Rolling Out a "World Car": Globalization, Outsourcing and Modularity

This article presents a case study of the ?roll-out? of a "world car" (the Fiat Palio). Based on original fieldwork carried on by the author in 6 countries (Italy, Brazil, Poland, Turkey, Argentina, India), it describes one of the most diverse international strategies in the recent history of the auto industry and represents an interesting terrain for analyzing how, in relationship with globalization, outsourcing and modularity play an increasing role in auto design and manufacturing. The article addresses the following research questions: 1) Does the "world car" approach represent a sustainable and robust strategy? 2) Is there a relationship between globalization, modularization and outsourcing in the auto industry? 3) Can these concepts be used to map out future developments and transformations in the contracting structure of the auto industry? This field study shows that producing and selling in many different places a car that involves absolute cross-country identity of interior/exterior design, parts, and quality standards (a "world car") represents an innovative and sustainable strategy. It also highlights that the robustness of this strategy decreases as the international scope and time span of the ?global? project increase. The Fiat Palio story also represents the first in depth analysis of what are, at the firm level, the dynamics that link globalization, outsourcing and modularization in the auto industry. The article confirms that modularization a) is a vaguely defined and ambiguously used term in the auto industry; b) is a broad concept, applicable and applied to a number of systems (product design, manufacturing, work organization, etc.); c) has only recently moved its first steps in auto design and manufacturing. The embryonic applications of modularity in design, manufacturing and organization reported in this study are used to map out future developments and transformations in the product architectures and organizational architectures of the auto industry. The article also suggests that, within a global strategy, modularization and outsourcing, though remaining conceptually distinct, tend to become, in practice, increasingly inseparable. The modularization of design, production and organization is intimately related to how, while trying to save costs, reduce risky investment, and manage the institutional constraints deriving from globalization, OEMs and suppliers partition their tasks, defining a new international division of labor

Global sourcing in the automotive supply chain: The case of Fiat Auto "project 178" world car

Objective of this paper is to present how Fiat Auto has developed a peculiar and innovative global sourcing model in conjunction with the rolling out of its "world car" project ?178?. Differently from other OEMs, that have designed vehicles with common "global" underbody platforms adapting body, trim levels and ride characteristics to local conditions, Fiat Auto "world car" concept and globalization strategy is more ambitious and complex, since the standardization of the 5 models stemming from the 178 platform involves absolute cross-country identity not only of interior/exterior design and contents but also of quality levels, robustness and compliance with European rules in terms of safety and pollution. The international supply chain supporting this globalization process can be interpreted as a double network of operations and transactions: the ?internal? supply chain, where "makes" are exchanged between Fiat Auto plants; the ?external? supply chain where ?buys? are purchased by Fiat Auto plants from suppliers. In the "external" supply chain, Fiat Auto manages, in a global sourcing perspective, a relatively stable group of suppliers, though in a competitive perspective, in order to guarantee cross-plant and cross-market component uniformity and worldwide efficiency. After depicting Fiat Auto global sourcing policies and the related organizational structures and processes, the paper highlights achievements and challenges of the model. The paper argues that Fiat's global sourcing, while putting competitive pressure on suppliers by means of worldwide information transparency on prices, quality and service, works as a performance improvement stimulator within OEM-first tier suppliers partnership relationships ("voice" mechanism), rather than a pure and simple supplierswitching device ("exit" mechanism)

Global sourcing in the automotive supply chain:The case of Fiat Auto

Objective of this paper is to present how Fiat Auto has developed a peculiar and innovative global sourcing model in conjunction with the rolling out of its "world car" project "178". Differently from other OEMs, that have designed vehicles with common "global" underbody platforms adapting body, trim levels and ride characteristics to local conditions, Fiat Auto "world car" concept and globalization strategy is more ambitious and complex, since the standardization of the 5 models stemming from the 178 platform involves absolute cross-country identity not only of interior/exterior design and contents but also of quality levels, robustness and compliance with European rules in terms of safety and pollution. The international supply chain supporting this globalization process can be interpreted as a double network of operations and transactions: the "internal" supply chain, where "makes" are exchanged between Fiat Auto plants; the "external" supply chain where "buys" are purchased by Fiat Auto plants from suppliers. In the "external" supply chain, Fiat Auto manages, in a global sourcing perspective, a relatively stable group of suppliers, though in a competitive perspective, in order to guarantee cross-plant and cross-market component uniformity and worldwide efficiency. After depicting Fiat Auto global sourcing policies and the related organizational structures and processes, the paper highlights achievements and challenges of the model. The paper argues that Fiat's global sourcing, while putting competitive pressure on suppliers by means of worldwide information transparency on prices, quality and service, works as a performance improvement stimulator within OEM-first tier suppliers partnership relationships ("voice" mechanism), rather than a pure and simple supplierswitching device ("exit" mechanism)

Does losing temporary workers matter? The effects of planned turnover on replacements and unit performance

This study examines the performance consequences of planned turnover. In particular, we investigate the departure of temporary workers due to the expiration of their contracts. We reconcile the contradictory predictions of collective turnover research—that any type of worker’s exit impairs organizational performance—and of contingent work research—that temporary workers’ exits improve organizational performance because they provide flexibility. We argue that the planned turnover of temporary workers has an inverted U shaped relationship with unit performance because it combines flexibility benefits and disruption costs. We also argue that the costs of planned temporary worker turnover are moderated by the proportion and the firm-specific experience of their replacements. We test these arguments using longitudinal monthly data from a leading multinational company in the food and beverage industry, and find support for our hypotheses. The study suggests that managers hiring temporary workers should consider the cost of losing them and challenges the widespread scholarly and managerial assumption that temporary workers are disposable resources

Complementarities and organizational (mis)fit:a retrospective analysis of the Toyota recall crisis

During the past six decades, the Toyota Motor Company established a ‘lean’ production and management system (the Toyota Way), which has become an iconic template for a high performing and learning organization. The massive recall crisis of 2009/2010 distorted Toyota’s image of a role model for a lean organization heavily. This case study analyzes retrospectively how the carmaker deviated from their original organizational configuration that was distinctive for its lean management system. We illustrate how managerial decisions geared towards extensive growth and globalization distorted complementarities among central elements of the Toyota Way, and ultimately caused organizational misfit. Whereas most of the literature on complementarities and organizational fit has emphasized processes of adaptation and evolution toward internal fit or misfit that are triggered by exogenous environmental changes, our case study of Toyota shows that external misfit can also be the unintended consequence of deliberate changes in the firm’s system of interdependent choices

Not Doomed to Death: A Map of Small Firms' Business Models in the Italian Textile Apparel Industry

Arnaldo Camuffo International Motor Vehicle Program Cambridge, MA 02139 and Bocconi University Milan 20136, Italy [email protected] And Roberto Pozzana University of Padua Padova 35123, Italy [email protected] And Andrea Vinelli University of Padua Padova 35123, Italy [email protected] And Laura Benedetti Società per gli Studi di Settore Rome 00143, Italy [email protected]