ITT Automotive
The $3.5Bn company is an Auto component manufacturer with offerings in 8 product groups. It has Engineering and production presence in EU and US. ITT-Teves (for ABS) is the only auto supplier to exceed $1 Bn Sales.
ABS Market trend
In 1990s Greater hands on experience with technology, and economies of scale due to increased demand drove cost reduction in ABS Systems.
Suppliers faced challenges to meet volumes as greater emphasis on safety to fit wider products, made OEMs to introduce ABS even compact and subcompact vehicles.
Penetration of ABS in grew to 32% in 1992 against 14% in cars.
Demand for the ability to produce higher volumes along with systems that are Smaller, Lighter and low cost, coupled with reduced product life cycles.
ITT-Teves held ~27% worldwide ABS sales and market shares were slow to change; Margins were decreasing due to increased competition.
MK-20 Project targets
System cost must be half the price compared to the latest MK4-Gi.
Only two years of development time (concept Market), reduction in lead time by ~40%.
Smaller and lighter than ever before.
Challenges
Need for Innovations in product design, process establishment and wider compatibility with OEM requirements with an aim of cost reduction.
Need for simultaneous engineering from Product design and Production engineering teams to reduce lead times.
1. What are your recommendations regarding the issue of standardizing process technology across all plants? Are there motives behind this proposal, other than those stated in the case?
Process standardisation across all plants in US like in Germany is not recommended considering the various local factors that significantly affect production costs. Higher process standardisation has significant advantages of decrease in the costs due to faster cycle times, ramp-up and consistent quality. However it constraints the freedom of product variety, loss of continuous improvements through Kaizen and greater risk of capital locking in product
ABS Market trend
In 1990s Greater hands on experience with technology, and economies of scale due to increased demand drove cost reduction in ABS Systems.
Suppliers faced challenges to meet volumes as greater emphasis on safety to fit wider products, made OEMs to introduce ABS even compact and subcompact vehicles.
Penetration of ABS in grew to 32% in 1992 against 14% in cars.
Demand for the ability to produce higher volumes along with systems that are Smaller, Lighter and low cost, coupled with reduced product life cycles.
ITT-Teves held ~27% worldwide ABS sales and market shares were slow to change; Margins were decreasing due to increased competition.
MK-20 Project targets
System cost must be half the price compared to the latest MK4-Gi.
Only two years of development time (concept Market), reduction in lead time by ~40%.
Smaller and lighter than ever before.
Challenges
Need for Innovations in product design, process establishment and wider compatibility with OEM requirements with an aim of cost reduction.
Need for simultaneous engineering from Product design and Production engineering teams to reduce lead times.
1. What are your recommendations regarding the issue of standardizing process technology across all plants? Are there motives behind this proposal, other than those stated in the case?
Process standardisation across all plants in US like in Germany is not recommended considering the various local factors that significantly affect production costs. Higher process standardisation has significant advantages of decrease in the costs due to faster cycle times, ramp-up and consistent quality. However it constraints the freedom of product variety, loss of continuous improvements through Kaizen and greater risk of capital locking in product