Global sourcing in the automotive supply chain:The case of Fiat Auto

Abstract

Objective of this paper is to present how Fiat Auto has developed a peculiar and innovative global sourcing model in conjunction with the rolling out of its "world car" project "178". Differently from other OEMs, that have designed vehicles with common "global" underbody platforms adapting body, trim levels and ride characteristics to local conditions, Fiat Auto "world car" concept and globalization strategy is more ambitious and complex, since the standardization of the 5 models stemming from the 178 platform involves absolute cross-country identity not only of interior/exterior design and contents but also of quality levels, robustness and compliance with European rules in terms of safety and pollution. The international supply chain supporting this globalization process can be interpreted as a double network of operations and transactions: the "internal" supply chain, where "makes" are exchanged between Fiat Auto plants; the "external" supply chain where "buys" are purchased by Fiat Auto plants from suppliers. In the "external" supply chain, Fiat Auto manages, in a global sourcing perspective, a relatively stable group of suppliers, though in a competitive perspective, in order to guarantee cross-plant and cross-market component uniformity and worldwide efficiency. After depicting Fiat Auto global sourcing policies and the related organizational structures and processes, the paper highlights achievements and challenges of the model. The paper argues that Fiat's global sourcing, while putting competitive pressure on suppliers by means of worldwide information transparency on prices, quality and service, works as a performance improvement stimulator within OEM-first tier suppliers partnership relationships ("voice" mechanism), rather than a pure and simple supplierswitching device ("exit" mechanism).