Automotive Industry Still Adjusting to Globalization's Impact

New IDC Manufacturing Insights report urges manufacturers to adopt process improvement initiatives to enable the assembly plant of the future


Framingham, MA — December 15, 2010 — Globalization is having a major impact on the automotive industry, and the auto supply chain is undergoing dramatic changes as it copes with new economic realities, seeks to meet shifting demands in consumer preferences and incorporates new technologies to improve energy efficiency, safety and comfort, according to a new report from IDC Manufacturing Insights.

The report, "The Assembly Plant of the Future — Restructuring Global Manufacturing to Meet the Challenges of the Global Economy," discusses the challenges of global manufacturing and how forward-looking automakers are restructuring both design and manufacturing strategies to improve efficiency and remain competitive. The study was based on interviews with automotive manufacturers and suppliers in the US, Europe and Asia.

"The manufacturing of automotives today has not fundamentally changed since 1913 when Henry Ford revolutionized the assembly process by creating the moving assembly line," said Joe Barkai, practice director of product lifecycle strategies at IDC Manufacturing Insights. "It is clear, based on our research, the manufacturing process must be improved dramatically in order to meet the economic and technology challenges of 21st century global manufacturing."

IDC Manufacturing Insights research indicates that the impact of globalization, growing operational complexity and diverse markets and consumers demand that that overall manufacturing strategy should shift from "economy of scale" to "economy of scope," focusing on global flexible manufacturing capabilities. A "design anywhere, make anywhere, sell anywhere" strategy will lead to the formation of a global plant floor. Moreover, automakers will improve portfolio-level planning and incorporate design for capabilities in the design of future vehicles, the research firm argues.

No one strategy or approach can meet all these needs and survive the rapid rate of change, the study suggests. Manufacturers will have to use a blend of strategies and undertake several process improvement initiatives to realize the architecture necessary to enable the plant of the future. Among these process improvements are the adoption of emerging IT technologies and operating models — especially in pervasive communication, Cloud-based architectures and mobile devices — that will provide a solid foundation for powering the assembly plant of the future.

The report is available to IDC clients here. IDC researchers Joe Barkai and Pierfrancesco Manenti discussed the report on a recent Web conference that can accessed here (registration required).

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