Green automotive supply chain for an emerging market

Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2008.Includes bibliographical references (leaves 94-97).Green Supply Chain Management (GSCM) within the automotive industry is largely based on combining lean manufacturing with mandated supplier adoption of ISO 14001-compliant Environmental Management Systems (EMS). This approach evolved from automotive manufacturers seeking to expediently expand green practices within existing lean supply chains. However, a new automotive enterprise, without the legacy issues of an existing supply chain, has the opportunity to customize its supply chain from scratch, to comprehensively achieve both financial and green objectives. This thesis investigated a more holistic approach to creating a financially-viable green automotive supply chain for the MIT Vehicle Design Summit (VDS) - a start-up enterprise planning to enter the Indian emerging market with a new type of eco-friendly automobile. First, a hypothetical VDS supply chain was postulated by analyzing the contextual challenges of the Indian emerging economy, so as to optimize the location, supplier selection and manufacturing models within its business context. To ensure that the capital investments needed to fulfill the supply chain's green objectives do not compromise its primary purpose of value creation, a Triple Bottom Line technique called Environmental Cost Accounting was used as a managerial decision tool, which demonstrated the financial viability of GSCM for VDS. Next, green solutions for each supply chain function were identified for integration into the hypothetical supply chain. It was found that many important green solutions for an automotive supply chain like supplier selection, concurrent engineering, cascading of lean production best practices to the extended supply chain, fuel-efficient transport practices and green infrastructure design, have already been developed by various governmental and non-governmental agencies.(cont.) Also, product recovery through End-of-Life Vehicle (ELV) processing was identified as a vital green supply chain function required for closing the loop between sales and sourcing. The key issue was integrating these disparate solutions into a holistic environmental management framework for VDS to implement and sustain. This was accomplished using an IS014001-based EMS as the master plan. The developed EMS Manual is a pioneering document that leverages chain-wide participation in existing green initiatives like the Green Suppliers Network, SmartWay Transport Partnership and LEED Green Building Rating, to realize a green supply chain by ensuring continuous monitoring and improvement of the implemented initiatives.by Gene Fisch, Jr. [and] Tien Song Paul Neo.M.Eng.in Logistic

Changing Features of the Automobile Industry in Asia:Comparison of Production, Trade and Market Structure in Selected Countries

The global automotive industry, increasingly characterized by global mergers and relocation of production centers to emerging developing economies, is in the grips of a global price-war. The industry is subject to imperfect competition which has resulted in too much of everything — too much capacity, too many competitors and too much redundancy and overlap. The industry is concerned with consumer demands for styling, safety, and comfort; and with labor relations and manufacturing efficiency. In this context, the study examines the growth patterns, changes in ownership structures, trade patterns and role of governments of selected Asian countries (viz. China, India, Indonesia and Thailand) in the automobile sector.Automobile, Asia, Market Structure

Outward FDI and Knowledge Flows: A Study of the Indian Automotive Sector

In recent years developing countries have emerged as significant participants in the OFDI (outward foreign direct investment) activities having the strategic asset seeking motive. Such OFDI which is assets exploiting cum augmenting involves potential two way cross border knowledge flows. This study examines these issues for the Indian automotive industry that is currently transnationalizing at a rapid rate in terms of both exports and OFDI. The study traces the technological capability building and several dimensions of OFDI in this industry. The case studies of two major automotive Groups highlight their competence building, and knowledge seeking operations. This study undertakes a quantitative analysis of the influence of OFDI activities on the in‐house (domestic) R&D performance of Indian automotive firms during 1988–2008. As expected, the favourable impacts on R&D intensity appear to be stronger for developed vs. developing host nations, and for joint venture vs. wholly‐owned ownership OFDI. The study concludes with suggestions to promote particularly the strategic asset enhancing OFDI.OFDI; Strategic Assets‐seeking FDI; R&D; Automotive Industry

Outward FDI and Knowledge Flows: A Study of the Indian Automotive Sector

In recent years developing countries have emerged as significant participants in the OFDI (outward foreign direct investment) activities having the strategic asset seeking motive. Such OFDI which is assets exploiting cum augmenting involves potential two way cross border knowledge flows. This study examines these issues for the Indian automotive industry that is currently transnationalizing at a rapid rate in terms of both exports and OFDI. The study traces the technological capability building and several dimensions of OFDI in this industry. The case studies of two major automotive Groups highlight their competence building, and knowledge seeking operations. This study undertakes a quantitative analysis of the influence of OFDI activities on the in‐house (domestic) R&D performance of Indian automotive firms during 1988–2008. As expected, the favourable impacts on R&D intensity appear to be stronger for developed vs. developing host nations, and for joint venture vs. wholly‐owned ownership OFDI. The study concludes with suggestions to promote particularly the strategic asset enhancing OFDI.OFDI; Strategic Assets‐seeking FDI; R&D; Automotive Industry

A Double Diamond Comparison of the Automotive Industry of China, India, and South Korea

Recently China became the third largest automotive producing country in the world, next to the U.S and Japan. South Korea is the fifth biggest automotive manufacturing country and India has more recently emerged as one of the top ten automotive manufacturing countries. This paper compares industry competitiveness of these three emerging automotive manufacturing countries by using the Double Diamond Model which is based on Porter\u27s Diamond Model. Our results show that the Chinese automotive industry is as competitive as South Korea\u27s factor conditions, demand conditions, related and supporting industries as well as competitive rivalry. By contrast, India is less competitive

Rover and out? Globalisation, the West Midlands auto cluster, and the end of MG Rover

This paper sets the scene for this Policy Studies special issue on plant closures by outlining the form of the auto cluster in the West Midlands, the nature of structural changes unfolding in the industry, and the decline and eventual collapse of MG Rover (MGR). Structural changes highlighted include: greater pressure on firms to recover costs when technological change has been intensifying, driving up the costs of new model development; increased international sourcing of modular components; and a shift of final assembly operations towards lower cost locations. All of these make maintaining mature clusters such as the West Midlands more challenging for firms and policy makers. The paper then looks at ‘what went wrong’ at MGR. Given long-run problems at the firm and its inability to recover costs, BMW's sale of the firm in 2000 left MGR virtually dead on its feet, and by 2002/2003 it was clear to many that the firm was running out of time. Whilst recognising that the firm's demise was ultimately a long-term failure of management, the paper also looks at other contributing factors, including government policy mistakes over the years, such as the misguided ‘national champions’ approach in the 1950s and 1960s, a failure to integrate activities under nationalisation in the 1970s, a mistaken privatisation to British Aerospace in the 1980s, and a downside of competition policy in ‘allowing’ the sale to a largely inappropriate owner in BMW in the 1990s. The considerable volatility of sterling in recent years hastened the firm's eventual demise

Automotive Industry Response to its Global QMS Standard ISO/TS-16949

With increasing globalization, the intense competition and customer-pressure have spurred many producers from developing/ emerging countries to adopt the best management and organizational practices. The quality issues are paramount for automotive manufacturing. The multiplicity of Quality Management System (QMS) Standards prevalent till the 1990s finally gave way to development of a harmonized automotive industry-specific QMS, namely ISO/TS-16949. This paper analyzes the major factors motivating firms to adopt this Standard: its quality signaling function, especially in international business, and facilitative role in moving up the supply chain. We investigate the inter-national and inter-regional concentration of ISO/TS-16949 certificates and relate those changes to the automotive industry dynamics. Among the top certifying nations - China, India and Brazil included - these certificates and ‘cars and commercial vehicles’ produced are highly correlated. A moderate-to-high worldwide growth of this certification is probable in near future with its gaining popularity among Tier-2 suppliers and for two/ three-wheeler automotive production. The Indian evidence indicates a sizeable proportion of car and commercial vehicle plants being ISO/TS-16949 certified and a high certification incidence among large and medium-large auto component firms. We suggest the creation of a Centre to encourage and prepare SMEs and provide financial assistance for ISO/TS-16949 certification

What happens in global value chains when the markey shifts from the north to the south?

This paper charts the evolution of financial and economic crisis in the global economy and argues that the likely outcome will be sustained growth in the two very large Asian Driver economies of China and India and stagnation in the historically dominant northern economies. Given the nature of demand in low income southern economies, it is likely to be reflected in sustained demand for commodities, with other southern economy producers in global value chains being forced into lower levels of value added. Standards are likely to be of considerably reduced significance in value chains feeding into China and India. These issues are considered in the light of evidence drawn from the experience of Thai exporters of cassava, and Gabonese exporters of timber