Overview

Suppliers in any industry must be able to respond to changing demand patterns in the market, but in the motor vehicle industry, where typically 60 percent of the product s value ^[1.] derives from internally and externally supplied components, supplier response is critical. A manufacturer must schedule at least 2,000 individual components per final product, with billions of possible combinations. Some of these, such as switching the driver side from left to right and vice versa, require fundamental changes in manufacturing operations.

To date, manufacturers typically rate suppliers according to price first, followed by quality and delivery reliability. In a build-to-order system, location is also important where to source components and subsystems. The industry seems conflicted here, with a widespread move to global sourcing ^[2.] on the one hand and the popularity of supplier parks on the other. Another source of conflict is modular supply. GM s Yellowstone project made headlines in the late 1990s, when the company announced its intent to have suppliers build whole modular systems that production would then install intact on a new type of assembly line in flexible factories that were half the current size. Despite pilot implementations outside the United States, the project failed because of union resistance. In 2000, Donald Hackworth, GM s senior vice-president for manufacturing, said The word modular is no longer in GM s vocabulary. ^[3.]

But modularity per se is not the culprit.