Networks and Exchanges: A Contrarian's View" Michael J. Suman May 14th, 2004 Michael J. Suman 1979 – 1996 Vice President for Prince Corporation 1996 – 2002 Group Vice President for Johnson Controls Automotive Division Introduction Primary Areas Of Responsibility Sales Marketing
Michael J. Suman
May 14th, 2004
1979 – 1996
Vice President for Prince Corporation
1996 – 2002
Group Vice President for Johnson Controls Automotive Division
Primary Areas Of Responsibility
Product Development (43 U.S. Patents)
Managed IT systems on a global basis
Interface with investor relations and press
The world of cost reduction and lean will continue to be the cornerstone of good business practices. What do executives do when lean practices are not enough? One author puts it another way:
Financial markets relentlessly pressure executives to grow and keep growing faster and faster. Is it possible to succeed with this mandate? Don’t the innovations that can satisfy investors’ demands for growth require taking risks that are unacceptable to those same investors? Is there a way out of this dilemma?
The Innovator’s Solution by Clayton Christian
The Internet as a medium is value neutral. During the explosion many companies tried to make this communication link a business in itself instead of using it as new tool.
“E is best”
European IPOs 1999 Dot-Com Share Fall-Out
US Christmas 1998
US IPOs 1997/8
Peak of Inflated Expectations
Trough of Disillusionment
Slope of Enlightenment
Plateau of Profitability
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
This story begins with a look at where the Domestic Automotive Industry was in the year 2000
The news for Automotive was not good as the .com companies stock price rose exponentially for two years
Even though many of us already had a plan, partners, and were moving fast, we were given incentive to stop our internal activities.
200 global locations and hundreds of software legacy systems
General Motors NAO Purchasing
Ford NAO Purchasing
DaimlerChrysler NAO Purchasing
Business Case Justification
Very few new Internet suppliers had the capability of understanding our product development process
Integration was not a technical issue
Industries with long product cycles (automotive is 10 years) require a tremendous amount of compromising when it comes to “surprise and delight” features and functions. What does a product planner do when a feature market tests 50/50?
Being able to use carryover products on multiple vehicle platforms is mandatory – but market demographics and use preferences make this difficult. Many times the resulting investment is similar to a housing contractor tooling new fuse boxes and wall switches for every house in the subdivision.
Many times engineers are kept from designing products in a master planned flex build method because of innovation freeze dates.
Lean Manufacturing with fewer parts
Automotive assembly plants need to have much less WIP yet provide mass customization
Dealers are sometimes forced to floor plan more vehicles than necessary because of customers option preferences
Suppliers would be willing to carry more of the upfront costs if they could be a part of the aftermarket parts and accessories business. Many times OEM suppliers have no capability of competing with the AutoZone’s of the world.
B2B = Back to Basics
Basic questions I would ask all IT and Internet suppliers
Is this in our plan