Strategic commentary

How the automotive industry can drive their Strategy Execution

Published 3 weeks ago

As part of a complex, valuable industry, automotive manufacturers are faced with the delicate balancing act of performing at a high operational level all the while innovating and looking towards the long-term future with their strategies. Despite this, and the additional challenges of operating at a global scale, volatile market conditions and a convoluted supply chain, successful navigation of this reality can be achieved with a Strategy Execution solution.

Written by: Gillian Wilson, Senior Account Executive

With a global growth of 2.8% per year, the industry is synonymous with change - new designs, technology and models varying in style, performance and eco credentials. In fact, we can already see relatively new trends will soon start to dominate the market, and increasing government policy will deliver stricter regulations, ensuring additional challenges for auto industry executives.

From senior leaders formulating and cascading strategies to combat the ever-changing market conditions, to the operational team driving Continuous Improvement every day, Strategy Execution software is crucial to underpin and provide the foundations for success.

Changing market realities

Until now, the greatest innovation in the automobile industry was arguably the dawn of Henry Ford’s assembly line in 1913. Over a hundred years later the industry continues to pour US$ billions of investment into innovation strategies.

Such an example comes in the form of Volkswagen AG and Porsche SE Holding in 2012, or the Renault Nissan Mitsubishi Alliance, whose alliance dominates the market with 1 in 9 vehicle sales worldwide.

This complexity brings additional challenges in maintaining market demand (running the business) and developing new options for the emerging markets (changing the business).

Innovation

Until now, the greatest innovation in the automobile industry was arguably the dawn of Henry Ford’s assembly line in 1913. Over a hundred years later the industry continues to pour US$ billions of investment into innovation strategies.

Today, innovation forms the foundation of the industry, resulting in leaders’ attention being drawn to the future and how to sustain and grow their market share. However, keeping track of the innovation efforts and how they support the overarching strategy can be difficult with the continued use of traditional strategy tools, and without a centralised location to house its execution.

This complexity brings additional challenges in maintaining market demand (running the business) and developing new options for the emerging markets (changing the business).

Operational challenges

Operational challenges are a daily reality for the industry.

Save for exceptional circumstances, the car manufacturers rely on a complex supply chain – in fact, each vehicle contains more than 20,000 parts from thousands of suppliers. These suppliers have their own strategic and operational challenges, meaning their success and failures directly impact your strategic and operational performance.

Ensuring that each link in the chain is strong and supports your commercial goals is difficult. This is compounded when a Strategy Execution solution cannot be relied upon to bring together multiple data sets and goals relating to the different elements of the supply chain, and ultimately how this feeds the manufacturer’s strategy.

Toyota’s operational excellence

Operational excellence in manufacturing is a prerequisite for profitability in the automotive industry, and a standout organisation in this area is Toyota.

The Japanese automobile giants are renowned for their Toyota Production System (TPS), an integrated socio-technical system that comprises its management philosophy and practices. Systems such as TPS typically organise manufacturing and logistics but can also include customer interaction.

In 2019, many organisations operate their own ‘production system’, designed to ensure every action of the company is standardised and adds value to the production process whilst helping to increase overall productivity.

How Strategy Execution solutions support car manufacturers

Car manufacturers are no different from other industries in the sense that market forces will continue to exert pressure, meaning that we will see an even greater focus on operational excellence for:

  • Driving cost down
  • Improving quality
  • Enabling greater flexibility
  • Speeding up time to market

These goals are especially challenging within such a dynamic market which requires leaders to continuously improve their daily running and transformation of the business.

Strategy Execution solutions, such as i-nexus, address two fundamental and complex challenges facing automobile organisations - the ongoing performance management of their operation; and managing change through the transformation, development and deployment of forward-looking strategic objectives.


To discover more about how you can bridge the strategy and execution air gap, download a free copy of our Key to Strategy Execution eBook. Click here to get your copy.


Looking to the future

Further disruption within the automotive industry is inevitable.

For example, self-driving vehicles raise the question of where to develop technology to compete.

Equally, increasing regulation around CO2 emissions requires innovation and the ability to align transformation efforts alongside the operational realities of the day to day management.

Without the solution which can house and align these two aspects of Strategy Execution, adaptation will prove to be difficult.

And in a post-globalisation era, localisation is growing in popularity, feeding a shift to local business. Rather than operations at a global scale, which are significantly more complex, a local focus is emerging, bringing new regulatory challenges for manufacturing and sales functions.

Through a centralised solution, these changes can be navigated with relative ease, ensuring that no matter the level within the organisation, all projects, initiatives and goals feedback into the global, corporate strategy.

Continue reading around this subject

We have a wealth of resources freely available to digest, all designed to help you achieve your strategic goals. We've hand-picked the below to set you on the right track:


About the author

Gillian has a rich background in Strategy Execution, supporting and advising public and private sector organisations across the globe to achieve their strategic goals.

If you'd like to talk more about your strategic challenges, reach out to her on gillian.wilson@i-nexus.com or connect with Gillian on LinkedIn for the latest insights on strategy and execution.


In other blogs