|2001 Management Briefing Seminars index|
"Buying up companies seems increasingly risky and costly," Stallkamp said. "We must resist the trend to integrate at the first tier level, or we will only be replicating the sins and costs of vertical integration the OEMs committed."
A supplier alliance is a flexible, nimble and temporary alternative to acquisitions, he said.
"It's best to start small than large, some trivial little project, then work up from there," Stallkamp said.
Automakers are pressing Tier 1 suppliers to assume more internal product development; increased warranty responsibility; increased financing costs, including carrying the costs of development into production; and greatly increased sales, general and administrative costs, he said.
Stallkamp said forming alliances offers advantages over integration, including preserving the independence of the supply base and tailoring the supply chain for the specific product and automaker needs.