Global Operations: Focus on Automobile Industry

Right from the Industrial revolution and after the world wars the automotive world has emerged, as no one has ever imagined. It is one of the biggest industries in the Europe, USA and South-East Asia that contributes significantly to the world’s GDP. “Global competition”, “Innovation” and “Product life cycle” are the terms that are re-defined in the automotive business.As global competition intensifies, the ability to source, make or sell products in more than one country has become a critical success factor in most businesses, particularly automobiles. This has generated a considerable interest for several firms. Automobile Industry continues to experience dynamic changes — changes that sweeps across national borders. Manufacturing is already the most global of all sectors and every company, large and small, needs to constantly review its international configuration.

With prices set by large-scale buyers, raw materials costs increasing, IT and lean initiatives reaching diminishing returns and investors impatient for bigger profits, there are few business levers left. To succeed, auto manufacturers and auto component manufacturers must manage large and complex supply chains, spanning many geographic regions, and pursue opportunities in diverse national markets. While national policies play an important role in shaping the environment for local manufacturing operations and resulting products, cost competition increasingly drives the industry toward global product offerings.The networks of overseas facilities and partners may either emerge incrementally in response to local opportunities and threats, or be acquired ready-made following merger or acquisition. In either case, they may no longer be appropriate for the current competitive situation.

The rapid growth of Asian economies, in particular India and China, offers exciting opportunities and challenges for manufacturers in today’s global marketplace. In order to realize the enormous market potential of these emerging markets, companies need to look beyond traditional logistics and supply chain management strategies. Countries must build transport, trade and information technology infrastructure to make their manufacturing and service industries globally competitive and to create jobs.

An effective global manufacturing network is more than the sum of its parts. Each site and plant needs a clear purpose to which it sticks closely. The co-ordination of sites,Plants and functions needs to be optimized. At the same time, the network needs to be constantly redesigned as world situations shift. Most companies have started to create business processes from scratch for the design and implementation of their manufacturing networks. What they probably don’t know is just how close to world-class those processes are. The consequences of being nearly right could be the difference between business success and failure.