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Autoliv Case Study

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Autoliv Case Study
Sean Desai
MBA6127
Effective Global Strategic Sourcing

530 Pointe Vista Court
Corona, Ca 92881
Telephone: 951-870-7238
Email: sdesai2@capellauniversity.edu
Instructor: Dr. Mohammed Robbani

Introduction
Autoliv is the world’s largest auto safety systems manufacturer. The company has been around for some time, but as two separate entities Autoliv AB and Morton ASP. The two companies merged in 1997 to become the company they are today. Autoliv is most notable for producing the airbag, which is now a safety feature which comes equipped in most cars today.   What was once a luxury item became a common commodity, no longer was Autoliv able to charge a premium on airbags which led to “price erosion” (Roussel and Cohen, 40).   This issue combined with a supply chain flailing to keep up with production demands, being non homogenous, and declining economic factors led Autoliv to a hard place.
Standardized Production
In response to the issues Autoliv was facing, Autoliv decided to employ the assistance of their biggest client, Toyota. Toyota created TPS (Toyota Production System), which is the precursor to the lean methodology or lean manufacturing. Toyota also saw the value in assisting Autoliv, because if Toyota assists its suppliers it will upgrade their own supply chain which Toyota views as an asset. Correcting Autoliv’s supply chain issues did not include turning their custom products to standardized products, this was not even remotely possible.
“No two cars use the exact same airbag system—not even very similar cars such as the Chevrolet Camaro and the Pontiac Firebird. And subtle variations in design create different crash profiles, requiring different airbag system configurations for every car model.” (Roussel and Cohen, 42)
Prior to bringing in Toyota, Autoliv organized their facility by automaker and had one long line which serviced a specific customer. This system was highly inefficient, it did not allow for...

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