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Ron Harbour

Ron Harbour. President Harbour Consulting. Evolution of the Manufacturer / Supplier Continuum. Presented by Ron Harbour May 17, 2007. The Definition of an OEM. The Harbour Report ™. Recent Clients. The Harbour Enterprise Model. Global Strategic Footprint.

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Ron Harbour

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  1. Ron Harbour • President • Harbour Consulting

  2. Evolution of the Manufacturer / Supplier Continuum Presented by Ron Harbour May 17, 2007 The Definition of an OEM

  3. The Harbour Report™

  4. Recent Clients

  5. The Harbour Enterprise Model Global Strategic Footprint Quality Products and Improved Profitability Product Teardown and Analysis Leadership Training Lean Product & Process Design Manufacturing Process Optimization Assembly Time Reduction Greenfield Plant Design & Development Global Competitive Benchmarking Product Quality Improvement Strategic Sourcing & Supplier Optimization Manufacturing Assessments & Transformations Part Count and Piece Cost Optimization

  6. 2006 Harbour Report™HPV Trend Percent Change from 2005 -0.2% 6.0% 3.3% -1.5% -5.4% 3.3% GM excludes medium duty. Honda, Nissan and Toyota data includes partial reporting of North American plants.

  7. Introduction • What is an automotive company? • What function does an automaker perform? • What does a manufacturer produce (core business)?

  8. (Continued) • Where is the line between an automaker and a supplier (or is there one anymore)? • What forces are most influential anymore… market economics or labor unions? • How will the transition define the future?

  9. The Plant of Yester-Year Ford Rouge Complex

  10. Progress Phase 1 Phase 2 Phase 3 Phase 4 1950’s to 1980’s Early to mid 1900’s 1980’s to Present The Future High Vertical Integration Modern Sourcing Definition Outsourcing Rush, Core Re-Defined No Accepted Norm Includes foundries, steel mills, rubber plants, textiles, upholstery, wiring, chassis components Vehicle assembly, metal stamping, engine, transmission, and select key components • Marginal outsourcing of services, components (seats, IPs, door trim, chassis, bumpers) • Sequencing centers • “Hallowing out” of engineering • Lean logistics • Supplier ownership & responsibility for body, paint, chassis • Supplier work in OEM plants • Pay on production • Major modules delivered

  11. Assembly Plant ComponentSourcing Trends

  12. Assembly Support ServicesSourcing Trends GM / Chrysler / Ford New Domestics

  13. Engine Sourcing Trends * 3 C’s 5 C’s *U.S. Owned Companies

  14. Transmission Sourcing Trends

  15. The Evolution of the Manufacturer/Supplier Continuum

  16. Assembly Plant Capacity (1990 – 2008) Annual North American production grew 28% from 12.5 million vehicles in 1990 to 16 million in 2006. Net

  17. Component / Service Sourcing The “Core Business” Strategy Part Cost Logistics, Containers What influences the sourcing decision? Labor Cost and Availability Available Capital Control of Overall Quality of Key Components Product and/or Process Technology

  18. Why the Major Shift? • Growing gap between supplier and OEM wages • Limited funds for R&D • Growing technical complexity of product • Lack of flexibility to manage lower volumes

  19. What Does the Future Hold? • Demand for more flexibility • Less manufacturing process / performance differentiation • Spread of capital required for new product development

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