I recently attended an informative event produced by Columbia University. The event "Changing Gears: Shifting the Global Auto Industry from 'Push' to 'Pull'" offered an array of speakers, ranging from UAW leadership, OEM management, Tier 1 supplier to dealership owner. This breadth of perspectives demonstrated a telling commitment by stakeholders from across the U.S. automotive industry to make fundamental changes. Animated panel discussions addressed themes around collective bargaini
The UAW representative prudently avoided addressing topics of workforce entitlement and other gold plated benefits, choosing to focus her remarks on how U.S. automotive workers represent the vanguard of an industry forced to compete in a global market, one where protectionism in nations (Korea was cited specifically) put the U.S. automotive workforce and, by proxy, Americans at a disadvantage in a global market. While this point was inarguable, the UAW representative furthered her case when she raised the challenges of an aging workforce, and cautioned her fellow panel members concerning the inadequate numbers of incoming technical workers; a demographic challenge that is certain to further adversely impact the efficacy of the American automotive workforce.
OEM and suppliers at the Columbia University event offered similar view points on the state of the industry. Both seemingly agreed that the three U.S. automotive manufacturers had been experiencing a "Slow Goodbye" and that the re-birth of the industry and distribution networks would be formed around a notion of creating satisfied customers by delivering high quality products that the market desires. By implication, the three had -- in recent history-- ignored their customers and did not produce vehicles the market wanted. As stated by both the OEM and dealership representative, the time to concentrate on satisfied customers is now. In fact, the OEM representative contended that "satisfied customers are our greatest asset."
An important narrative emerged at the Columbia event that may be lost on the population at large. Buried in the national debate predating President Obama's bailout of the U.S. auto industry was the fact that nearly 80% of those employed by the auto industry do not work at the three OEMs; rather, are employed at suppliers. Long the backbone of the U.S. auto industry, U.S. automotive suppliers represent the future as well. Debating the pros and cons of the bailout is best left to others; nevertheless, the rolling unemployment at suppliers and supplier attrition that would have followed if a bailout had not been extended would have been profound.
Looking forward, U.S. OEMs will be well served to put increased emphasis and resources into their supply chains to meet the demands of the future. What we anticipate this means is that automotive supply networks will evolve to a point where they can approximate the long discussed 'just in time' manufacturing model, while also mitigating the dreaded lot rot that has plagued many automotive dealerships in recent history. This is best accomplished if supplier distribution networks are built atop supply chain information technology frameworks that are inclusive of stakeholders from across the ecosystem of supplier, OEM and dealership.
As a takeaway from the Columbia event, it seems that if the U.S. automobile manufacturers hope to compete with an Asian automotive industry that by 2010 will produce 60% of vehicles worldwide, U.S. OEMs and their suppliers must adopt an ethos that is predicated on being product oriented and process driven. Investment in information technology is at the forefront as a key enabler of industry transformation – in improving knowledge management for an aging workforce, in connecting with consumers, and in coordinating complex supply networks.