Managerial implications of the modular consortium model in a Brazilian automotive plant

Recently, automotive manufacturers have sought to outsource part of their traditional territory in an attempt to gain competitive advantages by decreasing production costs and increasing the speed of the development of new products. In order to do this, the modular consortium model has been introduced as a new and revolutionary approach to outsourcing assembly in automotive manufacturing. In November 1996, VW and seven module suppliers inaugurated a new truck and bus plant in Resende, a greenfield site in Brazil, using a pioneering pure modular consortium. As a radical case of outsourcing in the supply chain, the factory has aroused great interest and become a “laboratory” for the entire automotive industry. This article provides a brief description of the factory and discusses some managerial challenges and new business opportunities which have been introduced on both sides of the partnership with the establishment of the new plant.