world class manufacturing - integrating the automotive supply chain professor andrew graves 42 nd...
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World Class Manufacturing -World Class Manufacturing -Integrating the Automotive Supply ChainIntegrating the Automotive Supply Chain
Professor Andrew Graves42nd ACMA Annual Session& National Conference2nd September 2002
• Centred at MIT - International Research Network
100 researchers, 30 universities, 6 continents100 researchers, 30 universities, 6 continents European H.Q. – University of Bath, UKEuropean H.Q. – University of Bath, UK
• Comprehensive, Systematic View of the Industry• Data Driven /Analysis Oriented, Comparative Research• Programme Activities:
Comparative Research - Industry BenchmarkingComparative Research - Industry Benchmarking Policy Analysis - Corporate StrategyPolicy Analysis - Corporate Strategy Close Interaction with Industry,Government & LabourClose Interaction with Industry,Government & Labour
• Broad-based Global Sponsorship
OverviewOverview - - International Motor Vehicle ProgrammeInternational Motor Vehicle Programme
EUROPEEUROPE
• Government & Industry / NAAMSA
• Sloan Foundation (US)• Canadian Fed. & State Govern’ts• US Dept. of Commerce
• Chrysler• Ford• GM• Honda• Nissan• Toyota• Leading Suppliers (US & Mexico)
• BMW• Fiat• Ford• Honda• Mercedes-Benz• Nedcar• Nissan• Renault• Toyota• Volvo• Volkswagen
• Unipart• GKN• Lucas• Johnson Matthey• T & N
• Auto companies (JAMA)
• Auto suppliers (JAPIA)
• Auto companies• Government• FAPM - Suppliers
• KAMA - Auto companies
• Argentina & Brazil
JAPANJAPAN
AUSTRALIAAUSTRALIA
KOREAKOREA
SOUTH SOUTH AFRICAAFRICA
SOUTH AMERICA SOUTH AMERICA
MAJOR IMVP PARTICIPANTSMAJOR IMVP PARTICIPANTS
• EC (DG III)• DTI (Automotive Directorate)• CLEPA (Suppliers))
• Goldman Sachs-------------------------
-------------------------
NORTH AMERICANORTH AMERICA
IMVP research is being conducted in 6 main areas
Manufacturing Practice
Research and Development
Supply Systems
Environment and Mobility (IVHS)
Distribution Systems and Markets
Strategy and Policy
Cross-Industry Benchmarking
INDUSTRY CLOCKSPEED
FRUITFLIES
INFO. SYSTEMS CHIPS AUTOS AERO
GEOLOGY
CIVILS
Professor C. Fine, MIT
THE AUTO INDUSTRY IS IN THE MIDDLE OF A REVOLUTION
FROM MASS TO LEAN PRODUCTION
MASS
Some Western
Assemblers
Traditional
Suppliers
LEARNING
Many Western
Assemblers
Transplant
Suppliers
LEAN
Japanese
Japanese
Suppliers
Traditional mass producers will have tobecome lean to survive
LEAN PRODUCTION IS DRIVEN BY A SIMPLE PRINCIPLE:
Eliminate all costs which do not add value to a product or process
LEAN PHILOSOPHY
What are the benefits of lean ?
Reduced CostsReduced Costs Improved QualityImproved Quality Reduced Cycle TimeReduced Cycle Time
1317
26
1921
25
19
25
31
23
35
58
23
35
56
26
41
79
0
10
20
30
40
50
60
70
80
90
100
Pro
ducti
vit
y
(hours
/V
ehic
le)
J / J J / NA US/ NA US&J / E E/ E NIC
Parent Location/ Plant Location
Best
Weighted Average
Worst
ASSEMBLY PLANT PRODUCTIVITY - 1989
12
16
24
13
1821
14
22
31
15
24
34
20
29
37
20
29
38
50
87
210
29
34
45
2728
33
0
10
20
30
40
50
60
70
80
90
100
Hours
per
veh
icle
J / J J / NA US/ NA US & J / E E/ E NIC SA AUS KOR
Plant Location
Best
Average
Worst
ASSEMBLY PLANT PRODUCTIVITY - 1994
Lean vs. Mass Benchmarking
ASSEMBLY PLANTASSEMBLY PLANT
MassMass LeanLean
Direct Hours/Car 25 11
Defects/100 cars 200 75
Hours stock 32 3
Repair Area 14% 4%
% Employees in Teams 1% 70%
Hours Training/Year 173 380
SUPPLIER PLANTSUPPLIER PLANT
MassMassLeanLean
‘000 Units/Head 5.0 0.9
% Defects 2.5% 0.025%
Batch Size 287 125
Set up time in mins. 44 3
Stock turns/year 32 94
% Employees in Teams 54% 80%
EXPLAINING THE MANUFACTURING GAP
Plant Scale Build Complexity Level of Automation Management Policies Product Design for Manufacture
5 POSSIBLE FACTORS:5 POSSIBLE FACTORS:
PARTSSUPPLIER
PARTSSUPPLIER
PARTSSUPPLIER
TOOLINGSUPPLIER
FINAL ASSEMBLY IS THE “MOMENTOF TRUTH” FOR THE ENTIRE PROCESS
IT GETS DISPERSED OVER THE SUPPLY WEB
HUNDREDS OR THOUSANDS OF MILES AND THREE TO TEN YEARS
TOOLINGSUPPLIER
ASSEMBLYSUPPLIER
ASSEMBLERASSEMBLERDESIGNERDESIGNER
A PRODUCT DESIGNA PRODUCT DESIGNSTARTS OUT FROM ONE POINTSTARTS OUT FROM ONE POINT
Make-Buy Complexity:Make-Buy Complexity:Product Development on a Supply WebProduct Development on a Supply Web
Whitney, et al, “Agile Pathfinders in the Aircraft & Automobile Industries - A Progress Report”
FABRICATIO
N TOOLS
SPECIFICATIO
NS
ASSEMBLY TOOLS
DESIGNS
DESIGN P
ARTS
ASSEMBLIESDESIGNS
PA
RT
S
SPECIFIC
ATIONS
ASSEMBLYSUPPLIER
WHO HAS THE POWER IN THE CHAIN ?
Make Buy Strategy
Customers
IBM
INTEL
MICROSOFT
ASSESSING AND FORECASTING WHICH STAGES OF THESUPPLY CHAIN WILL BE HIGH-PROFIT, HIGH LEVERAGE
© Prof. C Fine, MIT
Issues for Industrial Competitiveness
• Identify world’s best practice
• Benchmark your performance against the best
• Don’t imitate competitors, but develop leaner and more focused strategies
• Focus upon managing the whole system - not parts of it
• Bring together individuals with knowledge and control
• Eliminate ‘frozen layer’ of management
• Re-assess Training & Education
CONCLUSIONS
WESTERN VMs AND SUPPLIERS CLOSED GAP
WITH JAPANESE
KEY DRIVER – LEAN MANUFACTURING
TECHNIQUES
POWER SHIFT FROM VMs TO MEGA-SUPPLIERS
BUT – STILL POOR PROFITABILITY
WHAT IS NEXT BEST PRACTICE ?
Build to OrderBuild to Order
The Three Day CarThe Three Day Car
Build to OrderBuild to Order
The Three Day CarThe Three Day Car
3DayCar objective3DayCar objective
“ To develop an organisational and process framework within which a customer’s need for a vehicle can be fulfilled in three days, from order placement through manufacture and delivery.”
The research teamThe research team
• International Car Distribution ProgrammeInternational Car Distribution Programme Marketing & Finance
• Cardiff Business School, Lean Enterprise CentreCardiff Business School, Lean Enterprise Centre Systems & Organisation
• School of Management, University of BathSchool of Management, University of Bath Environment & Technology
–
3 member / 14 person consortium
SponsorsSponsorsEPSRC: Engineering & Physical Science Research CouncilVM’s: Ford, Honda, Nissan, Peugeot, Vauxhall, VW
Suppliers: GKN, Thyssen Krupp Automotive, TI Group (Bundy), MTTA
Logistics / Axial, Institute of logistics & transportdistribution: Wallenius Wilhelmsen
Retail / Inchcape, Lancaster, NFDA, Dealers: Pendragon, Quicks
IT: BEA Systems, Cap Gemini, Keane
Finance: Goldman Sachs
Government: DTI
The issueThe issue
• ‘Shop-Floor Myopia’ - Manufacturers (‘VMs’) have spent last 15 years optimising the plant
• IMVP assembly plant and enterprise benchmarking suggests Europe and US now matching Japan
• But at detriment to whole order fulfilment chain (Japanese amongst the least flexible)
• Identify the scope for new entrants in a ‘3 day’ market
• Examine the environmental & resource impact of a large scale move to ‘3 day’ cars
The issueThe issueSubstantial savings could berealised if VMs moved from ‘stock-push’ to ‘build-to-order’
– Flexible production– Integrated players– Modularisation and alternative body-
structures– Order amendment– Open order pipeline– Demand segmentation, distribution centres
1st tier
OrderOrder schedulingscheduling
ProgrammeProgramme PlanningPlanning
DealerDealerNSCNSC
Customer
2nd tier
Raw Mat. PR
ES
S
WE
LD
PA
INT
AS
SE
M
TE
ST
DealerDealerD.C.D.C.
SequencingSequencing
Information flow
Physical flow
Basic order fulfilment systemBasic order fulfilment system
PurchasePurchase
1st tier
Prod.
controlProg’ing DealerNSC
Customer
2nd tier
Raw Mat. PR
ES
S
WE
LD
PA
INT
AS
SE
M
TE
ST
DealerD.C.
Purchase
3 Day Car probably demands 3 Day Car probably demands significant changes to systemsignificant changes to system
•Volume•Time
•Discount•Push•Stock
•Paint•Batching•C’straint
•Dealer & market allocation•Push
•Batching•Push•Trading
•Instability•Forrester•Batching
•Fluctuations•Wrong stock•Temporary•Batching, quality, labour,
shutdown, volume, IT
•Long PDI, t/o customer loss
Generic Model - Av. TimesGeneric Model - Av. Times
• Order entry Dealer-Manufacturer 3.8 days• Order bank 9.8
days• Scheduled orders 14.1 days• Sequenced orders held 6.0 days• Physical production FFD-EOL 1.4 days• Loading at factory 0.9 days• Distribution to dealer 3.8 days
‘ ‘ 39.8 Day Car ’ Capability39.8 Day Car ’ Capability
• Theoretical current best practice OTD leadtime: 11 days
• Average OTD leadtime (Europe):
40 days
• 40 to 50 days stock held in the system
Clearly, we currently cannot build the 3DayCar !
SummarySummary
Current problemsCurrent problems
Vehicle Complexity - internal, ext. variety
Tooling costs - single piece flow v EOS
Capacity constraints - vm’s & suppliers
Schedule / build unreliability - paint
Visibility - IT legacy, lack of standards...
3DayCar requirements3DayCar requirements
Real-time information flow: ‘responsiveness’
Total visibility across supply chain
– Systems integration – Compatibility of bespoke EDI systems
Feedback and demand management– Checking capability and delivery, as promised
Selective disclosure of information
Minimum cost
– Implementation / installation– Training & maintenance
Reliability, ‘Scaleability’, Flexibility
From..
To..
Tier
1
Tier
2
Tier
3
Batch processing
Bespoke EDI
Transactions
Web-based
Tier 2Tier 1 Tier 3
Order pipelineOrder pipeline
ResponsivenessResponsiveness
ANX, ENX, WebEDI..
3Daycar 3Daycar extranetextranet
Tier 2
Tier 1
Tier 3 Tier 2
XM
LX
ML
>Order bank
>Plant capacity
>Supplier capacity
>Parts inventory
>Logistics capacity
>Assembly sequence
SummarySummary THERE WILL NOT BE A DEFINITIVE THERE WILL NOT BE A DEFINITIVE
3DAYCAR I.T . SYSTEM MODEL !3DAYCAR I.T . SYSTEM MODEL !
• Solutions are dependent on existing infrastructure and individual choices by VMs and suppliers:
– Total communication package: Covisint
– Independent: Volkswagen, Supply On.. (Bosch)
• Moving from rigid assumption based to permission based systems requires long term strategy
• Information systems critical to all BTO scenarios– Initially: functions merged and number of systems reduced– Ultimately: aim for real-time information exchange online
between all key players to allow the system to act as an optimised whole
Future Production Future Production TechnologyTechnology
‘Solving the bottlenecks to flexible production’
Supplier OpportunitiesSupplier Opportunities
Alternative Paint StrategiesAlternative Paint Strategies
1. Painted Body Stores
• De-couple paint
2. New Painting Systems
• Batch size of one & no solvent emissions
3. Alternative body construction
• Thermoplastic in-mould coloured panels
Agile Paint systemAgile Paint system
New painting technology imminent:
- Batch sizes of one & no purging with solvent
- No paint pre-mixing
Overcomes batch problem..but
- Reliability
- Assembly line constraints:
3DayCar proposal to increase
manning to remove constraints
PBS only necessary for unreliability
Dynamic Body Dynamic Body constructionconstruction
1 Frame part-assembled
2 Order tagged to vehicle
Body Paint Assembly
Current order leadtime v potential:
3 Build completed toorder using modules
De-coupling / flexibility..
Future solutionsFuture solutions
Alternative body structures / materials:
Independent Body & Panels (IBP),
composites
New assembly strategies: Micro Factory
Retailing (MFR) - building close to customer
New product strategies: ‘Plug and play’,
‘mix and match’, ‘lifecycle’
Communication / trading portals: Direct
links between marketing, supply, logistics and
product development.
ConclusionConclusion
Many VM’s now focusing on BTO:Renault - Nissan, BMW, Ford
Current ‘push’ system chronically inefficient - encourages overproduction, massive stock levels, fails to satisfy customers, and requires discounting
Need to focus on:1. Real customer demand, rather than the assembly plant2. Supply Chain Integration
Build to Order is inevitable - it will impact everyplayer – from dealer to supplier to manufacturer