Automotive Supplier Project Management: An Explorative Case Study

Abstract:

 Automotive Supplier Project Management: An Explorative Case Study

Martin Schröder

Purpose: Project management in automotive R&D has been extensively studied. While the role of suppliers in new product development has explored in depth, the overwhelming majority of such investigations are conducted from the carmaker’s perspective (Helper and Sako 1995; Midler and Navarre 2004; Beaume, Maniak and Midler 2009). This is unfortunate, because the largely integral product architecture prevalent in the automotive industry forces suppliers to adapt to carmakers’ propriety specifications, suggesting that supplier firms need to manage their customer relationships via different channels and separate projects. It follows that project management and intra-firm linkages to functional departments may be utilised for learning processes and new product development of suppliers. While there has been some recent research into the question how suppliers handle similar projects with different customers (Cabigiosu, Zirpoli, and Camuffo 2013), there is so far no detailed understanding of how automotive suppliers may utilise different projects to further their internal product development.

Design: First, a review of automotive product development literature was conducted to establish what constitutes best practice in project management for new product development. Second, in order to understand if suppliers’ project management routines are similar or different from those of carmakers and how automotive suppliers learn from projects with different customers, a pilot case study with a German bearings supplier was carried out. Further case studies were planned but could not be conducted due to the corona pandemic.

Findings: First, as expected, the supplier develops custom solutions for each carmaker separately. To do so, the development process is divided between a ‘base design’ which is developed at R&D headquarters in Germany and adapted designs which are developed at overseas R&D facilities, usually located close to customers’ R&D locations. The adapted design process is governed by a software tool that defines a standard process: The tool not only defines stages (gateways or milestones), but also defines which function is responsible for individual tasks. Thus, it is a highly standardised process. It is worth mentioning that despite customers’ continued insistence on co-location, face-to-face interaction between customer and supplier engineers is decreasing and virtual teams and team meetings are increasing (even before the corona pandemic). Second, regarding cross-project learning, the supplier simply tracks all requirements (as expressed in requests for quotation) from all customers. Thus, global R&D headquarters analyse current customer requirements and extrapolates trends when creating new base designs. Finally, it is noteworthy that the development process for industrial bearings is completely different from that of automotive bearings, in that while the latter are adapted to each customer’s requirement, the former are standardised and basically sold through a catalogue.

Significance: Compared to project management practices of carmakers, the approach of the bearings suppliers appears even more standardised. This suggests that innovation in this component is incremental. Information exchange is mainly occurring between global R&D headquarters and individual overseas R&D locations without significant exchange of information between different overseas locations. Regarding the adaptation process, it is interesting to note that virtual teams are increasing despite the continued customer requirement to co-locate with their R&D facilities. However, more case studies are needed to check if this pattern is exceptional or relatively typical for automotive parts suppliers’ project management routines in product development.

References

Beaume, R., Maniak, R. and C. Midler (2009) ‘Crossing innovation and product projects management: A comparative analysis in the automotive industry’, International Journal of Project Management 27, No. 2, pp. 166-174.

Cabigiosu, A., Zirpoli, F. and A. Camuffo (2013) ‘Modularity, interfaces definition and the integration of external sources of innovation in the automotive industry’, Research Policy 42, No. 3, pp. 662-675.

Helper, S. and M. Sako (1995) ‘Supplier Relations in Japan and the United States: Are They Converging?’, Sloan Management Review 36, No. 3, pp. 77-84.

Midler, C. and C. Navarre (2004) ‘Project Management in the Automotive Industry’ pp. 1368-1388 in Morris, P.W.G. and J.K. Pinto (eds.) The Wiley Guide to Managing Projects. Hoboken: John Wiley & Sons.