The Automotive Assembly Plant of the Future

Transcription

1 The Automotive Assembly Plant of the Future MESA conference Düsseldorf, November 9 th, 2010 Pier Manenti EMEA Research Director IDC Manufacturing Insights

2 About IDC Manufacturing Insights A division of IDC Develops industry research, benchmarking projects and advisory services on business process best practices and on the use of IT in manufacturing Helps manufacturers improve their capabilities in key business process areas Helps IT vendors to assess the market opportunities and better tailor offering to end-users needs IDC Manufacturing Insights Page 2

3 IDC Manufacturing Insights Areas of research Value Chains Asset Oriented Value Chain Engineering Oriented Value Chain Technology Oriented Value Chain Brand Oriented Value Chain Process Domains Chemicals, Pharmaceuticals, Automotive, Aerospace, Machinery, High-tech, Semiconductor, Fashion, Food&Beverage, Operations Technology strategies Look at a segment across domains Supply Chain strategies Product Lifecycle strategies Look at a domain across segments Emerging Agenda IDC Manufacturing Insights Page 3

4 The automotive industry is very conservative The manufacturing model for the automotive industry today has not fundamentally changed over the years Henry Ford built the River Rouge assembly plant in the 20s as a monument to his mass production principles with iron ore (from Ford mines) and rubber (from Ford plantations) coming into the factory and Model Ts coming out for a growing, ready market Large corporation still try to benefit from their critical mass for profitable volume manufacturing Ford s River Rouge Tool & Die Shop IDC Manufacturing Insights Page 4

5 The effect of mass production Excess inventory The sequential supply chain from tier suppliers to the manufacturer and then to the dealership lot results in day cycle time from raw material to ultimate consumer. McKinsey estimated that vehicle manufacturers waste $80 billion annually by producing nondemand inventory (inventory costs, insurance, damage costs, incentives etc.) Suboptimal capacity utilization Capacity utilization is suboptimal and inconsistent. Most OEMs keep manufacturing facilities running at less than maximum capacity; worse, because of poor demand forecasting and capacity planning, they experience huge swings in utilizations. Productivity challenges Profitability is a major concern in the automotive industry and productivity remains a key objective. Some manufacturers, especially American OEMs, struggle with high variability that leads to excess capacity in some plants. This creates a "productivity vise," in which OEMs lower prices and create other incentives to push vehicles that fill idle capacity, putting pressure on operations to become even more productive and tightening the vise with each cycle. The result: excessive use of discounts and other incentives that create large inventories and erode already small margins. IDC Manufacturing Insights Page 5

6 From Economy of Scale to Opportunities in Flexibility In the last decade automakers have been moving away from a single view based on economy of scale and implement more flexible production models to better fit changing market demand. This transition impacted assembly lines processes and forms the foundation of the future approach to assembly line manufacturing: Multiple Vehicles on a Single Assembly Line From Make-to-Stock (MTS) to Build-to-Order (BTO) World Car Distributed Assembly and CKD IDC Manufacturing Insights Page 6

7 Multiple Vehicles on a Single Assembly Line It is estimated that platform-based design can offer consumers same number of models while reducing the number of unique architectures by 50%. Platform-based design offer significant benefits throughout engineering and service. Assembly manufacturing benefits: Capacity utilization Lower Inventories Quality Capital and Operating Expenses Impact on Software IDC Manufacturing Insights estimates savings are summarized in Table 2. TABLE 2 Savings R&D 40% Engineering 25% Raw materials 20% Production: methods, tools, inventories 30% Logistics 20% Source: IDC Manufacturing Insights, 2010 IDC Manufacturing Insights Page 7

8 From Make-to-Stock (MTS) to Build-to-Order (BTO) The benefits of BTO for customer satisfaction and brand loyalty are clear. But they are not the only benefits: Reduction in inventories In some regions shorten the order-to-delivery-time Thus BTO proponents argue there is a potential 10% additional profit of the retail price of the vehicle. Savings of a BTO strategy introduction are estimated of $500-$1500 per vehicle [Goldmann Sachs 2000, Roland Berger 2000] Despite some obvious benefits, BTO is more common in Europe than North America and Japan, is still striving to find an acceptance worldwide. Leading automakers include BMW, Daimler, Renault and Fiat. BTO production will account for less than 20%. One important reason resides in the fact that BTO is a more appropriate manufacturing strategy for premium brands that generate profits through upselling customers a wide range of features and options. It is not an appropriate manufacturing strategy for OEMs selling high-volume or low cost vehicles with a limited range of options. Japanese manufacturers tend to eschew BTO and essentially make to stock, as they limit the number of customer specified features by offering vehicles that contain most features as standard IDC Manufacturing Insights Page 8

9 World Car The "World Car" concept demands high level of standardization and common components. All models are based on the same platform and share at least 60% of parts and offer only a limited set of consumer options, an approach that suits the consumer base in emerging economies. Manufacturing. Modular design reduces manufacturing complexity, as assembly line processes and organizational structures are identical homogeneous across multiple plants, leveraging common structures, operational processes, equipments and degree of automation. Modular design uses simpler work instructions and tools, and can be done efficiently with less automation than standard design. Process commonality allows benchmarking and sharing of best manufacturing practices between plants. Supply chain. Common parts and streamline global sourcing and logistics process that governs worldwide transactions among plants and between plants and suppliers. From a demand fulfillment side, some plants can be designed as swing plants, that have excess capacity and the flexibility to manufacture any country s variant. IDC Manufacturing Insights Page 9

10 Distributed Assembly and CKD Tata Motors has greatly extended the basis CKD strategy for their compact car Nano. The Nano s modular design allows distribution of complete CKD, which can be assembled by local assembly hubs and entrepreneurs located close to consumer. Tata took a CKD approach less for fiscal reasons, but more as a way to build distributed manufacturing facilities in India. Indian consumers are well familiar with this distributed assembly; in India, bicycle parts are sent to retail outlets in modular kits, and are assembled just-in-time based on the selection of product features made by the customer. Some challenges: Scalability of this model is questionable. Final assembly quality issues (primarily noise, vibration and harshness (NVH) issues that lead to squeak and rattle problems), although the customer expectations in emerging economies may be still sufficiently low. Safety standards in established markets. Although the Nano passed the European crash worthiness after only few relatively small modifications. IDC Manufacturing Insights Page 10

11 Future outlook China in 2050 China in 2015 Source: IBM BCS IDC Manufacturing Insights Page 11

12 Trends in Operations Management Product dynamics Trend towards mass configuration MTS MTO ATO/ETO Centralized Detailed Scheduling Local Manufacturing Execution Single Large Plant Multiple Outsourced Plants Global Multi-enterprise Orchestration Centralized Supply Chain Planning Trend towards multi-plant Multiple Small Plants proximate to demand Production dynamics IDC Manufacturing Insights Page 12

13 The Global Plant Floor approach Global Multi-enterprise Orchestration New New approach The Global Plant Floor The ability to harmonize, supervise and coordinate execution activities across company's and suppliers manufacturing operations. A unique virtual factory that consolidates the number of different manufacturing plants in terms of resources, processes, and products. IDC Manufacturing Insights Page 13

14 Factors Influencing the Global Plant Floor From Multi-national to Truly Global - The accepted practice of large global enterprises has been to establish regional management structures with presence in individual countries. This well-reasoned multi-national approach allowed companies to tailor products to local tastes, market in tune to cultural motivators, and build local relationships. Companies aren't necessarily abandoning the tailored multi-national approach, but are evolving it to allow more movement of knowledge about markets from country to country. A truly global approach still involves an appreciation for local needs, but allows for a harmonization of business practices, consumer taste, regulations and so forth. Modular Products/Modular Trade - Modular products have well defined components with established standards based interfaces. Similarly, supply chains can be composed of many available suppliers of standard components (modular) or a small circle of individual suppliers (integrated). Integral architectures will look upstream into supplier factories to create a global plant network that includes both the company's facilities and those of their suppliers. Modular architectures will create a network focused downstream on the specific customer requirements. Multiple suppliers will deliver standard components, but the global plant network will include bulk assembly and postponed final assembly and packaging in what used to be distribution warehouses, retail outlets, or logistics facilities. Intelligent Automation and Digital Manufacturing - Investment in intelligent automation of the factory is critical to the development of the global plant floor. These massively multimachine factory networks will be enabled by technology that provides for the acquisition and delivery of real time data as well as the ability to remotely control the equipment to initiate corrective action. IDC Manufacturing Insights Page 14

15 The Global Plant Floor approach in the automotive industry Global coordination Companies will operate a network of production facilities that blend into a single virtual plant, with an ability to manage the network, yet allow for local variances in the assembly process that are required because of different levels of automation, products and regulations. They will have full visibility to assembly line performance, and quality and traceability of data, analyze differences and identify best practices that should be applied across different lines and plants. There will be real-time diagnosis/prognosis capability to identify potential issues and rapidly assess the impact on the business. Each assembly line in the global plant floor will report the status of processes in real time. Design for Capabilities The global plant floor is not a network of identically equipped and provisioned plants. The network will include existing plants with exiting assembly lines and often old automation systems. Moreover, plants in different regions may have a different mix of automated and manual assembly processes. Consequently, new vehicles will have to be designed to fit the capabilities of the appropriate plant network, as well as the optimum manufacturing and distribution strategy. Design for capabilities, combined with planning for capacity and accurate demand forecasting will allow OEMs higher degree of production planning and level balancing than today's practice of model by model and plant by plant. IDC Manufacturing Insights Page 15

16 Design for Capabilities Duration Resources Capacity Duration Resources Conventional Capabilities Based Network Capabilities & Capacity: Tools Labor Materials For example, the design and manufacturing process of a mass-market car to be sold and therefore manufactured in an emerging economy may be optimized for a manufacturing plant with less automation and more manual processes. Moreover, vehicles may be assembled in joint venture operations with other OEMs, and often in knock down form. Conversely, low volume products for niche markets and manufactured in a developed economy must rely on automation. IDC Manufacturing Insights Page 16

17 Existing Applications Don't Support the Need for the Global Plant Floor Specialty Applications Business Alignment Multiple Instance ERP Single Instance ERP IT Efficiency IDC Manufacturing Insights Page 17

18 A Modern Operations Management Platform is Needed A separate enterprise wide A operational separate enterprise platform that wide is as operational important as platform the corporate that is as financial important ERP platform as the corporate financial ERP platform Business Alignment Specialty Applications Multiple Instance ERP IT Efficiency Operations Management Platform Single Instance ERP Supporting a customer Supporting driven approach a customer to driven operations approach to operations management in management globally integrated in globally organizations integrated dictates organizations an evolution dictates and an elevation evolution of and the elevation applications of the deployed applications to support operational deployed to processes support operational processes IDC Manufacturing Insights Page 18

19 The Fulfilment Execution System (FES) The focus on customer fulfillment is driving the convergence of manufacturing and supply chain execution IT investments with order management investments into a single system that we call Fulfillment Execution System (FES). FES provides manufacturing companies a singular, closed-loop management of inbound material, production capacity, and outbound order fulfillment all calibrated as close as possible to actual customer demand. The ability to identify a problem, isolate the root causes, understand the state of an execution processes and enable corrective actions as quickly as possible is what will distinguish a successful FES implementation. IDC Manufacturing Insights Page 19

20 The Fulfilment Execution System (FES) Collaboratio n Decision Management Analytic Integration Workflow Management Transaction Integration Data Management Control A successful FES provides consistent processes, informed people, and open lines of communication FES connects data gathered from plant floor devices and multiple business applications to corporate level through decisions support tools by creating visibility and intelligence on operational data in the context of business process workflows Essential to this view is the ability to integrate IT systems and associate real-time operational data into the context of business processes. IDC Manufacturing Insights Page 20

21 Key Initiatives, Top to Bottom Governance and Execution Optimization Complexity Reduction and Standardization Digital Manufacturing Plant Floor, MES and FES (Fulfillment Execution Systems) Wireless and Cloud computing IDC Manufacturing Insights Page 21

22 Actions to Consider Overall manufacturing strategy should shift from economy of scale to economy of scope, focusing on global flexible manufacturing capabilities. A "design anywhere, make anywhere, sell anywhere" strategy will lead to the formation of a global plant floor. Successful manufacturers will combine design for capability with planning for capacity and accurate demand forecasting, allowing them higher degree of production planning and level-balancing. Manufacturers will have to undertake complexity reduction efforts and achieve higher level of standardization in product structures and the corresponding data models and IT systems. Manufacturers will need to invest in improving visibility into plant floor operation, and tools to enhance coordination, analytics and planning capabilities. Emerging IT technologies and operating models, especially in pervasive communication, cloud-based architectures, and mobile devices will provide a solid foundation for these efforts. IDC Manufacturing Insights Page 22

23 Thank You! Questions? Pierfrancesco Manenti EMEA Research Director, IDC Manufacturing Insights Please contact me on site for a copy of this presentation IDC Manufacturing Insights Page 23