Spark plug manufacturers worldwide are about to face three challenges in the near future. Technology is rapidly changing and improving. Today, the world still relies heavily on combustion engines. From construction work to daily transportation, combustion engines are part of peoples’ daily lives. With heavy reliance on combustion engines, the spark plug market is improving.
Below are three challenges that they will face in the near future.
Volatile Prices of Materials
Spark plugs require special metals. Prices of metals used in spark plugs like copper or iridium are volatile – they are subject to price changes all the time. Another thing is that prices of these metals vary across the globe. With volatile market prices, manufacturers will have a hard time establishing cost leadership among competitors.
Manufacturers may find cheap copper from one country, but they have to remember that they still have to pay freight and other applicable taxes.
Increase in Demand for Spark Plugs
Currently, the forecasts in Market Research Future’s research Global Spark Plugs Market Research Report – Forecast to 2022 forecasted that the Asia-Pacific would soon dominate the spark plug market. Moreover, the Asia-Pacific also holds the most extensive automobile industries.
Since more automobile manufacturers reside in the Asia-Pacific, spark plug demand is high in this region.
Aside from for new cars, old cars also need spark plug replacements. Thus, demand is high for both car manufacturers and automobile repair shops.
Cost Efficient Manufacturing
With the rising demand for spark plugs, manufacturers are tempted to produce more. However, price and quality competition make it hard for manufacturers to establish product placement in consumers.
Cost efficient manufacturing focuses on reducing manufacturing costs to achieve cost leadership in the market. With cost leadership, manufacturers can sell spark plugs at a lower price due to lower manufacturing costs.
Since prices for direct materials of spark plugs are volatile, spark plug manufacturers should instead focus on overhead costs and quality costs.
Overhead, as one of the product cost components, is a serious issue in cost management. With lower overhead costs, manufacturers can cost and price spark plugs at a lower price.
Quality costs also play an essential role. Defective spark plugs deployed in the market can incur external failure costs such as replacement costs or rework costs.
Manufacturers should also look into a just-in-time (JIT) manufacturing system to reduce inventory costs such as carrying costs and storage costs. A JIT system can help companies mitigate overhead costs effectively to their advantage.
Technology is improving in every second. With the fast improvement of technology, businesses need to cope with the challenges in the market. Thus, Spark plug manufacturers worldwide should deal with the three challenges stated above to ensure the continued existence in the spark plug market.