The auto industry becomes more matrixed in a global context

This year (2012) we have seen an increase in interest in matrix management and a number of new clients in the automotive industry/its suppliers. Some of our clients are manufacturers themselves or the suppliers of components to global automotive companies. Many organizations in the industry have been global for many years. What seems to be speeding up is the rate of integrationin the industry. In the past, being global meant being everywhere. Today, increased sharing of platforms and information systems means that the supply chain is becoming more and more integrated as well.

Global customers demand a single point of contact in their suppliers. They want consistency in pricing, commercial agreements and delivery standards. If suppliers can’t meet this need, they may get less of a share of the work and may be at a disadvantage to their more integrated customers who often have a better view of their global pricing and performance than they do.

But it’s not all about supply chain integration. Successful suppliers are becoming partners in the development of new components and sub-assemblies. It’s not just about sharing information. It’s also about being easy to work with and delivering innovation and value.

For many organizations their matrix structure and virtual teams mean they operate outside of the traditional boundaries of the organization to include suppliers, partners and customers.

The industry has spent hundreds of millions of dollars on sharing systems, processes and information and have seen enormous benefits from this. Now it seems to be pursuing more integrated organizations and ways of working as the next logical step in the journey towards greater integration.

In this new world, we don’t just need to share information. We have to share ways of working. We have to build the skills to cooperate with colleagues in different locations, cultures (both national and corporate), time zones and even different organizations. It’s no longer just a commercial arrangement, it’s a source of added value for all involved.

As the industry becomes more integrated, suppliers in particular see their ability to cope with this global matrix way of working as a source of competitive advantage. The suppliers that can deliver seamless global projects, new products and supply chain performance to global customers will gain an increasing share of the pie.

To support the customer relationship and supply chain activity, suppliers are finding that their internal functions have to change. Their IT processes, HR and skill development, financial structures and other elements need to change to reflect this more integrated and ‘horizontal’ way of working. In the past the vertical silos of function and geography may have worked, but today’s automotive industry has to truly think globally.