Managing Growth in the Asian Auto Industry – A Challenge for Automotive Suppliers
By Mr. Arun Kumar - Director & Vice President of Omnex Asia Pacific Operations,Omnex Inc.
On October 26, 2012 Arun Kumar, Director & Vice President of Omnex Asia Pacific Operations spoke to a group of Automotive Industry VIPs invited from all over the world, including large OEM and Tier 1 companies. Mr. Kumar spoke to the audience as part of the Automotive Industry Action Group (AIAG) supplier event in Beijing to discuss the current state and challenges of the Automotive Industry in Asia.
Invited guests, Ladies and Gentlemen,
It gives me immense pleasure to stand before this distinguished gathering of bureaucrats,
professionals and eminent professionals from the Automotive industry all around
As we all know, the Automotive Industry in Asia has gone through
- Period of increased growth – China has contributed to 32% of the global sales
growth since 2007 to date.
- The Automotive industry is forecasted to grow from 32 million (units) in 2011
to 53 million by 2020. APA will account for 46% of the global automotive industry
market and over 60% of its growth.
Ford says - 60%-70% of Ford's growth in the next 10 years will be from Asia/ Pacific
In 2010, one in every six vehicles Ford sold globally was sold in APA. By 2020,
it will be one in three.
Bottom Line – There is a great interest in Asia by both Domestic and Global Automakers.
The China Government’s 12 x 5 strategic plan has major initiatives that will affect
the Chinese Automotive Industry
- Green Car to protect the environment
- Move Chinese Automotive industry to Innovation from just manufacturing (in other
words do more design in China and not only manufacturing that they see has low value
These factors all mean rapid new product launches in Asia and especially China.
Major OEMS are introducing
- 25 new vehicles and 20 new engines & transmissions to China by 2015,
- 18 new vehicles to India by the middle of the decade,
- 12 new vehicles to ASEAN during the next five years.
These changes have a dramatic impact on the OEMS in terms of infrastructure, management,
processes and capacity. It also means that the existing supply chain needs to improve.
Not only OEMs, but suppliers in APAC and China will need to develop ability to design
and launch new products quickly and sustain this. There is a need to find new suppliers
due to new Products and Green Technology.
The automotive supply chain in Asia has grown leaps and bounds, thanks to the concentrated
efforts of associations like AIAG, who bring the latest of methodologies and practices
to this part of the world including releasing new standards in various methodologies.
The average Tier 1 or Tier 2 supplier to the Automotive industry is eager to embrace
these techniques as well.
Despite best efforts, there is still much work to be done since we have recalls
from OEMs and a large portion of the Asian supply base struggling to provide the
OEM First time Right products and services, Just in Time, every time.
The truth is that the supplier is still confused on what to do and how to accomplish
this while reducing overall costs to the OEM, and yet show an increase in
profits for their own enterprise.
ISOTS 16949 and its reference manuals have provided a good guidance to these suppliers,
but it is easy to find slack implementation of the tools just for the sake of certification.
As Omnex has been preaching over the last 2 decades, certification should only be
the by-product of good management system. Supplier processes and management capabilities
need to continue improving in the Asia Supply Chain.
Omnex has been helping the automotive suppliers and OEMs in Asia for over 16 years
now, and have served over 10,000 clients in Asia alone. We have done multiple projects
helping develop supplier capabilities for New product launches to supporting OEMS.
We are again currently partnering with a large European OEM to improve the capabilities
of their supply base in Quality, Lean, and Logistics. So we have first hand knowledge
of the work that needs to be done in China. Frankly, it is going to take the kind
of effort that OEMs put into the supply bases in the 1980s and 1990s in the US to
improve the tier one and tier two supply bases.
The challenge for the OEM is how to become innovative in the Asian market designing
products to meet both customer and governmental needs. Developing capable supply
chains both internally and all over Asia is going to be a key strategic imperative.
The biggest challenge is of course for suppliers. Very rewarding, but the focus
has to be in improving internal process performance, overall competitiveness and
their ability to develop and adopt new technologies and design products.
It’s a known fact that suppliers need more access to technology, latest implementation
techniques, and best practices.
Its my strong belief that events such as this one is truly extending a helping hand
to suppliers to understand the expectations of OE giants and how serious they are
in pursing Operational Excellence for their suppliers. Let me thank AIAG for having
us co-sponsor the event and also congratulate them on arranging this event. I hope
you all have a wonderful time at this event.