Automotive suppliers in the 21st century have better tools than ever for production and inventory control, so there is less likelihood of ending up with unintentionally overproduced obsolete parts. A different product obsolescence risk is the pace of change – and no ERP can help with this one.
Innovation creates winners and losers. Fuel injection yielded a superior method of fuel delivery that displaced carburetors. Automatic motorized seat belts were overrun by more-effective and less-obtrusive driver-side airbags. Occasionally, an older product can beat back the threat and survive – due to cost, as in the case of dipsticks versus electronic sensors; or thanks to customer preference, as with analog odometers versus digital instrumentation.
In other instances, the challenged product lives on but in new regions. A maker of cables and actuators says that some of its applications have been replaced by electronics in North America and Europe but that its products have found new life in emerging markets. The company produces a mode-and-temperature cable used to manually adjust the heating, ventilation, and air-conditioning (HVAC) system on a small B-segment vehicle sold in Asia. The automaker specified low torque, because it wants the manual rotary controls to “feel electronic” to local drivers.
Looking ahead, the auto industry is ripe with technology trends that could cause radical change for some component makers. Lightweighting for fuel economy purposes is a global imperative that will drive new material selection in a multitude of systems. Alternative propulsion in hybrid and electric vehicles will have an impact on powertrain suppliers as their penetration rises. Autonomous vehicles have been winning attention and will create opportunities for additional equipment, and possibly substitution for current parts.
Even if suppliers are not directly affected by these major developments, they may be casualties of sub-initiatives. A lighting supplier, for example, mentioned recently that as power within vehicles becomes overtaxed, the ability of LEDs to offer greater functionality at lower wattage means that they are leapfrogging xenon bulbs in popularity. That trend is preventing xenon from progressing along the typical product life cycle curve that high-end components follow from premium feature on luxury vehicles to a standard offering across many vehicle segments.
Few, if any, suppliers have the power to block a worthy advancement, but every supplier can benefit from identifying a potentially adverse trend as early as possible. Following the trade press, attending industry events, cultivating a network of contacts, and simply being alert to the possibilities will help a supplier track the situation. Being involved early in the design phase with customers is critical for a strong working relationship, for awareness when alternatives are being considered, and as an opportunity to advocate for solutions within your portfolio.
If the signs point toward a potential threat, suppliers should work to preserve their product to whatever extent possible. Some suppliers use industry technical committees and presentations to try to influence standards and proactively bolster the position of their own technology. More important, they should formulate a game plan for the future. This could mean being the first to introduce the next generation, getting involved in the replacement product, or finding new areas to offset the loss.
Innovation can be a double-edged sword. Suppliers should make sure it is working for and not against you.
IRN Inc.
www.think-irn.com
About the author: Melissa Anderson is vice president of automotive research group IRN Inc. Anderson has consulted with automakers and suppliers extensively since 1986. She can be reached at melissa@think-irn.com.