Component manufacturers such as Visteon, Magna and Denso have become pillars of the car industry by globalising their operations and employing sophisticated methods of developing new products, a new white paper by The Economist Intelligence Unit said.

The paper “Tightening the global supply chain: best practices among vehicle equipment manufacturers” was based on original research and interviews with several key executives at some of the top component makers around the world.

Such suppliers are no longer mere contractors to the final assemblers, but are often contributing 75% or more of the value of the vehicle, owning the technology and the know-how required to produce the components.

 Many large component makers (Tier One suppliers) are taking over some of the roles previously played by original equipment manufacturers, such as GM and Ford. By working for a large number of OEMs they are becoming the experts in their particular fields, in terms of both product and process technology.

 Suppliers often completely design and develop components and supply them directly to the assembly line. This leaves little more for the OEM to do than to bolt them onto the car being assembled. Pre-assembled modules can include doors, seats and cockpits. And complete systems may include suspensions, transmissions and steering columns, which may be supplied in several pre-assembled modules, but contain all of the necessary linkages for the OEM to bolt the system onto the car it is assembling.

 Operating an efficient supply chain requires suppliers to focus closely on what consumers want. Mathias Hüttenrauch, director of marketing and corporate strategy for Visteon in Europe and South America, said: “We are really moving strongly towards the consumers. We have to have a customer focus. In the current environment it is not enough for a tier-one supplier to just come to an OEM and find out what its idea is. You have to bring some ideas to the table. They see us as the experts.”

 Equipment suppliers are rapidly standardising their range of products in order to make high quality components at a low cost. As vehicle manufacturers adopt platform policies, whereby different models use the same core chassis and powertrain technologies, suppliers too are using common and reusable components. Modules or systems designed specifically for one model or one OEM can contain many components that are also used for other models. This can be taken further by standardising subassemblies within modules and systems.