outsourcing in the automotive industry: from jit to modular consortia

~ ) Pergamon European Management ]ournal Vol. 15, No. 5, pp. 498--508, 1997

© 1997 Elsevier Science Ltd All rights reserved. Printed in Great Britain

PII: SO263-2373(97)00030-3 0263-2373/97 $17.00+0.00

Outsourcing in the Automotive Industry: From JIT to Modular Consortia ROBERT COLLINS, KIMBERLY BECHLER, IMD, Lausanne, Switzerland; SILVIO PIRES, Methodist University of Piracicaba and State University of Campinas, Brazil

The Modular Consortia approach to production being implemented by such leading-edge automotive manufacturers as Skoda and Volkswagen, is one of the latest experiments in manufacturer-supplier relationships. Competitive pressures and the on-going search for increased efficiencies and greater profits are driving automotive manufacturers and suppliers to reevaluate their respective supply chain activities and relationships. Automotive manufacturers are rationalizing the supply base, defining new supply requirements and increasing their use of outsourcing as a strategic alternative. In response, the automotive supply industry is experiencing consolidation and restructuring (with the creation of 'tiers of suppliers') and a move towards modular supply.

This article explores the manufacturer--supplier relationship at two of Skoda's facilities in the Czech Republic, and Volkswagen's new truck and bus plant in Resende, Brazil. Two conceptual models are developed, the Supplier Profile Matrix and the Stairs of Transformation, to illustrate the challenges and opportunities faced by both manufacturer and supplier as they move beyond JIT to integrated supply and to modular consortia. © 1 9 9 7 Elsevier Science Ltd

Introduction

Modular Consortia: Moving Beyond JIT

Two decades after the introduction of JIT, automotive manufacturers and suppliers are realizing that mastering ]IT is no longer enough to achieve competitive

advantage. Increased pressure to attain annual cost reduction targets and streamline operations are driving automotive manufacturers and suppliers to move beyond JIT, to reevaluate their respective supply chain activities and relationships (this involves a reassessment of who does the value added work as well as where and how it is done) as they strive to improve overall performance.

Against a background of changing structure and dynamics within the automotive industry, automotive manufacturers and suppliers are faced both with new challenges and opportunities as they strive to compete. These include serving new markets, enhancing relationships, seeking shorter lines of communication, and realizing faster new product introduction.

Automotive manufacturers are seeking to simplify the supply chain and improve efficiency. To achieve this end, automotive manufacturers are:

°~° rationalizing the supply base; o~o defining a new set of supply requirements (including

global sourcing, full service supply and design for manufacturing/design for assembly); and

o~o outsourcing activities which have historically been considered part of the automotive manufacturer's 'territory'.

In response to these initiatives, automotive suppliers are increasing their activity in mergers and acquisitions. Furthermore, suppliers are scrambling to maintain profit streams, resulting in industry consolidation and the restructuring of the supply base into "First, Second and Third Tier' suppliers (with the first tier supplier assembling the module and the second and third tier

498 European Management Journal Vol 15 No 5 October 1997

OUTSOURCING IN THE AUTOMOBILE INDUSTRY: FROM JIT TO MODULAR CONSORTIA

suppliers providing the subcomponents). To increase the 'value add' of their products and services, many suppliers are taking on additional functions (providing synchronous delivery, co-development and global support), striving to enhance competencies, and moving to modular supply - - where as first tier suppliers they are responsible for assembling the parts or 'subassemblies' into a module. Building on this notion of modular supply, some companies, such as Volkswagen, are addressing the need to move beyond JIT by experimenting with a new approach to production called Modular Consortia.

Modular Consortia: The Vision

In a modular consortium, the module supplier has the responsibility to assemble the module directly on the automotive manufacturer's assembly line: automotive manufacturers and suppliers work side by side. As Mr. Roberto Barretti, Director of Operations for Volkswagen's modular consortium experiment in Resende, Brazil, states, 'VW provides the house, and the suppliers the furniture' (Luquet and Grinbaum, 1996).

The modular consortium is characterized by a long-term contractual relationship between the automotive manufacturer and a small number of first tier suppliers, where:

°:" the suppliers assume responsibility for modular assembly, the on-line final module assembly into the vehicle, an investment stake in the operation and the management of the module supplier chain; and

o:o the automotive manufacturer provides the plant and assembly line, and assumes the responsibility for plant coordination and final testing.

This article focuses on evolution in the automotive industry from JIT supply to Modular Consortia, the latest experiment in production. It is based on recent supply chain management research conducted by the Manufacturing 2000 project at IMD, and is illustrated with three examples of supplier relationships.

Shifting Industry Structure and Dynamics

Increasing Outsourcing

With the increase of outsourcing to the supply base, suppliers are doing more design, parts manufacturing

and assembly in the automotive supply chain, as illustrated in Figure 1. This means that a greater proportion of the supply chain value added is available, that is, the 'Supplier Pie' is growing.

Shifting Territories

Formerly, suppliers and automotive manufacturers staked out separate territories: today, however, there is a blurring of the picture. With the increased outsourcing to the supply base, suppliers are moving in the direction of the automotive manufacturer's territory. Suppliers are moving to the right, bringing together more pieces and parts (manufactured or sourced) such that they become indispensable partners in the assembly of the vehicle. On the other hand, the automotive manufacturers are now focusing on design, distribution, retail and after-sales service. Figure 2 illustrates this movement.

But suppliers can only achieve a larger 'slice of the pie' at the expense of competition: the efforts by automotive manufacturers to rationalize their suppliers, combined with suppliers' desire to increase their proportion of the value added are driving two fundamental changes in the automotive supply base: consolidation and restructuring.

Consolidation and Restructuring of the Supply Base

As automotive manufacturers have worked to reduce their number of direct suppliers (attempting to create closed, collaborative, and long-term partnerships), suppliers have been forced to consolidate to survive, that is, it is eat or be eaten. The consolidation of the supply base must result in a drastic reduction in the number of suppliers. Recently, a former chief executive of Lucas, the UK components company, stated that he expects there to be only 15-20 global companies by the end of the decade, compared with roughly 10 tiInes that number today (Haig, 1996). In Brazil, AbipeAas (Brazilian Auto Parts Association) expects a decrease from 550 member associates to 250 in the next two years, due mainly to the globalization of the Brazilian marketplace.

With consolidation, there is also a restructuring of the supply base, with the creation of first, second and third tier suppliers. For the largest automotive suppliers, the strategic position is to become the first tier, sole automotive supplier in the global market. In addition, they are also reducing their own supply bases. Second

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and third tier suppliers are trying to retain their positions, now as suppliers to the first tier supplier.

• :o Or the supplier who has the greatest range of skills and capabilities?

Finally, these first tier suppliers are finding that one way to increase the amount of the value added in their products/services is to move to modular supply.

Moving Towards Modular Supply

Defining what is a module as opposed to a system is far from an exact science, as the words are often used interchangeably. However, the following definitions have been adapted from McKinsey: a module is a physical s u b a s s e m b l y - e.g. seats, dashboard/cockpit and front-end assemblies, while a system is a functional aggregate of components not necessarily delivered as one physical unit - - e.g. braking system (Mercer, 1995).

Initially, the move to modular supply was justified on the basis of cost reduction - - with suppliers often paying lower wages, having lower overheads and achieving greater economies of scale, manufacturers benefit from reduced inventory, freed-up floor space and simplified transactions. Arguably today, the need for increased speed to market and for new business development are driving this trend.

In the implementation of modular supply, automotive manufacturers have a number of key points to consider, such as: who is the natural integrator?

o:" Should it be the supplier whose part has the most value added?

°:° Or the supplier whose part contributes the greatest amount of technology?

o:o Or should it be the supplier whose part contains the greatest potential amount of liability to the whole module should failure occur?

Other points include specifying the module and then ensuring its integration.

For their part, suppliers are likely to champion a different set of criteria depending on their positioning relative to competition. For first tier suppliers, modular supply is a means to ensure current profit streams as well as to increase their market share. Furthermore, modular supply provides them with the opportunity to develop new competencies, and possibly, to acquire new technological know-how. For the second and third tier suppliers, modular supply means developing a new holistic approach - - not just thinking in terms of their 'particular' parts. This movement to modular supply has made the module supplier emerge as a new player in the automotive supply chain. Some first tier suppliers are now becoming module suppliers and some first tier suppliers are losing this position, becoming suppliers of the module supplier. Furthermore, it means that the first tier supplier is now responsible for managing the entire module supply chain, and consequently is facing a new set of managerial challenges.

Pursuing Different Production Approaches: Integrated Supply and Modular Consortia

As automotive manufacturers outsource more of their activities to the supply base and suppliers move towards modular supply, there is necessarily an impact on how production is organized. The evolution in the approach to production thereby requires the redefinition of customer--supplier relationships. In their never-ending pursuit of design and performance improvements, automotive manufacturers are looking for ways to

500 European Management JournalVo115 No 5 October 1997


benefit from suppliers' component know-how. Suppliers are looking for opportunities for growth while reducing the variability of their profit streams. Moving towards more stable and long-term relationships - - such as those defined by the modular consortia approach - - makes good sense for them both. However, the opportunity to work with a small, selective group of partners, sharing goals and investments, to design and manufacture new products quickly and thus create new joint distinctive competencies requires the creation of an aggressive improvement agenda for both customer and supplier.

Two of Skoda's facilities in the Czech Republic, and Volkswagen's new truck and bus plant in Resende, Brazil, are good examples of the evolving manufacturer- supplier relationship. In the following sections, two conceptual models will be used to better explain this transition from JIT to integrated supply and to modular consortia.

The Transition Process

Some automotive manufacturers and suppliers are moving to integrated supply and a few are experimenting with modular consortia. As they move beyond JIT relationships with several suppliers each with proximate but independent plants, to integrated, on-site 'hole-in-the-wall' relationships, there is a growing interdependence between supplier and manufacturer. This interdependence culminates in the modular consortia approach, with a total dependence between the co-investors. As highlighted in Table 1, these three approaches to production can be compared along five operational aspects: the number/nature of suppliers, supplier location relative to the automotive manufacturer's plant, closeness of the customer--supplier relationship, supplier role in logistics, and the degree of flexibility in the supplier's system of production.

However, this progression does not necessarily represent a mandatory evolution for suppliers, and the arguments for 'evolving' are mixed. Adapting existing or 'brownfield' sites to modular consortia is extremely difficult.

Transforming a 'brownfield' JIT network to integrated supply is made feasible by moving the existing production facilities closer to the plant or on-site. This 'brownfield' JIT network can also be modified to provide modular supply. However, for the integrated supplier,

moving to modular supply means breaking down the integrated supply network and reconstituting it for the module: the integrated suppliers must contend with the inflexibility of the 'hole-in-the-wall' relationship. Furthermore, already located on-site, there seems little advantage for them to do sub-assembly before delivery. But for both the JIT and integrated supply networks, adapting existing sites to modular consortia does not seem feasible as it would require changing the customer- supplier relationship, increased investment and reconfiguration of the production line. In addition, modular consortia introduce a new set of organizational requirements not always welcome in places with active unions: for example, determining who does the final installation of the module into the vehicle, the module supplier or the automotive manufacturer.

Therefore, it seems that the only feasible way for a JIT or integrated supply network to move to modular consortia is when modular consortia are set-up on new or 'greenfield' sites.

Realizing the Evolution: Three Automotive Manufacturing Plants

To further illustrate the evolution from JIT to integrated supply and to modular consortia, the production approaches of Skoda's Felicia plant (Plant A), Skoda's Octavia plant (Plant B), and VW's Resende plant (Plant C), are shown in Figure 3 below and discussed in the next sections.

Plant A: the Skoda Felicia Plant Positioned between the JIT and integrated supply production approaches, Plant A has been producing the Skoda Felicia car model since November 1994. With Volkswagen's acquisition of a majority stake in 1991, the plant has undergone a few changes in its approach to production, with supply integration as the latest experiment. Taking parts from over 270 companies for the Felicia model, Skoda has 6 integrated suppliers (makers of carpets, seats, exhaust systems, rear axles, bumpers, dashboards and instrument panels) which are physically located on site and manufacture JIT directly onto the line. One such supplier, Johnson Controls, provides seat modules to order: manufacturing and delivery lead time is 303 minutes. Responsible for all assembly, logistics and design, Johnson Controls is able to customize seat sets as required.

Table 1 Basic Features of Each Approach

JIT Integrated Supply Modular Consortia

Suppliers Several First tier Location Proximate, with geographic On-site 'hole-in-the-wall', with

separation no geographic constraint Relationship Independent Independent Logistics Effect coordination Increasing efficiency System Possible to Limited ability to Flexibility reconfigure reconfigure

Co-investors On-line, with no geographic constraint Dependent Increasing efficiency Limited ability to modify partnership

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JIT Integrated Supply Modular Consortia

Figure 3 The Movement from JIT to Integrated Supply and to Modular Consortia, and the Relative Placement of the Automotive Plants Highlighted

Plant B: the Skoda Octavia Plant Opened on September 3, 1996, Plant B produces the Skoda Octavia car model. Positioned between integrated supply and modular consortia, Plant B is trying to implement modular construction: the automotive manufacturer has put in place a central spine assembly line and separate feeder lines for the three modules. The feeder lines are given over to the three module suppliers, who have designated floor areas within the plant, and who are responsible for output of their modules only. The three supplier joint ventures assemble the front-end, door and cockpit modules directly on the feeder lines. The automotive manufacturer's employees are responsible for the installation of the module within the car on the main assembly spine. At present, the automotive manufacturer still maintains some of its original functions, such as creating the design, purchasing components and coordinating the logistics for the second and third tier suppliers.

Plant C: the Volkswagen Resende Plant In Resende, a medium-sized Brazilian city 150 km from Rio de Janeiro, Volkswagen inaugurated a new truck and bus manufacturing plant on November 1, 1996. This factory, which is pioneering the use of a pure modular consortium to produce 30,000 truck and bus chassis a year, is a joint investment of VW and seven select suppliers (before the new factory was inaugurated, VW managed 400 suppliers). VW expects to obtain in Resende a reduction of about 20% in production costs and a minimum decrease of 10% in assembly time. Operating with 1,350 employees, with only 200 directly contracted by VW (with roughly 160 in product engineering and 40 in manufacturing), the modular

consortium allows VW to focus on product design, final quality control, and marketing/sales.

In developing the modular consortium, VW and four suppliers set-up and operated a provisional factory during 1995 near the site where the new one was constructed. This allowed them to validate the modular consortium model and to develop the general basis for the partners' commitment in the new factory, which is detailed in an 80 page document considered highly confidential.

Figure 4 exhibits a schema of the basic assembly process and the company's partners at the Resende plant.

Inside the plant, VW is responsible for the co-ordination of the assembly line: plant production is 'made-to-order' and VW uses a daily master production schedule with the module suppliers. Each module supplier is responsible for assembling its module directly on the feeder line, and for managing the module supply chain (second and third tier suppliers). Each module supplier has its own terms of employment, but these must be reconciled with the other module suppliers' terms.

As VW is requiring suppliers to maintain a maximum of 6 to 8 hours of inventory within the plant, it creates the need for a reliable logistics system for the module suppliers or the storage of safety stocks near the plant, in order to co-ordinate the module and assembly line balancing. Rockwell, for instance, decided to provide, either inside or close to the Resende plant, backup for all parts/systems that could cause an eventual 'breakdown' in the assembly line. The module suppliers are credited

502 European Management Journal Vo115 No 5 October 1997


Cabin Structure Tamet Brazil)

Painting I Eisenmann (Germany)]

Frame Assembly (Chassis) Iochpe-Maxion (Brazil)

Suspension, Axles & Brakes Rockwell (USA)

Wheels & Tires Iochpe-Maxion (Brazil) Borlen (Brazil) Bridgestone (Japan)

Engine, Transmission & Cooling System

M W M (Germany) Cummins (USA)

Cabin Assembly VDO Kienzle (Germany)

Truck & Bus Assembly

Line

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Figure 4 Basic Assembly Process and the Partners at Resende

Number of Suppliers

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Figure 5 Supplier Profile Matrix

when the vehicle passes the final test and is driven off the line. In the case of an assembly line stoppage due to a problem caused by a module supplier, this supplier has to compensate for the production losses. In the case of a vehicle rejected at the final testing, the partners have decided that the module supplier responsible for the problem must pay for all repairs necessary, as well as the financial losses to VW and the module suppliers.

Automotive Supplier Perspective

A Snapshot View The matrix in Figure 5 represents a 'snapshot' view of the automotive suppliers for the three plants and positions them in one of the nine different cells of the matrix. In the matrix, the rows represent the geographic focus of suppliers, and the columns the number of

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Figure 6 The Stairs of Transformation for the Automotive Suppliers

suppliers involved in the 'partnership'. Here it is important to differentiate between the single and sole supplier: in the single option, the customer has more than one qualified supplier, but decides to buy from only one, whereas, in the sole case, the customer has just one qualified and exclusive supplier. The arrows in Figure 5 represent the current tendency moving partnerships towards the 'sole-global' position.

Most of the suppliers in Plant A seem locked into the 'sole-regional' position, while those in Plant B are in the 'single-local' position and seem to be debating whether to move over to the 'sole-local' position. Finally, in Plant C, all the first tier module suppliers are in the 'sole-local' position. However, moving from one cell to another requires the transformation of supply chain activities. For example, for those jumping from a 'single' to a 'sole' position in modular consortia, a more collaborative and intimate relationship is required with the automotive manufacturer. The nature of these transformations is further explored in Figure 6.

Explaining the Transformations

The Stairs of Transformation in Figure 6 represent the different transformations required of suppliers as they move towards a 'sole-global' relationship (considered the 'ideal' position by many) where breakthrough cost/benefits can be achieved. On top of each 'stairstep' is the activity being conducted (Assembly, Logistics, Backward Integration into new manufacturing, and Design) while underneath is the goal to be achieved (Conformance, Assembler schedule support, Functionality, Breakthrough cost/ benefits). To move from one stair up to the next means that suppliers must develop not only the competencies necessary to perform the particular activity, but also those necessary to improve the activity's performance as well - - which means also

learning how to do better things: for example, not only focusing on improving assembly time but also rethinking how assembly is being done.

As previously illustrated in Figure 3, Plants A, B, and C are each using different systems of production. The location of their respective suppliers on the Stairs of Transformation can be represented as shown in Figure 6.

In Plant A, suppliers, as illustrated by Johnson Controls, have climbed to the top of the stairs, achieving breakthrough cost/benefits and greater efficiency.

In Plant B, suppliers remain on the lowest step, 'assembly'. Suppliers are only being asked to tackle the systems integration aspect; the next goal is to outsource logistics. Having a low level of commitment in the relationship, the automotive manufacturer will replace suppliers unable to perform, or indeed insource the operation.

In Plant C, suppliers are starting on the lowest step ('assembly') and they are quickly heading in the direction of the highest level of involvement. They are currently focusing on the 'logistics' step, and intend to reach the top of the staircase by 1998, when a new family of truck and bus chassis designed by VW and the module suppliers will be released. Challenged by any work situation, their attitude is to fix the problem.

Unlike suppliers for Plants A and B, suppliers participating in the modular consortia approach are fully committed. This leaves them with significant managerial challenges. For example, suppliers have to be willing to develop new competencies. At Resende, the cab module, with over 800 components, is supplied by VDO, traditionally an instrument supplier. VDO will have to gain competencies in new technologies and processes dictated by the other components that comprise the

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module, and in managing the second and third tier suppliers. Managing the interface, not only between the first tier or module supplier and the automotive manufacturer, but between the suppliers themselves, will also be a challenge. Issues include cross-organizational team work, quality assurance, balancing material flows and dealing with the different terms and conditions among the workforces.

Another interesting point in the plant is that there are modules being provided by 'new joint companies' and also provided by competitors outside the plant. The Wheels & Tires module has as a supplier a new joint venture company, that is also now learning to work together in a complementary way. In the Engine, Transmission & Cooling System module, the plant is starting the production only with MWM as a module supplier, but in the near future, Cummins will join with them in order to provide the modules for the heavy trucks. In the recent past, both engine companies supplied VW, independently. Outside the Resende plant, both companies continue to be competitors in the 'medium power' diesel engine segment. The challenge for them will be learning how to collaborate on the module.

Automotive Manufacturer Perspective: Working Towards a Real Partnership

But suppliers should not be the only ones seeking to climb the Stairs of Transformation. Outsourcing implies an obligation for both parties: automotive manufacturers must not ignore their own transformation obligations. Both supplier and manufacturer must be willing to rethink their respective business activities in order for the partnership to thrive and mature.

The Stairs of Transformation in Figure 7 therefore represent the transformations required of the 'relationship' as both supplier and automotive manufacturer move up the stairs towards a genuine partnership. As in Figure 6, the activity conducted is on the top of the stairstep (Outsourcing, Infrastructure simplification, Competence reconfiguration, and Genuine partnership) and the goal to be achieved is below (Cost reduction, Operational focus, Strategic focus, and Vertical integration).

To climb the stairs, both partners need to agree on an aggressive improvement agenda. Only by them both pursuing continuous improvement programs can they create and maintain joint distinctive competencies at each step. For it is the development of these joint distinctive competencies that will lead the way to achieving 'breakthroughs' in increased value and reduced cost, as highlighted in Figure 8.

Through Skoda and Johnson Controls' partnership, they have been able to take their individual competencies in automotive design and seat design to a yet higher level with the creation of a joint distinctive competency - - contributing to the overall comfort, well being and safety of driver and passenger (providing special back support, for example).

There are similarities in the relationship between automotive manufacturer and supplier, and that of a young couple as they move from the 'courtship' phase to marriage. In Plant A, Skoda and the six integrated suppliers are still learning how to work together - - this is similar to the dating phase. In Plant B, Skoda and the three modular suppliers realize that they can both benefit from a closer relationship. This stage can be referred to as living together- the first step in establishing the partnership. Then in Plant C, with Skoda and the

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Figure 7 The Stairs of Transformat ion in the Automot ive Supply Ghain Partnership

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Supplier Automotive Manufacturer Genuine

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Figure a Creation of Joint Dietinctive Competenoles

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D ivorce remains a formal i ty

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Divorce is compl ica ted , drawn-out & painful

Figure 9 Level of Commitment in the Supply Chain Partnership

modular consortium of seven suppliers, there is a real investment in the relationship - - the partners' profitability is dependent on each individual partner's performance. In this stage, all partners have to be committed to making the marriage work.

As shown in Figure 9, each automotive manufacturing plant's supply chain partnership reflects a different level of commitment. And as in any formal relationship, the greater the level of commitment, the more difficult and painful is the separation, or the divorce. In Plant B, if either the automotive manufacturer or the supplier(s) is unhappy with performance, ending the relationship is really just a formality. The investment made by both

partners in the relationship, production systems and infrastructure is not enough to prohibit them from seeking other partners. However, in Plants A and C, due to the uniqueness of the supplier(s), the joint investment made by both automotive manufacturer and suppliers, and the resulting interdependence for profits, ending the relationship or divorce becomes a very complex issue.

M a n a g e r i a l Implications

The modular consortia approach is bringing partners in the automotive industry much closer. It consists of a real co-investment by the partners. For both sides, trying to

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T a b l e 2 T h e J u r y is St i l l O u t

Fiat, GM, Ford,

'Who has the know-how to assemble the car, the automaker or the supplier? I think it is the automaker. ' 'They (VW) are making a revolution. We prefer an evolution.' 'It could be the answer to the future of the automotive industry.'

implement the approach represents a set of challenges and opportunities. Automotive manufacturers have the opportunity to share part of the investment in new plants and to focus on some current key issues regarding industry competitiveness. On the other hand, they need to manage carefully the 'invasion' of part of their traditional territory. For the automotive suppliers, the approach requires them to share the risks and investments, and to rapidly obtain new competencies (climbing up the Stairs of Transformation). It also represents the opportunity to become a modular supplier and to increase their business wordwide. In terms of the concepts developed, both partners are climbing up the Stairs of Transformation, and moving towards the sole- global position in the Supplier Profile Matrix.

In order to reach this point, it is important to determine who to play with and what to play. This means paying particular attention to the selection of partners, the correct linkage of competencies, and the implementation of an aggressive improvement agenda (to climb up and enlarge the stairsteps).

For most experts, modular consortia represent the state- of-the-art in automotive industry manufacturing. However, the first pure experiment is only starting and it will require time to conduct a more accurate evaluation about what it really represents for the industry. All eyes will be on Volkswagen to see how it leverages its modular consortium experiment to

develop joint distinctive competencies and to create genuine partnerships with its suppliers.

Some industry competitors have already expressed their sentiments regarding the future of modular consortia (see Table 2).

Acknowledgments

Manufacturing 2000 research is based on a research partnership between IMD, Lausanne, Switzerland and the following companies: Andersen Consulting, Bell Packaging Corp., BP Chemicals, DuPont de Nemours, Exxon Chemical International Inc., GKN Automotive, Heineken, Nestl4 SA, Nokia Mobile Phones, Omega SA, Philips International B.V., Siemens AG and Volkswagen Audi AG. Silvio R.I. Pires'spost doctoral fellowship at IMD was sponsored by the Fundacao de Amparo a Pesquisa do Estado de Sao Paulo (Sao Paulo State Foundation for Research Support). This research does not necessarily represent the views of any of these organizations.

References

Haig, Simonian (1996) Star Parts for Bit Players. Financial Times, October 28, p. 17.

Luquet, M. and Grinbaum, R. (1996) 'Resende dfi o show'. Veja, October 23, p.120--121.

Mercer, Glenn (1995) McKinsey & Co. report, 'Modular Supply in the 1990s: the Keys to Success,' in the Economist Intelligence Uni t publication: Europe's Automotive Components Business, 2nd Quarter I995, pp. II2-135.

European Management Journal Vol 15 No 5 October 1997 507


ROBERT COLLINS, IMD, International Institute for Management DevelopmenL 23 Chemin de Bellerive. P.O. Box 915, Lausanne, CH-IOOI Switzerland.

Robert Collins is Professor of Manufacturing Management, Director of Manufacturing 2000 and Programme

Director of Managing Manufacturing at IMD, Lausanne, Switzerland. He is consultant to international companies in the areas of manufacturing transformation, manufacturing strategy formulation and implementation, planning and control systems, manufacturing practice and performance benchmarking, organizational development and management education. He has designed and directed numerous executive development programmes.

KIMBERLY BECHLER, IMD International Institute for Management Development, 23 Chemin de Bellerive, P.O. Box 915, Lausanne, CH- I OOI, Switzerland.

Kimberly Bechler is a Research Associate for Manufacturing 2000, an IMD Research Project. Her

research at IMD has included the development of over 20 case studies on issues related to alliances, creation of technology standards, enterprise transformation, internationalization, market research, strategic information management, technology transfer, total quality management and training and succession planning. Her previous experience includes Swiss Quality Products (SQP) Publication SA, 24 Heures Presse SA and Planning Research Corporation, Inc.

SILVIO PIRES, Av. Dem~trio Mitre 13I, Parque Santa Marta, Sao Carlos, Sao Paulo, Brazil, 13564-220.

Silvio Pires is a Professor of Manufacturing Management at the Methodist University of Piracicaba and at the State University of Campinas in Brazil, and he was a member of IMD's research staff while pursuing a post-doctoral fellowship. Silvio worked for Villares- General Electric Equipment as a Manufacturing Planning and Control Manager, and has an undergraduate, Master's and Doctorate in Production Engineering. He has published several articles and a book on Manufacturing Management in Brazil.

508 European Management JournalVo115 No 5 October 1997

outsourcing in the automotive industry: from jit to modular consortia

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