Manufacturing velocity: Position automotive manufacturing to keep pace
Inside Machines: Automakers need to gain speed in operations to remain competitive in global markets. Infrastructure, information visibility, and workforce productivity can help.
There’s no slowing down in the automotive industry. A customer base with a range of differing priorities for new-vehicle purchases—including safety, fuel efficiency, performance, design, and options—means vehicles are being produced in more variations than ever before while undergoing more frequent design refreshes. This is in addition to meeting the latest fuel-efficiency regulations, serving emerging global markets, and tightening profit margins.
Correspondingly, most manufacturers have transitioned from traditional one-vehicle, one-plant production models to producing multiple vehicles—in multiple variations—at one location. Delivering this flexible manufacturing capability while reducing downtime and maximizing output is a critical challenge. But manufacturers can meet this challenge and increase production by improving their manufacturing velocity.
Manufacturing velocity strategies incorporate three key components: infrastructure, information visibility, and workforce productivity. By addressing manufacturing velocity, automakers can respond to customer demands around the world more quickly and get to market faster without hurting the bottom line. Increasing manufacturing velocity can better respond to current and future global challenges.
Moving along faster
Automotive manufacturing has come a long way in the 100 years since Henry Ford launched the assembly line, cutting production time of the Ford Model T from 12 hours to six. The goal, however, essentially remains the same today: operate more efficiently and get products to market faster. Only today, vehicle variety is infinitely greater and constantly evolving, and the “market” reaches beyond several states, to several continents.
In talking to WardsAuto, Chrysler Chairman and CEO Sergio Marchionne summed up his company’s flexible-manufacturing ambitions: “Where we’d like to be is to have groups of plants that can produce multiple vehicles that are designed with the same architecture, but can serve multiple platforms.”
Profits, efficiency, competition
Having emerged from a global recession that saw some of the world's largest automakers nearly collapse due to withering sales, the auto industry is by and large back in the black. According to IHS Automotive, more than 80 million light vehicles were produced across the globe in 2012. That marked the first time production ever exceeded 80 million.
While the fortunes of automakers have greatly improved, the road forward will still have its bumps. Some of the greatest challenges include:
- Continued pressure to remain profitable
- Meeting increasingly stringent fuel-efficiency requirements
- Expanding operations into new markets
- Delivering products that satisfy a consumer base with an ever-increasing range of demands.
Profitability: The world's largest auto manufacturers annually produce about 3 million to more than 10 million cars in global operations. Such a high level of output means hundreds of vehicles are driving off production lines around the globe every minute. Combine this with the fixed profits attached to every vehicle and that puts a tremendous amount of pressure on plant managers to ensure downtime is kept to a minimum and productivity remains high.
Improved fuel economy: High fuel prices and ever-increasing fuel-efficiency standards are forcing automakers to deliver better-performing vehicles, hybrid and electric alternatives, and diesel-based vehicles. Additionally, as gas prices fluctuate, so does consumer demand. Operations must be flexible enough to quickly react to these fluid changes in demand.
Consumer demand: Demand goes deeper than the price of fuel. As cars become more advanced, better connected, and in general “smarter,” consumers want the latest features and styles. Vehicle models that once endured years with minimal changes now undergo regular refreshes. The term “early adopter” doesn't only apply to those who want the latest smartphones or high-definition TVs—it's just as applicable to the consumers who also want the most-current vehicle models with the latest technologies.
New markets: The significance of the global market can be seen in the industry's shifting production numbers, particularly in emerging markets. According to projections from IHS Automotive for 2012 to 2020, light-vehicle production will:
- Increase about 50% in South America
- Significantly increase in China, from about 18 million vehicles in 2012 to more than 30 million in 2020, and jump from about 8 million to more than 13 million in South Asia
- North America and Western Europe will see 10% to 20% increases in production, with most growth coming from Eastern Europe.
The upward shifts in new markets are thanks in large part to emerging middle classes that want the same safe, technologically advanced and fuel-efficient cars that consumers in first-world countries are driving.
Fast lane of production
Feeling the pressure to launch faster, refresh more often, and change options on a much more regular basis, automotive manufacturers are tasked with being able to getting the speed needed to ensure all those changes can happen regularly and with ease. However, vehicle design changes can't simply be “thrown over the wall,” from the design center to the manufacturing floor.
Vehicle refreshes, whether midyear or every other year, have impacts on the people, processes, and machinery in operations. Vehicle design changes—whether an added small crease in the back of a car, new taillights, or a new phone dock—can be relatively small with minimal impacts on overall equipment. But they can require tooling changes, supplier revisions, station changes, and other areas.
It’s necessary to find ways to sequence all of these things into existing plants while negating or minimizing the complexity that’s driven into operations.
That means initiating manufacturing velocity strategies and solutions that enable delivering the right products, at the right time, and with the right quality. Manufacturing velocity encompasses three main components:
- Having the right infrastructure in place
- Producing information in the right form factor, for the right people and at the right time
- Employing a highly skilled, multi-talented workforce.
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