Outsourcing brings speed and focus

Jan. 9, 2003
Hard work and intellectual capital alone aren't enough to stay competitive.

The progression from separate wheel bearing components, to preassembled units, to bolt-on modular hubs, exemplifies how automakers increasingly rely on suppliers for design expertise.
It's no secret manufacturers these days are asking more and more from suppliers. There's a realization that component vendors often have expertise that OEMs don't. And climbing the learning curve, or getting the equipment necessary to do a job is frequently too expensive or impractical.

Probably nowhere is this trend more evident than in automobile manufacturing, one of the first industries to embrace the approach. Here, suppliers are increasingly responsible for design, development, engineering, testing, prototyping, packaging, logistics, tooling, and assembly of a majority of vehicle components and systems. In fact, the Original Equipment Suppliers Assn. reports that today supplier content accounts for 60% of vehicle cost. And that figure is expected to hit 70% by 2010.

Bearing maker Koyo Corp. of USA, Westlake, Ohio, provides a good example of how supplier outsourcing took hold in automobile manufacturing. As recently as the early 1980s, bearing makers such as Koyo supplied automakers with tapered roller bearings (TRBs) for wheels. The TRBs worked fine though autoworkers had to grease the unsealed bearings, assemble them on axles, and carefully adjust preload, all on the factory floor. These steps took precious time in an environment where automakers were scrambling to reduce costs and streamline assembly. To squeeze time out of production, bearing makers began supplying double-row, angular-contact bearings for wheel assemblies that came pregreased and preloaded. But more was in store as the buzz of "value-added" services became synonymous with supplier outsourcing.

In the early 1990s Koyo calculated what car companies were paying for wheel assembly components as well as the toll for labor, shipping, and the logistics of dealing with multiple vendors. It turned out that preassembled wheel hubs (bearing, hub, bolts, grease for life) lowered costs across the board and also minimized required axial space. The advent of ABS then led Koyo and other suppliers to integrate ABS sensor rings into hub units by the late 1990s.

Such collaborations with customers are directly responsible for some of Koyo's most impressive technologies, the company claims. Its engineers routinely work with automotive customers during the R&D phase to perfect bearing mounting techniques that ultimately boost bearing efficiency and service life. Koyo sees the outsourcing trend only growing in scope and may next supply automakers with hub units preassembled to steering knuckles or constant velocity joints.

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