Chrysler’s Prototype Electric Car and Outsourcing Product Design
When does it make sense to outsource key elements of product design and how far do you take it?
Chrysler this week announced that it was much closer than most who follow the auto industry realized with the development of its new prototype of electric cars. It’s clear that cars that can achieve 200 miles on a single battery charge and quickly accelerate to highway speeds on battery power, can resuscitate Chrysler’s market position and possibly be among the factors that change the current oil usage equation.
“We are well ahead where the industry observers thought we were,” Chrysler President Tom LaSorda said.
Whether it was that financial aspect, time-to-market issues, or a combination of both, Chrysler chose to rely on suppliers for help in design of many key elements of the new electric prototype to a much greater degree than usual.
“Chrysler was able to make quick progress on electric cars by relying on outside suppliers for many of the key components,” The Wall Street Journal noted. “That is a big change from the auto industry’s traditional approach in which car makers develop most of a car’s components themselves.”
Right now that bet looks smart. It is clearly part of the trend called “Supply Chain Virtualization,” as companies in most industries are adding less and less value to the products they sell. The supply chain adds 80% or more of the value in many cases, from a production perspective. The final seller is increasingly just the “final assembler” in the process.
Source: SupplyChainDigest