Faurecia Case Analysis

Faurecia Case Analysis

Table of Contents

Major Issues        3

Objectives        3

Network Design Analysis        4

Voice of the Customer Analysis        5

References        7

In 1998, a merger resulted in the creation and incorporation of Faurecia; its business activity segments include: “automotive seating, vehicle interior, exhaust systems and front-end module” (Bidault,2007).  

Assumptions & Scope

The car seat industry is reliant on the car market; trends lead by carmakers have shaped the industry (Bidault,2007).  As a new company, Faurecia positioned itself as a tier-1 supplier. Over a period of 7 years, revenues grew and expansion resulted in “60,000 employees in 28 countries, 160 industrial sites and it invested $600 million in R&D every year” (Bidault,2007).  By 2005, the company had gone global ranking ninth overall as the largest parts supplier and third overall as the largest supplier of car seating (Bidault,2007).

The scope of this report is centered on the product development process of the car seating segment.  Strategic issues are identified, objectives set, and an analysis conducted.  To conclude, recommendations are identified addressing the issues outlined.

Major Issues

The car market trends, the merger, company growth rate, geographical spread and the company’s strategic positioning as a tier 1 supplier present many challenges.  

In 2003, Faurecia executive identified areas of improvement including: productivity gaps, reduction of development costs, ergonomic issues in the just-in-time plants and improvement in relation to quality standards (Bidault,2007).

In 2004, the company launched a program creating a top heavy management team meant to “support all the steps of product design, development and manufacturing” (Bidault,2007). By year end, executives acknowledged the need to “redefine the product development process” (Bidault,2007); citing issues related to resource allocation, project delays, and team morale.

While multiple issues exist, this report addresses two key issues expected to have the most impact:

1. Network Design
2. Voice of the Customer

Objectives

Quality, speed, cost, flexibility, and dependability are key operational performance objectives (Slack, Brandon-Jones & Johnston,2013).  Effectiveness of the recommendations will be measured by an achievement of a:

• 10% increase in the contracts awarded for seat design in 2016-2017
• 15% increase in the 2017 customer satisfaction survey results
• 10% increase in annual employee retention rates
• 5% increase in sales for the next fiscal year

Analysis, Recommendations & Plan of Action

Network Design Analysis

Vertical integration, company “expertise in all aspects of car seating” and the “capabilities to design and manufacture components for its own assembly lines as well as those of its customers” are key strengths (Bidault,2007). Vertical integration “can have a significant impact on a business unit’s position in its industry with respect to cost, differentiation, and other strategic issues, the vertical scope is an important consideration in corporate strategy” (QuickMBA.com,2010).

While many benefits are proven, drawbacks include: “capacity balancing issues, potentially higher costs due to low efficiencies resulting from lack of supplier competition, decreased ability to increase product variety if significant in-house development is required and developing new core competencies may compromise existing competencies” (QuickMBA.com,2010). Extreme competition and considerable cooperation exist in the car seat industry (Bidault, 2007).  “A well-developed network increases design options—it can even be a competitive advantage” (Athabasca University,2015).

Network Design Recommendations & Plan of Action

With evolving trends and the substantial growth Faurecia needs to redefine its focus, evaluate the current network design and conduct a cost/benefit analysis of current ownership activities.

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Source: (Athabasca University,2015)

Alternatives for consideration:

• “Long-term explicit contracts and joint ventures” (QuickMBA.com,2010).
• Co-opetition, “in the long-term creates value for the total network to find ways of increasing value for suppliers as well as customers” and outsourcing simply because “no single business does everything that is required to produce its products and services” (Slack et al.,2013,p.156).  

Voice of the Customer Analysis

In 2004, management of the team created to support the design and manufacturing process announced its focus as:

• Intent on influencing “the design of our products to optimize the assembly process” (Bidault,2007).
• “Designed the ideal assembly line for JIT, one that optimizes ergonomics and assembly costing, and we want to adapt the product design to fit it” (Bidault,2007).

Problem?  The company lost sight of the customer (internal/external); it focused on modifying the design to optimize assembly instead of designing a product centered on customer requirements.  This issue is multi-faceted: