Tangram Technology Ltd. - Business Workshop Report 7 - Jaguar Cars Limited

Business Workshop Report 7 
- Jaguar Cars Ltd.






British Plastics Federation



The Business Workshops are supported by the DTI as part of the Partnership in Plastics (PIP) Programme. The Programme is designed to improve the competitiveness of the UK plastics processing industry by building links between major customers and small to medium enterprises (SMEs). The focus of the Business Workshops is on informing the SMEs of the changing needs of major customers and the means of meeting these needs.


Jaguar has been a prestige automotive brand for over 40 years and new models reflect and continue this tradition. Part of the Ford Motor Company, Jaguar produces premium vehicles.

The market is highly competitive with supply greatly exceeding demand. All manufacturers are under pressure, as customers demand more choice, features and functions at no extra cost. For luxury car manufacturers, the customer desires for safety and the latest technology are paramount but there are additional “soft” demands for “ease of purchase” and an “enjoyable ownership experience”.

Market diversity means that vehicles and variants being increasingly being targeted to specific market sectors. In a market where almost all products are excellent, there is a natural need for each company to find their “core competencies” and to use these to achieve competitive advantage. The focus is increasingly on the “brand DNA” to ensure both distinctive product placement and survival of the brand. This will create radical changes in the future.


The automotive companies are changing the way they see themselves and the market. The use of “time as a strategic weapon” by reducing development times and product life cycles has led to the increased outsourcing of “non-core competencies”.

Outsourcing is also being driven by the need to establish and define an affordable business structure. The practice of designing the car and then finding out how much it cost to produce has been replaced by a top-down approach where the final cost is set and every part price is derived from this. The supplier is not asked to quote to a design but is given a requirements list and a target price to meet.

The companies are demanding, as a prerequisite to supply, the achievement of QS 9000 (the automotive extension to ISO 9001) and increasingly the achievement of ISO 14001 for Environmental Management Systems. Quality and environmental management are now part of the business background.


For suppliers, the growth in outsourcing is driving demands for sequenced delivery of higher-level assemblies, direct to the production line. As the car companies focus on brand management, first tier suppliers are concentrating on product engineering. Suppliers are expected to:

  • Be self-sufficient and provide product solutions. This means having design and development facilities to develop the products and processes to reduce costs and variability.
  • Apply the latest materials technology to add value and reduce cost at all manufacturing stages. Process variability reduction is a key factor and a Cpk of 1.33 is no longer sufficient - the goal is to achieve significant variability reductions and 6 Sigma performance.
  • Use rapid prototyping techniques to reduce prototype tooling use. It is increasingly common for tooling to be manufactured directly after simulation.

These demands are changing the balance of power in the sector. Previously the supplier base was tightly controlled and single sourcing was rare, the number of suppliers capable of meeting the current demands is small and shrinking. In the future, when the number of capable first tier suppliers is less than the number of car manufacturers, car manufacturers will be forced to work hard to attract the attention of competent suppliers.


The future supplier will be very different from that of the past. The drive is to “full-service suppliers” where:

  • The supplier owns the tooling.
  • The supplier produces at a “supplier park” next to the assembly plant.
  • The supplier embraces lean manufacturing to reduce cost.
  • The supplier manages the lower tiers of the supply chain and is responsible for their development. A vision of the supplier position in the supply chain must be part of the strategy to move forward for any supplier.
  • The supplier accepts part of the risk of product development and is “paid on production” i.e. as the vehicle comes off the production line. This creates a direct consumer linkage between the supplier and the consumer.
  • The supplier uses “paid on production” to involve machinery manufacturers via a shared capital investment approach, where the capital investment for the machine is funded on a per part basis.

The increased risks of this approach will also need new approaches to pricing where there is a factor in the price to insure against the risk involved in the transaction.


Within the car manufacturers, the current drive is to improve shareholder value and to increase engagement with the consumer via the brand management.

This will result in supplier segmentation based on the product they deliver. All components do not have the same consumer impact and components will be rated according to what is important to the consumer. Products with a high customer impact will be targeted for improvement or resourcing. The real consumer is not the car manufacturer but the ultimate buyer and the supplier is responsible to the consumer for their satisfaction with the product. This will increase demands for quality improvement and reduced product variation.

To achieve this, defect rates will be expected to decrease to less than 300 parts per million in the short term and even less in the longer term. Formal quality procedures will grow in importance and control plans and similar techniques will become “live” documents that totally interact with the operations.


This new world, with increased demands and risks, does not come without significant benefits for success. The supplier relationship must be a partnership which benefits both parties. In a good partnership both parties co-operate to achieve success. In a bad partnership a quick agreement shows that someone is being taken advantage of. The new suppliers will form real negotiated partnerships to reflect the new realities.

The car manufacturers and their world is changing and only by focusing on the core competencies will both the suppliers and manufacturers prosper.



“I believe car manufacturers in the future won’t make cars. Why shouldn’t they do what Nike does and just manage the finances and brands?”

John Simpson - Chief Executive of Mayflower on outsourcing.

© The Telegraph Group, 2000.























Internal and external trims

  • Seating applications
  • Display and dashboard applications
  • General internal trims

Functional components

  • Seals and body trims
  • Bumpers
  • Cable management parts
  • Engine parts (rocker covers etc.)
  • Fuel tanks and other blow mouldings (brake fluid, water etc.)


  • Brand management is becoming more important than production.

  • Increased outsourcing is driving the growth of suppliers structured to meet world-wide demands.

  • First tier suppliers are expected to carry out design and engineering to meet target costs rather than simply working to drawings and specifications.

  • The balance of power in the industry is changing with the development of strong first tier suppliers.

  • A clear vision of the location in the supplier chain is needed to survive and prosper.

  • Decreased product variability will become a driving force rather than simple “conformance to specification”.

  • Suppliers must produce a complete assembly rather than a simple single product.


Suppliers positioned correctly for changes in the market structure will grow in power and size despite market over-capacity. Other suppliers will find themselves increasingly dealing with first tier suppliers rather than directly with the car companies.

The PiP Programme consists of a range of activities including:

  • Business Workshops and Reports
  • Plasticity Seminars
  • Pentamode Code of Practice

Note: Any opinions expressed in this Business Workshop Report represent those of the author and not necessarily those of the BPF, DTI or Jaguar Cars Ltd.

Produced for the PiP Programme by Tangram Technology Ltd. (info@tangram.co.uk)

For further information about the PiP Programme contact:

The British Plastics Federation
6 Bath Place
Rivington Street
London EC2A 3JE
Tel: 020 7457 5000
Fax: 020 7457 5045

This Business Workshop Report is based on the results of a PiP Business Workshop held in February 2000. The customer viewpoint at the Workshop was presented by Mr. David Williams of Jaguar Cars Ltd.

March 2000

All logos and trademarks acknowledged. The assistance of Jaguar Cars Ltd. in the provision of artwork is also gratefully acknowledged.