Globalization and Supply Chain Networks : The Auto Industry in India and Brazil

Globalization and Supply chain Networks : the auto industry in India and Brazil

1. For global auto industry, contrast assembler-supplier relationships up to 1980’s with those of 1990’s.

Ans. As we read from the case, we see a changing relationship between supplier and assembler in the past two decades. Though the change seems to be quite qualitative in nature but the stark differences could still be identified. The reason for the same could be many but what came into being after 1980s was the requirement of integration and alliance.

Before 1980, the alliances with suppliers used to be short term. They were more like the captive suppliers where the details of the design was given to them by the assembler and they seldom had anything to do with the designing the part. Or they were the catalogue suppliers who catered to many assemblers. The term of alliances were small. The number of suppliers was less and assemblers outsourced less. Much of the actual value of the product was produced in house. Long term alliances with supplier or technology sharing could be sometimes seen in Japan but seldom anywhere else.

1980 found the onset of integration where the assembler supplier relationship alliance took a long term pattern. Outsourcing increased and assemblers started transferring component level activities to tier-1 suppliers. These tier-1 suppliers took part in design also and thus formed an integral part of the value chain. The component suppliers took higher responsibility of design. Thus the assemblers transferred a chunk of research and development money and responsibility to the tier

Unlike before 1980, the relationship between supplier and assembler is more complicated and also strategic in nature. Single supplier and lengthy period is an important take away. Thus, the supplier started providing to the assembler the black box which was the component required for assembling in the automobile.

Though not a part of the question but before 1980, the suppliers were just the executer of the requirement of the assembler or the standard planned product and assemblers were into in-house making of all core and non-core components. Efficiency increased by transferring the same to the supplier and depending upon one’s core activity.

This is the difference witnessed between till 1980s and after that in assembler - supplier relationship.

2. What are Triad economies? Compare them with emerging economies.

Ans: The triad regions are USA/CANADA, Western Europe and Japan. The economy pertaining to these three regions were called the TRIAD economy. As per that the TRIAD trade was:

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TRIAD economy gave rise to a separate grouping called the component group. There was a stark difference between the assembler and the tier 1 supplier. This symbolises the fact that the each company concentrates upon its core areas of work.

However in emerging economies like in India, we find a huge in surge of suppliers and business opportunists from the entire globe.Thus the response in the assembler supplier relationship changes. Anybody can enter the market.