) ‘Power diffusion in automotive supply chain’, IIES Seminar Series, No. 9711, pp.1–22. 3 As well as their largest suppliers. 4 VW has recently taken over several small specialist OEMs such as Lamborghini, Bugatti and Rolls Royce and has one modular plant in Resende (Brazil) for trucks. 5 Institute for International Economic Studies (1997) ‘Perspectives of automotive industry into the 21st century’, Symposium, Toyota City, 30 October. 6 Freyssenet, M. , Mair, A., Shimizu, K. and Volpato, G. (1998) One Best Way? Models of the World’s Automobile Producers, Oxford University Press, Oxford. 7 Lung, Y. Chanaron, J.J., Fujimoto, T. and Raff, D. (1999) Coping with Variety, Flexible Production Systems for Product Variety in the Automobile Industry, Ashgate, Aldershol. 8 See Chanaron [9] for a tentative synthesis of an approach which links the new industrial economics with management. 9 Chanaron, J.J. (1999) ‘Les leçons d’une visite’, La Lettre du GERPISA, No. 131. 10 De Banville, E. and Chanaron, J.J. (1991) Vers un système automobile européen, Paris, Economica.
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13
14 15
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17 18 19 20 21 22 23 24 25 26 27
28 29 30
31
J-J. Chanaron Chanaron, J.J. and Lung, Y. (1995) Economie de l’automobile, Paris, La Découverte, Repères No. 171. Kesseler, A. (1998) ‘The creative supplier, a new model for strategy, innovation, and customer relationships in concurrent design and engineering processes: the case of the automobile industry’, PhD Thesis, Ecole Polytechnique, Paris. Soderquist, K. Chanaron, J.J. and Birchall, D. (2000) ‘Automotive components suppliers facing the learning challenge’, International Journal of Vehicle Design, Special Issue, Forthcoming. This distinction module/system is also proposed by Pfaffmann and Stephan [15]. Functionality is referring to as ‘system sourcing’ and the assembling place to as ‘modular sourcing’. Pfaffmann E. and Stephan, M. (1998) ‘Direct investment strategies of multinational automotive suppliers in the German market: responses to outsourcing, globalisation, and supply chain-redesign in the 90s, in E.D. Jaffe, I.D. Nebenzahl and D. Te’eni, Proceedings of the 24th Annual Conference of the European International Business Academy on International Business Strategies and Middle East Regional Cooperation, Jerusalem, 1–15 December. Lung, Y., Salerno, M.S., Zilovicius, M., and Cameiro Dias, V. (1999) ‘Flexibility through modularity: experimentations with fractal production in Brazil and in Europe’, Chapter 9 in [7]. And which, in fact, has existed since the beginning of the Fordist assembly chain. The Smart is manufactured by Micro Car Corporation (MCC), a subsidiary of DaimlerChrysler Corporation. Automotive Industries Staff (1998) ‘Modular mania’, Automobile International, November, pp.34–47. Visit to the plant in February 1999. Which always means a change in plant location. Nellore, R., Söderquist, K, and Eriksson, K,Å. (1999) ‘A specification model for product development’, European Management Journal, Vol. 17, No. 1, pp.50–63. Penrose, E. (1959) The Theory of the Growth of the Firm, John Wiley & Sons, New York. Hamel, G. and Pralahad, C.K. (1990) ‘The core competence of the corporation’, Harvard Business Review, Vol. 90, No. 3, May-June, pp.79–93. Hamel, G. and Pralahad, C.K. (1991) ‘Corporate imagination and expeditionary marketing’, Harvard Business Review, Vol. 91, No. 4, July-August, pp.81–92. Leonard-Barton, D. (1992) ‘Core capabilities and core rigidities: a paradox in managing new product development’, Strategic Management Journal, Vol. 92, No. 13, pp.111–125. Ryatt, M.D. (1998) ‘When competencies are not core: self-confirming theories and the destruction of firm value’, SSRN Electronic Paper Collection, University of Rochester, Simon School of Business. The electronic unit is named Hirose plant, near Toyota City, created in 1989. Toyota (1997) Outline of Toyota Technical Center, TMC. In 1998–99, when tentatively computing all jobs involved in such a ‘web’ and concerned with the automobile, the Toyota Group had more than 280,000 employees in Japan and more than 80,000 employees abroad, i.e. a total of 360,000 employees worldwide. With a production of 5,210,000 vehicles, Toyota’s apparent physical productivity is then approximately 14.2 vehicle per employee in 1999. Such a figure is remarkably close to the ratio calculated for Peugeot-Citroën (14.6 for 2,277,600 vehicles). For VW Konzern, the figure is 16.1 vehicle per employee but without integrating minority shareholdings. Shimokawa, K. (1999) ‘Towards modularization’, Workshop on the Future of Automotive Industry, Japan Technology Transfer Association (JJTA), Tokyo, 26 October.
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