The phrase "competitive intelligence" refers to the monitoring of a competitor's products and market activities through the use of an intelligence gathering process. In the automotive industry, vehicle manufacturers have whole departments and teams dedicated to product clinics, vehicle teardowns, vehicle cost analysis, and future product program monitoring.
Why do these companies expend tremendous resources and manpower on competitive intelligence (CI)? In a word: advantage. The smarter companies are able to filter this competitive data directly into their product planning processes, product design teams and purchasing departments. The old adage of "knowledge equals power" holds true for smart vehicle manufacturers.
Several large suppliers—like Lear, Johnson Controls, TRW and Motorola—also place a high value on CI. Many of these companies have large product teardown rooms, competitor product databases, and perform part performance analyses. But this is not always the case.
According to our recent research, only 23% of automotive suppliers have dedicated resources for CI activities. Most of the supplier-related CI activities are product analysis related with very little emphasis placed upon active competitor research. Without a view of the real competitive landscape, suppliers are in danger of being blind-sided by an innovative new technology or an emerging new player. Expending funds for CI research is an insurance policy to guarantee market competitiveness and long-term viability.
Here are "real-world" examples of companies employing good and bad CI fundamentals:
By coordinating your company's current resources—sales, engineering, purchasing and marketing department—suppliers can collect important competitive intelligence data and route that information to a central coordinator for compilation, analysis and distribution to your company's top strategists:
Sales. By interacting with your company's customer base on a daily basis, sales personnel are the most valuable intelligence gathering organization within your company. By interacting with buyers, engineers and advanced product planning executives, sales representatives have access to a treasure trove of valuable data that can provide your company with a competitive advantage.
Engineering. By evaluating a competing product, engineers can determine the parts advantages/dis-advantages, manufacturability, technology level and strengths/weaknesses versus your company's current product portfolio. By interacting with OEM engineering teams, supplier engineers can collect information on future competitor products and systems.
Purchasing. Through existing relationships with Tier II/III suppliers, your purchasing organization can collect important data on your competitor's pricing structures, materials and supply bases. In addition, purchasing organizations can assist engineers in performing cost breakdown analyses on competing products.
Marketing. By synthesizing market intelligence for your company's sales, engineering and purchasing organizations, the marketing department can compile complete in-depth profiles of all major competitors and customers, supplier contract sourcing matrices (who has what business on what vehicle platforms) and product pricing/technology forecasts.
By working together, these departments can utilize existing staff and infrastructure to provide a higher level of competitive visibility to senior executives. Experience has shown that top CEOs and corporate officers rely on valuable market intelligence to plan mergers & acquisitions, new product development initiatives and corporate expansion into new markets.
Without it, your company could be one of the automotive industry's latest casualties.