Automotive Design and Production

SEP 2014

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AD&P; > September 2014 > TALK > Insights from IHS > Michael.Robinet@ihs.com 8 INSIGHTS FROM IHS Michael Robinet, Managing Director, IHS Automotive Consulting Why Opportunity Targeting Matters Michael Robinet has been a managing director of IHS Automo- tive Consulting since 2011. Prior to that, he was the director of Global Production Forecasts for IHS Automotive. His areas of expertise include global vehicle production and capacity forecasting, future product program intelligence, platform consolidation and globalization trends, trade fow/sourcing strategies, and OEM footprint/logistics trends. Today's successful component supplier navigates many wa- ters, some smooth, others treacherous. Compared to several decades ago, one can pinpoint successful suppliers as those who were visionaries. They were just enough ahead of the demand surge for their technology to be on the ground foor but not too far out to give up hope and pivot elsewhere. Examples include Gentex's auto dimming mirrors, Borg- Warner's turbochargers and Michelin's early work with the radial tire. Without a vision and subsequent need/demand from industry or consumers, the world would be void of these and other innovations. The spirit of innovation is still alive today—it has to be, given the number of challenges the industry faces. Global- ization, complexity, increasing speed to market, regulatory hurdles and an informed customer are all factors that drive innovation. And recognize that innovation is manifest in several forms—lower cost, quality, reliability, function, mass reduction, or consumer-facing value. Given intense com- petition, suppliers need another means to help bolster their odds to be sourced on the right program to ft within their business portfolio. Successful suppliers target business years ahead of the sourcing window. Opportunity targeting for a particular program/platform or application is a function of several factors. Technology need by the OEM/Tier 1, placement/priority within the supply base, level and stability of annual volumes, ability to lever- age the aftermarket, competitive positioning, and the desire for the customer to "pay" for advanced use of a valuable innovation. Another driver is to choose a program at the beginning of the rollout of a major platform, either regional or global in nature. Suppliers can work with advanced engineering to "steer" the specifcations for the component/ system to their advantage, locking out competitors and maintaining a price advantage. The advantage compounds as successive oferings are based from the burgeoning plat- form and the economics of introducing a second supplier become difcult. Smarter suppliers have proactively targeted business years in advance; it becomes even more critical given the chal- lenges facing the industry. There is a need to reduce risk in the face of customers asking for a wider production and design footprint (spanning several countries), increased development speed and challenges in procuring adequate tooling capacity. Choosing the right programs is the primary factor behind a supplier's long-term prosperity. Waiting for an RFQ to land on one's desk is likely too late for a well- thought and strategic approach to a new program. Success- ful suppliers placed a priority on a position on the program many months earlier. Supplier/OEM sourcing structures are more dynamic today than ever before. Average major or all-new cycle time is converging to 5 years on average for the industry: for full-frame trucks it is longer and for consumer-focused passenger cars shorter. The onset of global platforms across every region is driving this hyper-cadence speed. Between these major revisions are mid-cycle enhancements which are more extensive and complex. At each redesign is an op- portunity for resourcing—thus having the foresight to plan for business is a core competitive advantage. Replacing incumbent business is less important than having the optimal mix of business for your organization. No longer can we plan business from program to program. Opportunity targeting is critical to success.

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