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Supply Chain Strategy Scope Supply Chain Strategy Content
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Supply chain strategy is focused on core (plan, source, make, deliver, and return) capabilities and performance objectives One supply chain model (a set of supply chain capabilities and performance objectives) is dominant, with alternative approaches managed on an exception basis External relationships with customers and suppliers are managed using existing roles, processes, and metrics
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Autoliv Profile: Applying Rocket Science to the Supply Chain
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Through rapid growth and acquisitions, Autoliv captured a third of the global airbag market. But constant price pressure from the automakers and the economic slowdown of the late 1990s stretched the company s supply chain to the breaking point.
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Stockholm-based Autoliv is the world s largest manufacturer of auto safety systems. The company operates in 30 countries, developing and producing airbags, seatbelts, safety electronics, antiwhiplash seats, and related safety systems and components for all the major automotive makers worldwide. Autoliv employs 35,000 people and posts annual sales in excess of $4 billion. Autoliv s current global operation was created in 1997 by the merger of Autoliv AB of Sweden, then Europe s leading automotive safety company, and U.S.-based Morton ASP, the largest airbag manufacturer in North America and Asia. Innovation is Autoliv s hallmark. From its pioneering work in seatbelts in the 1950s to the first antisliding airbags launched in 2002 to keep drivers from slipping down under the dashboard in a head-on crash Autoliv is responsible for nearly every major innovation in automotive safety systems. During the 1990s, the business units that now make up Autoliv prospered as safety became a strong selling feature in the minds of car buyers. Led by the marketing strategies of Volvo and Chrysler and then driven by government regulations, airbags evolved from a luxury item in high-end vehicles to standard equipment for nearly every car on the road. Autoliv
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Strategic Supply Chain Management
grew with that trend, but it was growth that came with significant price erosion in its core products as airbags moved from a specialty item that could command a premium to near-commodity status. By 1998 it was clear that Autoliv was under stress. It faced annual price reductions for its products, mandated by the clout of the big automotive makers. Autoliv s supply chain, which ran through numerous independently operating business units with disparate systems and processes, was having trouble meeting customer requirements for production and delivery. Then the economic slowdown at the end of the decade hit the automotive industry, and demand for Autoliv s products softened. With price and demand trending down, Autoliv needed to find major cost savings to remain profitable and generate enough margin to fund innovation and maintain shareholder value. Most important, it had to cut costs without eroding the quality of its products. Mindful of the magnitude of the challenge, the company saw its supply chain as the key strategic asset that it could use to By 1998, Autoliv achieve its business objectives. One of the realized that it had to major drivers in our business, and really the thing that differentiates us, is our high cut costs without standard for quality and performance, says eroding the quality of Norm Markert, president of Autoliv North America. We re not making a cosmetic its products. element of the vehicle. This is about life and death. So we need to have an extremely high level of performance, and we understand that the robustness of our supply chain is vital to that performance. Beginning in 1998, Autoliv embarked on a strategic supply chain initiative that would change the way the company does business. The change began at Autoliv s operations in Utah. The results were so stunning that the new operating paradigm, dubbed the Autoliv Production System (APS), is now being rolled out around the globe. The way we are building equipment today is different [from] the way we built it a year ago, and that change is giving us competitive advantage, Markert says.
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