Improving performances at the second tier of the automotive supply chain: a draft case study of an innovative initiative in the Italian car industry

Abstract

This paper deals with the new role that firms at the second and third tier of the automotive supply chain are called to play in the ongoing process of globalisation of the automotive industry. It argues that the new demands these firms have to meet in product quality, service, and cost reduction imply a rationalisation of the lower tiers of the supply chain, which entails both selection among these firms and the upgrading of the survivors' competencies and performances. Most survivors will, however, be incapable alone of implementing the training and the long learning processes, which are needed to achieve this aim. Therefore the question of who should take care of such improvements (as regards their objectives, organisation, and costs) appears to be critical, and calls for original solutions. As a practical example of how to address its solution, we describe and comment on the program which Fiat Auto and about 100 of its direct suppliers have recently promoted in order to improve product quality at the second tier of this supply chain.