Migration Issues in Modularity for 1st Tier Automotive Suppliers

Abstract

This research attempts to explore the challenges and issues which local automotive component suppliers face as they make the transition to cockpit module suppliers. The paper firstly provides a description of modularity and then discusses the changing supplier roles and relationships in modular outsourcing. An exploratory case study approach involving two suppliers and one OEM is then used to investigate these themes and provide some insights into the motivations and implications for local component suppliers becoming cockpit module suppliers. The paper argues that there are a number of key issues facing suppliers and OEMs in their quest for modular production and supply. These relate to local expertise, supplier management, financial risk, and on-site/off-site (proximity) operations. This study sheds light on important emerging trends within automotive 1st tier/OEM relationships, in particular issues relating to changing supplier roles.