Automotive >> Case Study
CASE STUDY | Automotive
Reducing time to market and increasing product margins
Our client, a leading automotive components manufacturer, asked us to help them review their product development process. They were concerned that their existing process was out of step with overall project timing and often resulted in lower than expected product margins. This situation was mainly due to having one single approach for all products, regardless of complexity; a lack of adequate support tools; and suppliers being managed and selected too late in the process.
The first thing the team did was to map the current Product Lifecycle Management process. We did so by interviewing all the key staff involved in the company, as well as some key suppliers. We completed this step by analysing the product portfolio and then we assessed three case studies of past product development, to determine what “went wrong”.
Together with our client, during both one-to-one meetings and inter-functional workshops, we defined the new Product Lifecycle Management procedure and its implementation roadmap, in terms of organisation, responsibilities, systems and tools. For example, together with the client, we introduced differentiated procedures for catalogue products and new products, in order to manage faster simple projects; we involved crucial suppliers from the design phase; and we introduced sophisticated but easy to use tools for the economic evaluation of the project.
We also selected some of the most complex projects and introduced an inter-functional team to develop the product in parallel, so to generate innovation. Thanks to our engagement, the company was able to virtually eliminate the gap between the expected and effective date of project completion and to increase overall marginality through the effective business planning of the new projects.
To enter or not to enter the railway business?
Given that Turkey and its neighbouring countries possess a considerable market for both intercity and commuter trains, and given that this market is competitive, with almost all international players present (in terms of sales), our client, an automotive conglomerate in Turkey, was considering transforming its existing idle truck manufacturing site into a rolling stock manufacturing facility. But was setting up such a facility truly a good idea? If so, what should the entry strategy be? We were called in to answer these two questions.
In two months, our team developed a business plan for entry into the rolling stock manufacturing business and assessed its financial feasibility. Our market assessment evaluated the attractiveness of the railway industry in Turkey and the potential export countries. We then analysed the supply side in the rolling stock business, including local and international players, to assess the competitive arena and to identify potential partners for our client. Finally, we looked at the financial modelling of the business case.
Our team, together with the client, identified the most attractive segments to enter – with one example being light rail for the commuter network. We also told the client that strategic collaboration with a global player was virtually inevitable, and we shortlisted international players to contact.
As a result of this engagement, our client is now pursuing negotiations with the shortlisted global players, as we have made clear that transforming an idle truck manufacturing site into a rolling stock manufacturing facility was a good idea. Our client is now in a position to gain 30% of the market share in Turkey and 10-20% in export countries.
Helping set up a partnership in the infomobility business
Our client, a leading manufacturer of black boxes (data recording devices) for cars, wanted to evaluate a partnership with a leading European provider of telematic insurance services. At the time, they weren’t the only ones interested in the insurance services provider, as the market in Europe and Latin America was expected to grow significantly in the next few years.
The team’s objective was defining the partnership model and drafting an agreement between the two companies. We started out by selecting the target countries for the partnership and assessing the companies' positioning and key assets. We also had to get a good understanding of the technologies involved.
By the end of the project, we had selected the best technical and commercial partnership options, with specific solutions by country. We then negotiated the cost structure and royalties for our client, and drafted a partnership agreement. The partnership is now up and running very well in Europe, and is soon to be extended in Latin America, where black boxes will shortly be compulsory by law.
Scouting market and distribution opportunities in Eastern Europe
Our client, a major world tyre manufacturer , wanted to significantly expand its presence and market share in East Europe – particularly because all its global competitors, mainly thanks to local acquisitions, were going strong in this promising region. Our client could draw on local direct offices and a new big plant in one major country but something more had to be done in terms of presence and market share.
Our team did a diagnosis of the market and defined presence options and development targets . On top of desk analyses we worked with client executives in four countries. In particular, we carried out more than 40 interviews with retailers, importers and experts in ten countries - from Hungary to Ukraine, to Poland and Bosnia… - that present huge differences in terms of markets, distribution environment and legislation. This allowed us to define the best presence approach by different market segment , the logistic/distribution alternatives and the organisational requirements to implement options.
The plan prepared with client management foresaw to double market share in few years, through a differentiated approach by country/trade segment. The key pillars of the strategy were
• Three strategic presence models according to country /distribution segment: Direct "retail" presence; JV with top distributors to build a controlled network; use of distributors
• Aggregation of office structures ; review of role and size of sales and distribution organizations ,according to each country’s strategic approach
• Review of logistic hubs based on market opportunities and requirements
The project was not only of value for the client, but allowed the team to experience very differentiated environments in terms of business culture and commercial practices
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