How Wireless Delivers Costs Savings and Accelerates Vertical De-Integration in the Auto Industry

Transcription

1 The Role of Wireless in Advanced Business Systems: How Wireless Delivers Costs Savings and Accelerates Vertical De-Integration in the Auto Industry Mark Place Senior Consultant 2004, Latitude Consulting Group, Inc. 1 Latitude Consulting Group, Inc.

2 Overview - Topics About Latitude The Automotive Challenge In with The New: Wireless Automotive Solutions Future Direction: Integrated De-Integration Wrap-up

3 About Latitude Latitude Consulting Group is a digital business and technology consulting firm. Our mission is to help clients use Internet-based technologies to reduce costs, improve revenues, reduce cycle times and improve quality. We provide innovative solutions that digitize sales channels, supply chains, factories, healthcare providers, and insurers.

4 The Automotive Challenge The Challenge is Daunting Complicated supply chain hundreds of suppliers Thousands of people Complex product - 25,000 parts Product must be safe, reliable, easy-to-build, maintainable, environmentally friendly, affordable, desirable,

5 The Automotive Challenge Survival of the Leanest Lowest cost wins Inventory is expensive Highly competitive, cost-sensitive marketplace driving increased outsourcing

6 The Automotive Challenge Seemingly Infinitesimal Improvements are a Big Deal Huge costs and volumes involved Car makers are highly risk-averse Evolutionary, incremental improvement is the rule

7 In with The New: Wireless Automotive Solutions

8 Wireless Automotive Solutions Impact of wireless spreading through tactical applications: Component & Vehicle Assembly Yard & Warehouse Management Maintenance Operations

9 Component & Vehicle Assembly Wireless Provides Cost Savings on the Assembly Plant Floor RFID already used extensively in assembly operations RFID enabled Manufactured Part Tracking System detailed genealogy of each manufactured part Precisely targeted recalls reduce false positive recalls by several orders of magnitude Tens of millions of dollars saved Reduced customer aggravation

10 Yard & Warehouse Management Information Transparency Promises Future Savings RFID being utilized to track parts beyond the plant floor to storage and transit Improved coordination of just-intime processes Diminished boundary between part producer and part consumer Lowered inventory

11 Maintenance Operations The Cost of Not Knowing Sophisticated machine tools require constant maintenance Large plants (several million square feet) make getting information (a trip to the maintenance office) very timeconsuming Paper-based process hard to follow Hard to ensure compliance and workforce performance Many minutes lost retrieving manuals damage caused when manual not used

12 Maintenance Operations Delivering Information Where It Is Needed Maintenance staff goes mobile with wireless PDAs Optimized schedules minimize travel time Online manuals reduce risk of damage Enhanced compliance with maintenance schedules increase machine uptime Better tracking of workforce performance

13 Future Direction: Integrated De-Integration

14 Future Direction Information revolution is having a tremendous impact on productivity Wireless innovation extends the benefits of the information revolution to the non-tethered world Increased availability of information throughout the enterprise will change the very structure of the enterprise

15 Future Direction Transaction Cost Theory Coase Theorem Developed by University of Chicago economist Ronald Coase The Nature of the Firm published in 1937 Won Nobel Prize in Economics in 1991

16 Future Direction Coase s transaction costs theory : Finding a supplier (search costs) Reaching an agreement with the supplier (contracting costs) Organizing resources and processes (coordination costs) Relationship between transaction costs and internal costs define how an industry s value chain is structured

17 Future Direction Wireless Technology Decreases Coordination Costs Wireless technologies increase the ubiquity and transparency of supply chain information, causing coordination costs to drop

18 Future Direction Decreased Coordination Costs Accelerates Vertical De-integration Automotive companies are increasingly becoming brand managers -- mainly responsible for platform engineering, coordination of suppliers, assembly, sales and marketing Cost-saving technologies increase competitive pressure On an industry-wide scale, lowered transactions costs relative to internal costs will continue to accelerate the vertical de-integration of the automotive industry