Deepesh rathore

Bundling - Is this the end of entrepreneurship?

Wow, that is a fairly loaded designation. And an indication that companies nowadays are getting more and more serious about sourcing from global sources.

The buzzword in the automotive supplier industry is “bundling.” That is the clubbing of requirements of a platform over many production plants to create greater volumes for a supplier and drive down costs. That along with global sourcing means that you get the best in the world that there is and at the most competitive prices there are.

While things may not be as easy as they appear, global sourcing and bundling does present a number of new choices. 

While chatting with a senior industry executive, it was interesting to note that his designation read – not the usual “General Manager – Vendor Development” as most calling cards of India based purchasing managers tend to read – “General Manager – World Wide Purchase.”

While the metaphor may be global sourcing, the end result often involves hunting down a global supplier who has design capabilities to satisfy European (and North American) demands with a plant in China or India to satisfy the accountants.

Take for example the Suzuki Swift. Delphi supplies the steering systems to the global Swift program, to the Suzuki plants in Gurgaon, India and Magyar Suzuki in Hungary, from the Delphi plant in Bangalore, India.

While it may not always be possible to supply from one plant to the entire globe, suppliers tend to form chains through collaborations. The Swift's headlamps in Hungary come from Stanley Electric and in India come from Magna's Indian partner, Lumax Auto Industries.  Same is the case for seatbelts, half-shafts, engine management system, air conditioning and about a 100 more key components.

In such a scenario, suppliers with “global networks” will gain over suppliers with only regional strengths.  Nothing to fear there, mostly, as most Indian suppliers are part of global networks through their technical and equity collaborations. 

It will need considerable willpower and perseverance, not to mention huge funds, to develop oneself into a stand alone supplier with indigenous technology. Perhaps one reason why IT entrepreneurs out number auto supplier entrepreneurs by 10:1

For more details on Bundling visit www.theautodiary.com

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