Posts Tagged ‘automotive industry’

Springtime for suppliers

Sunday, September 19th, 2010

Something is happening in supplier land. I don’t dare say it too loud. It’s like a ray of sunshine after a long winter. You don’t want it to get scared and fade away.

I first became aware of it speaking with a large chemical company in Europe two weeks ago. They supply resins to large automotive companies. “It’s not as bad as it used to be,” the supplier said. “The big automotive companies are beginning to work with us, you know, exchange some designs, underwrite the cost of some tooling and development. They no longer steal our designs and reverse-auction them to the lowest bidder.”  There was a pause in the conversation. “Even the American guys are getting better,” he added, for good measure.

For 25 years, I’ve been on the wrong side of the supplier discussion, arguing that original equipment manufacturers (OEMs) would be economically better served to co-create with their suppliers rather than beat them into price submission. A buyer at General Motors once told me, in the era when Purchasing Head Inaki Lopez was encouraging intimidation as a strategy, “Your theory of co-creation as it applies to suppliers does not even rise to the level of being wrong. You’ll never sell this here.” His prediction has proven so accurate that I’ve spent the last 25 years in my frozen supplier tundra, watching sourcing consultants help buyers slash costs and throats of defenseless suppliers too dependent on their order-givers to walk away.

Last week, though, I noticed some more ice melting from the trees. I was with a group that supplies parts to a large number of industries in the US and Japan. The most enthusiastic response to co-creation I got from this group was…from the automotive contingent. “Now that Ford has a Boeing person at the helm, things are downright good,” they said. “We’re sharing our best designs with them again. We’d stopped doing that many years ago.”

This weekend, a whole chunk of the ice cap melted under my incredulous eyes. The purchasing group at a large US healthcare company – yes you read it right, the purchasing group – is seeking help to build a new collaborative network capability. I read page after page of this RFP with trepidation, trembling at every page that this search for a new supplier co-creation capability might be a cover-up for the usual exercise of “We really are trying to lower cost.”  But no, it appears to be real.  This may be the end of the ice age for Western suppliers.

Oh yes, one more thing. Now that arrogance has been wiped off the face of the US automotive industry, there seems to be a new bully. Four companies in the last few weeks have voted for a new purchasing villain. You guessed it: Apple Computer appears to have risen to the top of the charts when it comes to treating suppliers badly. I wonder whether Steve Jobs is interested in automotive history.

A product design poet among engineers

Wednesday, December 30th, 2009

Being in the co-creation business, I’m often confronted with product design issues. This draws me into the world of software tools used to support the work of engineers designing those products. This industry was originally known as Computer-Aided Design (CAD), was later renamed CAD/CAM (Computer-Aided Manufacturing), and is now called Product Lifecycle Management (PLM), to reflect the fact that products increasingly need to be designed not only for manufacturing and testing but also for maintenance, servicing and disposal.

PLM is a left-brained world, to put it mildly. It is a steely blue industry where 3D charts twirl on computer screens, engineers exchange schematic designs and blinking tables of data, and tensile strength and mean-time-between failure drive the choice of material. No room for soft emotional types here. PLM software development has largely been driven by the automotive and aerospace industries, neither of which represents a benchmark for customer sensitivity, as most travelers can attest daily. Installing these software packages requires massive systems integration efforts, which are delivered by IT consulting firms and supervised by corporate IT staffs, themselves hardly populated by marketing hippies searching for new consumer experiences.


In the midst of this free-for-all of engineering features, the CEO of the French company Dassault Systemes, a person by the name of Bernard Charlès, is attempting to take his company to a different place. (In the interest of transparency, let me mention that I met Charlès once about three years ago, but do not otherwise have any relationship with him or Dassault Systemes. I just happen to like what he stands for.) Simply put, Charlès wants his software to enable the co-creation of the customer experience by bringing together user communities and engineers. He wants design to be done in real time, with users leading the charge. It is a poet’s vision in a math-based world, a rhomboid among the squares of the industry. The idea is to let customers visualize their experience through the software and allow engineers to engage in a direct dialogue with them, based on the simulated experience offered.

Picture a Boeing engineer working with a flight crew from Singapore Airlines and a group of frequent fliers to design the layout of the recently launched Boeing 787 Dreamliner plane’s interior. Imagine the pilot able to participate in the design of his cockpit and seat, and the flight attendant allowed to see her quarters move in size and place, with the drawers rearranged in real time. Become the passenger able to recline his seat, turn on his lights, and watch his neighbors. The software is no longer solely a generator of blueprint schematics and design data, but a dream machine able to engage the customer’s senses and trigger experiential conversations between customers and designers. Dassault Systemes is where IBM meets Nintendo.

Charlès’ view is that every individual is a potential product designer. (In this, there is some parallelism with Muhammad Yunus’ view that everybody is a micro-entrepreneur waiting to happen, as I blogged earlier.) Part of the Dassault Systemes strategy is therefore to democratize PLM tools – for example, Dassault owns SolidWorks, the US-based leader in low-cost PLM software. The company has also set up an online design community called 3dvia, where individuals can download 3D objects for free. It has also created a joint venture with the Publicis advertising group to offer a service called 3dswym – which stands for “see what you mean” – to help designers of packaged good products visualize the customer journey associated with the product. Charlès’ dream is to put these tools in the mind of any creator anywhere in the world.

Of course, the transformational challenge posed by this vision is enormous, and like most visionaries, Charlès may be underestimating the task at hand. His journey is comparable to Steve Jobs attempting to build a business based on a new experience for computer, entertainment, and communication consumers, in spite of massive distribution and consumer education challenges. Charlès’ competitors are largely of the left-brained variety and have formidable distribution power with CIOs. Interestingly, Dassault Systemes just bought the PLM business of IBM, its long-time partner, presumably to create a new concept of distribution more focused on customer co-creation, in a move reminiscent of Apple starting its own stores. The re-training that will have to occur in the engineering and IT professions to move to some form of customer experience sensitivity is of mammoth proportion. Customers, long accustomed to the dominance of engineering thinking over their needs, will also have to unlearn their acceptance of design mediocrity and find a new voice.

A good place for Charlès’ vision of co-created design with customers may be the US automotive industry. Detroit’s fatal flaw has long been its inability to transform from the inside. Empowering customers to participate in the design of future cars with Detroit engineers may produce the mobilization of car lovers and engineers alike, and revitalize a moribund industry. Co-creation as the future of the automotive industry in the US would certainly be a better vision than the current death by a thousand cuts.