> Now, it's a very mature category where it's all about refinement, not major innovation
I disagree. You are completely right that in that situation it makes sense to develop an interchangeable supplier base. as you mention it allows you to increase competition and put pressure on them to reduce costs.
However, in a situation where you're still looking for innovation, like developing a new car (or plane) it makes sense to work with highly integrated suppliers. These won't be interchangeable and because you're very dependent on them, the opportunities for cost saving are probably smaller. On the other hand, because they have specialized knowledge and skills they can actually help you innovate much faster. At least that's the theory; you're right that SpaceX seems to focus on doing as much as possible in-house and it seems to work for them. A reason could be however, that the type of suppliers necessary to make this model work are just not there (yet) in their business.
I guess in practice it's about finding the right balance. Insisting on doing everything yourself can lead to bad cases of NIH syndrome, while outsourcing everything leads to a loss of control.
Yea, totally agree, but something like cars have far less variation than do SpaceX's rockets. Say, the automatic transmission isn't massively coupled (engineer constraint wise) to the rest of the car unless you're doing a hybrid or something.
That means the local improvement (better gears, weight reduction, etc.) is most of the improvement - not in conjunction with much else. It's why you'll often find struts from a 1999 model that are drop-in replacements for the 2012 even though the cars look very different.
The other element is being cornered by suppliers. If you only have one or two suppliers who can produce a component, you are exposing yourself to risk. Those one or two suppliers can let you develop a design that relies on their technology, then greatly increase the price when you are ready to go to production. Elon Musk calls this "going Russian": http://www.esquire.com/features/americans-2012/elon-musk-int...
I disagree. You are completely right that in that situation it makes sense to develop an interchangeable supplier base. as you mention it allows you to increase competition and put pressure on them to reduce costs.
However, in a situation where you're still looking for innovation, like developing a new car (or plane) it makes sense to work with highly integrated suppliers. These won't be interchangeable and because you're very dependent on them, the opportunities for cost saving are probably smaller. On the other hand, because they have specialized knowledge and skills they can actually help you innovate much faster. At least that's the theory; you're right that SpaceX seems to focus on doing as much as possible in-house and it seems to work for them. A reason could be however, that the type of suppliers necessary to make this model work are just not there (yet) in their business.
I guess in practice it's about finding the right balance. Insisting on doing everything yourself can lead to bad cases of NIH syndrome, while outsourcing everything leads to a loss of control.