What It Takes to Be A Competitive Supplier: Lessons from Bosch
Although it might seem that some automotive suppliers—like Bosch—are so wired into the automotive infrastructure that they really have it made without having to work at it. Think again. The people at Bosch recognize that the stakes are high and that the only way to make it is to do whatever it takes to be a superlative supplier. Here's a look at some of the things that it is doing.
On 21 May 1996, ground was broken in a field near the town of Boxberg in southern Germany, about 90 km northeast of Stuttgart. By the time all of the ground was broken, 2.4 million cubic meters of earth were moved on the 92-hectacre site. Then the paving equipment was moved into place. It put down a three lane oval course that's 3-km long. There's a vehicle dynamics area, a flat asphalt plate 300-m in diameter. A 3.7-km long handling course with various road surfaces. There are roads with inclinations ranging from 5 to 30% (which is where some of the moved earth was mounded). There's a course with surfaces of asphalt, concrete, basalt, and tile. There are two ponds (30 and 100-cm deep) and a road with a 3-cm water depth. There is a 2,800-m2 building housing offices, labs, and service equipment on the site.
By mid-June 1998, just over two years since the start of the construction project, Robert Bosch GmbH (Stuttgart) had invested 100,000,000 DM on its Boxberg Proving Grounds.
Bosch is unquestionably one of the leading automotive suppliers on the planet, providing an array of equipment including braking systems, gasoline and diesel fuel injectors, and an assortment of electronic devices, including radios, navigation equipment, and cockpit displays. According to Robert Oswald, member of the board of Robert Bosch GmbH and chairman, president and CEO of its wholly owned U.S. subsidiary, Robert Bosch Corp. (Broadview, IL), the Automotive Equipment Div. of the Bosch Group is the most-important part of the organization.
That is, overall sales for Bosch in 1997 were 46.9 billion DM, of which the Automotive Equipment Div. accounted for 28.7 billion DM, or 61%. The other 39% are made up of sales by three other sectors: Consumer Goods (24%), Communication Technology (11%) and Capital Goods (4%).
Bosch is a company where innovation is a critical competency. Oswald notes, "Nurturing and strengthening our innovative capacities is an important basis for future company development." He says that in 1997, Bosch had more than 1,500 patent registrations in Germany, which was the second most of any company. He observes, "At Bosch, we employ almost 15,000 scientists, engineers, and technicians in the areas of research, advanced development, process development, and, in particular, the development and improvement of new and existing products and systems. The main focus of this work is currently on high-pressure diesel injection systems, direct gasoline injection, electronic stability program (ESP), and mobile phones."
Overall, there are some 115,000 employees dedicated to automotive in facilities throughout the world.
The new Bosch Boxberg proving grounds includes a high-speed oval, rough roads, inclines, water basins, low-friction surfaces, a handling course, and a vehicle dynamics area. All this to assure that its components and systems function with technical superiority.
All of which brings us back to the proving grounds in Boxberg.
There are two ways of looking at it. For one thing, there is the practical matter. Oswald explains that in the 1950s and 60s, the testing of products was performed on public roads. Clearly, that's not what you'd call "controlled conditions." In 1968, the company opened a technical center (174,670 m2 of building space) in Schwieberdingen, Germany, that has a small test track. But due to market demands for better braking systems as well as for such things as ESP (you may have heard of the problem that the Mercedes A-Class had with tipping over when two Scandinavian journalists simulated the avoidance of a moose on the road: ESP is a fundamental means by which the A-Class has now attained the needed stability), Bosch engineers needed some more area to test their developments, which led to the building of the Boxberg facility.
The second way is somewhat surprising. Dr. Norbert Rittmannsberger, senior vice president of Development, Automotive Equipment Division 1, ABS & Brakes, Robert Bosch GmbH, in describing the facility, comments that one of the reasons the track was built was so that the organization would "be taken seriously by auto manufacturers."
The implications of that comment should be completely startling to anyone in the automotive supplier business today. Consider: the ABS & Brakes business division alone has16,500 workers, and 44 manufacturing locations in Europe, North America, Asia, and Australia. Then there are all of the aforementioned scientists, engineers, and technicians, a percentage of whom work on developments for the group. Bosch ABS is available on 220 different vehicles built by 56 manufacturers. Since 1978, when it put ABS into series production, it has shipped more than 40 million systems.
All that, yet credibility is an on-going concern. They take nothing for granted.
The point is simply this: To be a supplier today, companies must become thoroughly dedicated to providing customers with the best in high-quality, innovative, cost-effective products. It may not take the building of a complete test track, but anyone at any company who thinks that "good enough is good enough" is sorely mistaken if they have to compete with a company like Bosch.
Bosch's Robert Oswald: "Big automobile manufacturers are becoming increasingly global and they expect that their specific requirements for supplied products will be fulfilled quickly and flexibly worldwide. This will require presence near the custoomer. Bosch established its first foreign representation in Great Britain in 1898 and at the beginning of the century started to manufacture automotive equipment at locations outside of Germany." Put another way: Bosch has been "going global" for 100 years (Photo: Bosch).
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