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draft for review – not for distribution - Automotive Industry Action Group

draft for review – not for distribution - Automotive Industry Action Group

draft for review – not for distribution - Automotive Industry Action

CHINA’S AUTO SUPPLIERS NEED GREATER INVESTMENT IN BUSINESS SYSTEMSAIAG/IBM Study Outlines Intense Battle Ahead in China’s Automotive SectorSouthfield, Mich.—May 19, 2004— As China’s automotive suppliers rush to meet thedemands of the world’s fastest-growing automotive market, an overcapacity problemalready may be brewing, according to a new study written by Economist CorporateNetwork and released today by the Automotive Industry Action Group (AIAG) and IBMBusiness Consulting Services’ Institute for Business Value. The quest to addmanufacturing capacity is taking place at a faster rate than expected market growth,raising overcapacity concerns and the possibility of a shakeout within five years.In pursuit of lean operations, automakers worldwide have focused on investing intechnology. The China Auto Suppliers Survey looked at how China’s automotivesuppliers make use of process and production technology.The study found that IT spending by automotive suppliers in China was generally low,with more than three-quarters of respondents investing less than $100,000 per year. Italso examined major concerns, including an overwhelming need to find and retain goodstaff, which was cited by survey respondents as a barrier to successful development.When it comes to automating operations, less than a quarter of respondents useenterprise resource planning (ERP) systems.“This study makes it clear how standardization of business process and technologycould catapult China into a crucial position in the global automotive industry,” saidAndrew J. Cummins, executive director of AIAG. “Specifically, the research suggests theurgent need for suppliers in China to embrace common criteria, benchmarks and toolsfor business process and performance in order to achieve the cost-competitiveness theyseek.”--more--

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