MALAYSIA INSTITUTE FOR SUPPLY CHAIN INNOVATION (M.I.S.I) k · 2017-02-14 · IT E k MALAYSIA INSTITUTE FOR SUPPLY CHAIN INNOVATION (M.I.S.I) Dr. Javad Feizabadi MISI’s Assistant

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MALAYSIA INSTITUTE FOR SUPPLY CHAIN INNOVATION (M.I.S.I)

Dr. Javad Feizabadi

MISI’s Assistant

Professor and MIT Research Affiliate

South East Asia Auto Summit, Jakarta 8-9 April 2015

[email protected]

WhatIwillcover…

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§ MITGlobalSCALENetwork§  Automo7veExcellenceCenter@MISI§  GlobalAutomo7veIndustryDrivingForces

q  ShiEinggravitycenterfromtheWesttoTheEastq  …

§  ScenariosforSEAautomo7vevaluechain§ Wrapup

WHOWEARE…MITGlobalSCALENetwork

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Interna7onalallianceofleadingresearchandeduca7oncentersdedicatedtosupplychainandlogis7csexcellencethroughinnova7on.

MalaysiaIns=tuteforSupplyChainInnova=on

•  LaunchedinMarch2011•  Jointini7a7vebetweenMITandthe

GovernmentofMalaysia•  LocatedinBukitJelutong,ShahAlam,

about15milesoutsideofKualaLumpurand10minutestoindustrialparks

MISIMITMalaysiaSCM

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MISIAutomo=veCenterofExcellenceEXPERTS:

Dr.JavadFeizabadi:Over7yearsofworkingandresearchingexperienceinautomo=veindustryinEurope,MiddleEastandSEA

Dr.DavidGonsalvez:FormerdirectorofGlobalSupplyChainStrategyatGeneralMotorsandover20yearsofexperienceinThailand,GermanyandSwitzerlandDr.ShardulPhadnis:Over7yearsexperienceinManufacturingindustryandexpertinscenarioplanningandsupplychainstrategyDr.MahenderSingh:Over15yearsexperienceinthefieldofsupplychainstrategyandformerdirectorofSupplyChain2020atMIT

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Automo=veCenterofExcellenceCurrentResearchProject:

TheChangingGlobalAutomo=veValuechainandredesigningautovaluechainsinSEA

PHASE1 Iden7fyingandanalyzingthedrivingforcesinglobalautomo7veindustry

PHASE2 DevelopingscenariosforSEAautomo7vevaluechains

PHASE3 Implica7onsonSEAautomo7vevaluechains

PHASE4 Formula7ngwinningstrategiesforautomo7vefirms

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Global automotive industry driving forces and its implication on South East Asia Automotive

Value chains

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Challengesofmanagingautomotivevaluechain

Dynamicsindifferentindustriesinupstream

anddownstream

SupplyChainVs.SupplyChaincompe77onandcomplexityofcommon

elements

Newplayersinvaluechainduetonewfueltechnology

andchangingindustryclockspeed

Strikeabalancebetweeneconomyofscaleandscopeformovingbackandforthfrom

BTStoBTOandSKUprolifera7on

Changingconsumerandcustomerindownstreamwiththeemergenceofnew

businessmodels

Thecycleofconsolida7onand

fragmenta7oninautoindustryanditsimpact

onsupplychain

Liquiditypressureincapitalmarketandpushingforreducingsupplychainlead-7me

Newmaterialanditsimpactonsupplychainand

logis7cs

Pu_ngproperpolicyinplacetomanagethemega-

suppliers

MovingfromaglobalSCtoaregionalSCandfromalongSCtoa

shortSC

Managingthreedifferentfulfillment

chains:OE,Accessoryandspare

parts

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DrivingForcesinGlobalAutoIndustry

Urbaniza7on

Customiza7onSustainability

GLOBALAUTOMOTIVEINDUSTRY

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DF1:ShiYingcenterofgravity

ASEAN Countries

China

India

Legends

WORLD MAP (SUPPLY CHAIN DEVELOPMENT)

global hub for small cars

Car exporter

Global Vehicle Production increased inASEAN, China & India from 34% in 1997 to 64% in 2010

CAR Exporter

R&D for Basic Research

R&D for Car Development

Global Hub

Core Countries Sourcing, Manufacturing, Retailing

Global Vehicle Production decreased inCore Countries from 66% 1997 to 36% in 2010:

US, Japan, Korea, Germany, Italy

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Es7matedlightvehicleproduc7oninN11countriesby2020(source:FrostandSullivan,2012)

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lightvehicleproduc7on2007-2020(source:FrostandSullivan,2012)

M6A0-18 78

(2.0)

3.0

8.0

13.0

18.0

23.0

28.0

Units

(Milli

on)

Brazil China The Czech RepublicGermany India ThailandIran Japan South KoreaRussia South Africa USA

1.4%

0.2%

9.5%

6.9%

4.3%

3.7%

6.1%

3.2%

1.7%

10.1%

4.2%

5.7%

Brazil

China

The Czech Republic

Germany

India

Thailand

Iran

Japan

South Korea

Russia

South Africa

USA

Source: LMC Automotive Forecasting; Frost & Sullivan analysis.

Global Vehicle Production 2007-2020 Iran and Thailand are the fastest-growing markets after China, India and South Africa

Automotive Industry Vision: Light Vehicle Production, Global, 2007-2020

Automotive Industry Vision: CAGR Production, Global, 2010-2020

Global

Average CAGR 4.3%

Iran

Korea

China

India

Russia

USA Japan

Germany Brazil

Thailand The Czech Republic

South Africa

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Globalvehiclesalesin2007to2020

M6A0-18 79

0.9%

8.9%

8.9%

4.0%

6.0%

5.2%

2.4%

11.4%

4.9%

5.6%

-0.4%

China

The Czech Republic

Germany

India

Indonesia

Iran

Japan

South Korea

Russia

South Africa

USA

(2.0)

3.0

8.0

13.0

18.0

23.0

28.0

Uni

ts (M

illio

n)

Brazil China The Czech RepublicGermany India IndonesiaIran Japan South KoreaRussia South Africa USA

Global Vehicle Sales 2007-2020 India, followed by South Africa and Russia, are the fastest-growing markets in terms of sales, driven by their economic growth

Automotive Industry Vision: Light Vehicle Sales, Global,

2007-2020 Automotive Industry Vision: CAGR of Sales,

Global, 2010-2020 Global

Average CAGR 4.6%

Iran South Korea

China

India Russia

USA

Japan Germany

Brazil

The Czech Republic South Africa Indonesia


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emergingandfutureemergingvehicleproduc7onhubs(Source:FrostandSullivan,2012)

M6A0-18 80

Future Emerging Production Hubs—Thailand, Mexico, Iran, South Korea and Turkey These countries are predicted to become vehicle-production hubs after BRIC

2010 Forecasted 2015 Forecasted 2020 CAGR (2015-2020) Brazil 3,215,025 4,379,445 4,600,000 1.0% Russia 1,295,031 2,470,319 3,199,755 5.3% India 3,170,648 4,958,285 8,300,000 10.9% China 15,481,666 24,335,943 28,000,000 2.8%

Thailand 1,533,196 2,129,598 2,314,956 1.7% Mexico 2,066,004 3,043,842 3,266,720 1.4%

Iran 1,457,708 2,242,963 2,535,992 2.5% South Korea 3,981,648 3,962,316 4,065,627 0.5%

Turkey 1,029,992 1,295,967 1,517,470 3.2%

Indonesia 648,375 894,453 1079450 South Africa 505,924 730,144 842872 2.9%

Argentina 663,246 869,247 927082.3736 1.3% Malaysia 568,290 656,729 670031.561 0.4%

Czech Republic 980,396 1,269,995 1,343,760 1.1% Philippines 84,348 82,655 88000 1.3%

5.2% in 7 years

Automotive Industry Vision: Vehicle Production in Key Emerging and Future Emerging Markets, Global, 2010, 2015 and 2020

Global Production CAGR

Em

ergi

ng

Mar

kets

(B

RIC

)

Futu

re

Em

ergi

ng

Mar

kets

Long

Ter

m K

ey

Mar

kets

7.8% in 7 years BRIC CAGR


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M6A0-18 23

Global Automotive Production 2020—Regional Overview Asia will emerge as a production hub, with about half the vehicles globally, manufactured here. China will account for 28 per cent out of it.

Note: Africa - South Africa Asia - Australia, China, India, Indonesia, Japan, Korea, Malaysia, The Philippines, Taiwan, Thailand, New Zealand Eastern Europe – Bulgaria, Bosnia, Croatia, The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey, Ukraine The Middle East – Egypt, Iran North America - Canada, Mexico, USA South America - Argentina, Brazil, Chile, Colombia, Ecuador, Uruguay, Venezuela Western Europe - Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK

Note: All figures are rounded. The base year is 2010. Source: LMC Automotive Forecasting; Frost & Sullivan analysis.

71.7 million Vehicles

107.9 million Vehicles Automotive Industry Vision: Light-vehicle Production, Global, 2010 and 2020

China 26

Others 3.2

Africa 1.0%

2020

Russia 2.8

Italy 2.8

France 2.6

Others 1.9 0

10

20

30

40

50

60

Africa Asia Eastern Europe Middle East North America South America Western Europe

China 28.0

Other 2.5

Japan 10.6

India 8.3

Korea 4.0 Thailand 2.3

1.0 Million Iran 2.5

9.3 million

Russia 3.2

Others 3.8

Turkey 1.5 Poland 0.8 Mexico 3.2 Canada 2.3

16.8 million

Brazil 4.6

Argentina 0.9

6.0 million

Others 1.6

France 2.7

Germany 6.4

Italy 1.5

Spain 2.8 UK 1.6

16.6 million

55.7 million

USA 11.3

Mill

ion U

nits

Africa 1.0%

North America 16.0%

Western Europe 18.0%

Eastern Europe 8.0%

South America 6.0%

Asia 49.0%

The Middle East 2.0%


South America 6.0%

North America 15.0%

Eastern Europe 9.0%

Asia 51.0%


CAGR: 4.3%

Others 1%

2020 2010

Note: Vehicle Sales in Million Units Includes all Light Vehicle: Passenger Vehicles and Light Commercial Vehicles (less than 3.5 ton)

2.5 million Others 0.5

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M6A0-18 24

Global Automotive Sales 2020—Regional Overview Dominance of Asian countries in automotive industry will continue beyond 2020 with a growth CAGR of 5.58 per cent

Automotive Industry Vision: Light Vehicle Sales, Global, 2010 and 2020

Note: Africa - South Africa Asia - Australia, China, India, Indonesia, Japan, Korea, Malaysia, The Philippines, Taiwan, Thailand, New Zealand Eastern Europe – Bulgaria, Bosnia, Croatia, The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey, Ukraine The Middle East – Egypt, Iran North America - Canada, Mexico, USA South America - Argentina, Brazil, Chile, Colombia, Ecuador, Uruguay, Venezuela Western Europe - Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK

Note: All figures are rounded. The base year is 2010. Source: LMC Automotive Forecasting; Frost & Sullivan analysis. Note: Vehicle Sales in Million Units, Includes all Light Vehicle: Passenger Vehicles and Light Commercial Vehicles (less than 3.5 ton)

70.7 million Vehicles

~ 107.0 million Vehicles

0

10

20

30

40

50

60

Afric a Asia Ea ste rn Europe Middle Ea st North Ame ric a South Ame ric a We ste rn Europe

1 Million 7.2 million

18 million

China 29

USA 17.2

Canada 1.9

Brazil 5.3 Africa1.0%

Mill

ion

Uni

ts

2020

Japan 4.9

Iran 2.4

Turkey 1.3

Russia 4.2

Poland 0.8

Mexico 1.6 Argentina 0.7

Germany 3.9

UK 2.8

France 2.8

Spain 1.7

Others 3.9

Others 1.2

UK 2.9

Italy 2.8

2.8 million

20.7 million

48.4 million

8.3 million

India 7.8

Other 4.1 Korea

1.5

Indonesia 1.1

Other 2

North America 20.0%


Eastern Europe 5.0%

South America 7.0%

Asia 41.0%

Others 4.0%


North America 19.0%


Eastern Europe 8.0%

South America 7.0%

Asia 44.0%

Others 3.0%


CAGR: 4.6%

Africa 1.0%

2010

Egypt 0.4

PHASETWO:SCENARIOSFORAUTOMOTIVEVALUECHAINDESIGNINSEA

SECTIONII:

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Howisscenarioplanningdifferent?

Time

l Pl

anni

ng H

oriz

on

ShiYfocusfrompredic=ontoprepara=on

Material developed by: Dr. Mahender Singh (MIT, CTL)

©2014ShardulPhadnis

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SCENARIODEVELOPMENTCantheorganiza=onCONTROLtheelement?

Yes No

Cantheorganiza=onINFLUENCEtheelement?

NoYes

DrivingForceLocalFactor

Isvalueoverplanninghorizonpredictable

NoYes

UncertaintyTrend

Elementoffocaldecision

Phadnisetal.,2014

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FocalDecision:Automo=vevaluechain(anestedstructure)

AGLOBALindustry:automakersandglobalsuppliersformbuyer-supplierrela7onshipsonaglobalscale.Inter-regionalvehicleandpartstradeissubstan7albutcappedbypoli7calandopera7onalconsidera7ons.

REGIONALproduc7onsystems:intra-regionalfinishedvehiclesandpartsflowsarethedominantopera7onalpagerninthisindustry

NATIONALproduc7onsystems:domes7cproduc7oniss7llverystronginthisindustry,ands7lldominatesinmanyna7onalmarkets

LOCALclusters:ac7vi7estendtobeconcentratedwithinclustersofspecializedac7vity,suchasdesign,Assembly

Griffinetal,2007

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FocalDecision:Automo=veValueChainRedesign

Value Chain Redesign

Car Design

Production process design

Delivery process design

Supply chain design

EnabledbyPhadnis2014

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Localfactors(transactionalenvironment)

New material (Nano)

Over-capacity in

industry

Intensity of competition

ASEAN Economic Community

Alternative fuels

Cost of capital and

liquidity pressure

Energy price volatility

Mega suppliers and their power

Variety of regulations to comply with

Moving from BTS to BTO


Product Design



Supply chain design


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DrivingForces(contextualenvironment)

Personalization

Value Bifurcation

Use not own

Machine Intelligence

Sustainability

Consolidation and

Fragmentation cycle

Go East

Urbanization

New material (Nano)

Over-capacity in industry



Alternative fuels

Cost of capital and liquidity pressure






Product Design



Supply chain design


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Scenario:ImpactandUncertainty

Go East

Value Bifurcation

Sustainability

Machine Intelligence

Use not own

Fragmentation and

consolidation cycle

Personalization

Urbanization

New material (Nano)

Over-capacity in industry



Alternative fuels

Cost of capital and liquidity pressure






Product Design



Supply chain design


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ScenariosforSEAautomotivevaluechaindesign


Pers

onal

izat

ion

Value bifurcation

Moving entirely from a MTS to MTO

Moving back to MTS due to shared economy

Two segments of the market: premium and value products

Fragmented market segments and having various segments in the market

Mass Volume

Mass customization

Fragmented Custom

Fragmented Mass

Other driving forces MC MV FM FC

Shared economy

Machine intelligence

Go East

Urbanization

Consolidation and fragmentation cycle

Sustainability

25

WrapUp

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§  Valuechaindesigncapabilityistheonlyenduringcorecompetencyforautomakers

§  Concurrent-designandengineeringofPRUDUCT,PROCSEEandSUPPLYCHAINwithtackingintoaccountthedrivingforcesintheindustry

§  Consideringallthetrendsanduncertain7esforSEAautovaluechain,itrequiresprepara7onfordifferentscenariosmaterializa7on,NOTPREDICTION

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Documents

MALAYSIA INSTITUTE FOR SUPPLY CHAIN INNOVATION (M.I.S.I) k · 2017-02-14 · IT E k MALAYSIA INSTITUTE FOR SUPPLY CHAIN INNOVATION (M.I.S.I) Dr. Javad Feizabadi MISI’s Assistant