Car sales in India are going through the roof as the country continues to grow and prosper. More people with money means more goods and services and more cars to transport them. While prosperity is a welcome addition to the India economy, the impact on the environment is not. In fact, the environmental challenge raises some important questions: How can India minimize the environmental impact caused by the transportation sector without impacting the country's growth momentum? Which automotive technologies are environmentally friendly? How can Indian automakers sell "green" cars at a price that will suit cost-conscious Indian consumers?

To answer these questions, A.T. Kearney and the Confederation of Indian Industry (CII) conducted a joint study to identify and prioritize key actions for cost-effective green mobility. This report explores various options available to India to move toward a green mobility paradigm with lower carbon dioxide equivalent (CO₂e) emissions—and therefore less impact on global warming—and lower emission of regulated pollutants such as particulate matter (PM), monoxides of nitrogen (NOx), carbon monoxide (CO), and unburned hydrocarbon (HC).

This report examines the opportunities available for a more cost-effective, greener mobility future for the consideration of all stakeholders: industry, government, and consumers.

Standards are the rules, guidelines, and definitions that describe repeatable ways of doing things. Standards are a crucial element in the EU's industrial strategy as Europe seeks to remain a shaper of global standards rather than a follower.

The European Round Table of Industrialists worked with A.T. Kearney to study the issue of developing and implementing standards. We found six recommendations for establishing standards in European industry:

• Establish performance targets to foster innovation. Standards spread collective knowledge, bringing together industry players in a working environment of sharing and collaboration. The use of standardized parts and business processes can reduce early investment costs and risks, and provide a platform from which industries can innovate.
• Consult with experts. Involving technical and industrial experts, even when standards are initiated by governments, can help build standards on solid foundations.
• Coordinate industry players. European standardization bodies can play a larger role in facilitating standard-setting along the value chain and across industries.
• Balance speed and consensus. Standards must be put in place quickly in the face of accelerating technological change and market competition, and they must be built on a foundation of consensus to broadly address the requirements of all players.
• Encourage a global approach. European companies that adopt and participate in setting global standards increase their market access to other countries.
• Encourage SME participation. Despite their importance to the European economy, few small and medium-sized enterprises (SMEs) are actively involved in setting standards.

Corporate compliance—or, more accurately, the risk of noncompliance—has become a major concern over the past decade, especially for global manufacturers with operations in many different countries and jurisdictions. When a practice commonly accepted in one country could be a serious criminal or civil offense in another, companies had better know about it.

Many firms understand that compliance can lead to competitive advantage and are making their suppliers commit to compliance standards that go far beyond those required by law.

To understand how companies reduce the risks of noncompliance, A.T. Kearney surveyed execu¬tives at leading manufacturers, conducting in-depth interviews with compliance executives at nearly 40 top companies worldwide. While most studies approach compliance from a legal perspective, we focus our attention on compliance management.

Five major findings emerged from our examination of compliance management in these areas:

• Most companies expect to expand their compliance systems.
• Lower management has a much less favorable perception of compliance systems than top management, indicating a strong need for administrative efforts to generate acceptance at all levels.
• Most companies do not have an independent compliance department that reports directly to the executive board.
• External resources are especially useful for setting up a compliance system.
• The most effective compliance systems integrate compliance and process management.

Creating a unique customer experience is one of the best ways to achieve sustainable growth, particularly in industries that are stagnating. If a telco, a utility, or an insurance company can create a highly differentiated customer experience that turns dissatisfaction or indifference into delight, it will recruit an army of vocal advocates online and offline, gain market share, and generate revenue growth.

Sound simple? It isn't, especially in sectors where the core product or service is difficult to differentiate. But it is doable, as Disney, IKEA, and ArcelorMittal have demonstrated. These firms are among the 15 Summer Champions identified by A.T. Kearney from an initial list of 500 as companies that outgrew their markets consistently over a five-year period despite being the largest players in their sectors.

Most manufacturers know about frugal engineering—the concept of developing innovative, no-frills products at the lowest cost possible. India's Tata Nano, an urban vehicle with a $2,500 price tag that targets price-conscious customers, is the poster child for frugal engineering. What, then, is frugal re-engineering? We define it as a structured, sustainable process of continually redesigning products to cut costs. Cost-effective continual re-engineering (or continuous improvement in manufacturing parlance) of a product is the essence of frugal re-engineering. For example, plastic parts can be redesigned to be made of polypropylene instead of costlier fiber-reinforced plastic, and low-temperature specs can be relaxed for window-channel grease in temperate regions that don't have harsh winters.

Frugal re-engineering builds on the concepts of value analysis, value engineering (VAVE). It encompasses the strategic imperatives of an empowered organization supported by processes, metrics, tools, and systems. It enables companies to continually reduce costs in a structured manner.

Material purchases account for about 60 percent of the typical manufacturer's cost base, and rising commodity prices exert upward pressure on engineered material costs. But there is good news: Frugal re-engineering has the potential to drive year-on-year cost savings of between 7 and 12 percent.

Frugal re-engineering borrows from the Indian concept of "jugaad." Indian entrepreneurs, using parts from junkyards, have been known to create their own local transportation to fill the void in low-cost vehicles. It is comparable to grassroots innovation that uses ingenuity to solve a problem at a minimal cost. In this paper, we discuss the processes and techniques used by these innovators to develop cost-effective solutions.

The late 1990s and early 2000s were a time of unbridled optimism for most industries across the globe. As demand grew, original equipment manufacturers (OEMs) and suppliers invested in capacity ahead of demand to stay competitive. Ambitious growth plans and easy access to capital fueled heavy over-investment across the supply chains of most industries.

The global recession changed all of that, as pessimism reigned. The steep fall in demand across sectors forced manufacturers to cut production and cancel orders for input supplies. Cyclical industries with long investment lead times were hit hardest—primarily because they could not pull out of their large capacity investments. The effects were felt worldwide, with a drastic drop in sales translating to a near—complete cancellation of orders from suppliers. Facing idle capacity and unable to repay loans, many suppliers went bankrupt, reduced their workforce, or downsized production facilities. As thousands of smaller suppliers went out of business, major manufacturers streamlined their vendors, focusing on retaining their larger first-tier integrators—those most able to withstand future shocks.

Although the past two years have brought a brief rebound, future prospects remain uncertain. Demand is picking up and the manufacturing sector is recovering from the depths of the crisis, yet many suppliers remain hesitant to add capacity. Component manufacturers have seen significantly slower investment growth than OEMs.

These risk-averse suppliers are causing manufacturers to lose sales. General Motors blames a shortage of key parts for lost sales in India while the CEOs of Boeing and Airbus have publicly expressed concern over suppliers' inability to keep up with their growth plans. In the past two years, the lead time for semiconductor supplies has nearly tripled as suppliers decline to add capacity. Cisco's ambitious growth plans have been constrained by the lack of cooperation from dynamic random access memory (DRAM) suppliers that suffered estimated losses of $13 billion in 2009 and 2010.

One major reason suppliers are wary of adding capacity is because they bear the majority of the risks—even more so during a recession—while the rewards are skewed toward manufacturers. In the absence of appropriate risk-sharing mechanisms, suppliers have little incentive to add capacity ahead of demand, especially if adding capacity requires large capital expenditures. It is imperative for manufacturers—especially those in cyclical industries—to provide suppliers with incentives to add capacity. The question is: how?

A.T. Kearney's recent study of MRO service concepts in Europe finds that the financial crisis spurred a trend toward MRO outsourcing as companies sought to cut costs. While internal MRO services for industrial production are projected to decline by 3 percent per year over the next three years, the European market for external MRO services is expected to grow by 2 percent a year—to about €60 billion ($82 billion)—over the same period. Our study shows that the trend continues and is both supply- and demand-driven. On the supply side, large MRO service providers are focusing on meeting customers' needs by providing quality services at affordable prices. On the demand side, pressure on manufacturers to reduce costs has increased the attractiveness of—and lowered the barriers to—advanced concepts in integrated MRO services.

Today's property and casualty (P&C) insurance customers no longer interact with insurers solely by visiting an agent—they're also phoning, texting, tweeting and surfing. To succeed these days, insurers must be able to serve customers across an ever-expanding landscape.

The downturn turned upturn is not the only dynamic at play in the automotive industry. Other industry trends are also poised to disrupt the relationship between fleet buyers— including car rental firms, large corporations and governments—and their automotive sellers who must act fast to adapt:

• Formerly mere threats, Craigslist, eBay, and other automotive websites are now fully developed rivals, playing havoc with traditional automotive markets and sales channels. 
• Automakers are entering new businesses, such as car-sharing services, and competing with their commercial fleet customers.
• Fleet buyers are consolidating and strengthening their demand-side bargaining power.
• Green technology players are entering the market. Circumventing the dealer sales network, original equipment manufacturers (OEMs) are introducing "green" vehicles such as electric cars through commercial fleet buyers.

We expect the shift from a fleet buyer's market to a seller's market to begin early in 2011. As OEM capacity and consumer demand align, the automakers are moving vehicles into the more profitable retail sales channel, raising vehicle prices and reducing purchase incentives. For fleet buyers, it will mean a far less favorable vehicle mix, an escalation in prices and a shortage of supply.

As a result, the traditional fleet buyer-seller relationship will have to change. The companies speediest to adapt will capture an early-mover advantage. There is no time to lose, as the window of opportunity for change is closing rapidly.

For companies that use steel in their manufacturing processes success depends on smart pricing and materials management strategies—recovering materials costs, improving sourcing, and utilizing steel scrap throughout their value chains.

Henry Ford's historic promise in 1908 to "build a car for the great multitude" resulted in the production of more than 15 million Model Ts and created unprecedented mobility for consumers everywhere. Will India's Tata Motors deliver on its equally bold promise to a new generation of consumers to bring the Nano to market for the "great multitude" at a price of $2,500?