Change Management can mean many different things in different industries, but automotive suppliers know it best as the game that can make or break the profitability of any project. As product development both on the vehicle and the system components starts 2 to 3 years before the final production launch, technical, specification and scope changes during this phase are part of the daily exercises of the suppliers’ project teams. Despite this, managing such Changes remains a major headache for many suppliers and optimising the financial impact an even greater migraine.
Change Management demands a high level of collaboration between many cross-functional team players in a compacted time period. The Change input randomly comes from various directions , both from customer and internal sources, and then must be technically evaluated, analysed by sub-suppliers and manufacturing engineers, timing and costs estimated and a pricing & quotation strategy agreed and approved. Demanding OEM customers typically expect a response in less than 2 weeks. Too often we have seen impatient customers proceeding with Changes based on their own low-ball estimates, when the supplier response was not in time (leaving the supplier to then play catch-up in the implementation and commercial negotiations).
Traditional tools such as Excel tracking sheets, databases, email workflows, etc. are the suppliers’ Achilles’ heels to keep up with the detail and pace required. The difficulty to access or input data means project and sales managers run blind to the complete scope of Changes due to the many flying under their radar screens.
While no one will openly admit it, Changes are a key opportunity for a supplier to improve the margin on a project. Conversely, poor costing/pricing of Changes can be the shot that will condemn a project forever to red ink. It is a known fact that the overall bottom-line of some automotive suppliers is dictated by just a few under-performing projects. Therefore, the best performing suppliers pride themselves on transparent overviews of all Changes and are closely tracking the financial impact and negotiation status to protect and maximise their margins.
A flexible, cloud-based and mobile-enabled digital solution is the game plan required to overcome the above challenges, improve collaboration and provide the transparency necessary to steer your business.
Considering the financial stakes of the Change Management game, investing now in a digital transformation yields a quick ROI winning strategy.