The ‘hidden factories’ costing carmakers £500k per day per programme.

Why automotive supply chain PLM integration must be effectively managed, and how to do it.

The automotive industry – despite significant productivity improvements in recent decades – must overcome the avoidable inefficiencies of the dreaded ‘hidden factory’. With complex logistics and demanding vehicle release schedules, this phenomenon’s invisible inefficiencies can incur unnecessary costs of up to £500k per day per vehicle programme. This can and should be avoided with effective management of supply chain PLM (Product Lifecycle Management) tool and process integration & collaboration. Compliant and efficient supply chain PLM integration management (and resulting eradication of the supply chain’s ‘hidden factory’) is important because of the complexity of automotive manufacturing. The ‘hidden factory’ is a wasteful phenomenon encompassing invisible inefficiencies such as non-compliant processes and duplication of effort. Automotive OEMs run multiple programmes at any one time and when one programme is completed (vehicle launched to market), the next one starts immediately to ensure that mid-cycle refreshes and new product release dates are met. With multiple vehicle variants and customised vehicles rolling off the same production lines (which are typically supplied by ‘just in time delivery’), supply chain PLM integration must be effectively managed to keep programmes on target.

Key reasons for mismanagement: 

• Incorrect or inappropriate tools & processes 
• Requirements not clearly defined 
• Timing plans outdated 
• Communications not integrated 
• Insufficient & outdated data 

Best practices to avoid supply chain PLM mismanagement:

 To mitigate the risks of Supply Chain integration mismanagement in the automotive industry, you should ensure that you have a robust Statement of Work in place, in addition to your Terms and Conditions, along with access to the relevant knowledge via experienced people and supporting documentation. This clear definition of requirements will allow suppliers to plan their resource accordingly to work and submit CAD designs aligned to key programme milestones and also plan their own manufacturing processes so that prototype & production parts can be produced and delivered on time at the factories.Programme plans aligned to the traditional systems engineering V-Model of automotive product development are often complex, involving several project delivery methodologies such as Waterfall, Agile, Kanban, Lean, Six Sigma, etc. Timing is critical, so lessons learned from previous programmes should be incorporated into new programme plans to ensure that they are realistic and achievable to avoid unnecessary delays. Factor in external forces that can impact your timing plan, such as supply chain delays (e.g., semi-conductor shortages) or poor sales which will impact your business cash flow and therefore ability to fund new projects.Limit your methods of communication to a single source so that the correct contacts can be targeted as & when required and to avoid mixed messaging from different business functions which would result in delays. Ensuring that all departments have visibility into communications with suppliers ensures that all parties stay aligned to the same delivery dates.Finally, ensure that your Supply Chain data is organised and maintained in a system that allows for collaborative management and therefore the data always remains ‘live’. A dedicated system or platform will help to reduce the administration burden and allow for process workflows, automation, tracking, live reporting, etc., against set timescales and allowing for resource to be focused on more value-add projects & delivery.Mismanagement of Supply Chain PLM integration inevitably leads to delays, which can cost an average programme, in time paid alone to all people working on it, in the region of £500k per day and lead to a late launch of the product. Recurring daily delays then typically run into 2-6 weeks' worth of delays to a vehicle programme which can then range from £5-15m in additional resource costs alone.Ensuring that you correctly manage your Supply Chain PLM integration can avoid unnecessary delays and costs, and deliver an efficiency boost.In summary, the key learnings for making strategic & successful real time, data driven, informed business decisions about your Supply Chain PLM Integration:In summary, the key learnings for making strategic & successful real time, data driven, informed business decisions about your Supply Chain PLM Integration: 

• Robust Statement of Work in addition to Terms & Conditions 
• Access to Knowledge, including dedicated & experienced people and relevant documentation 

• Realistic and Achievable Project Timing Plans 
• One focused and aligned method of communication 
• Live Data managed in a dedicated collaborative platform

Written by Antony Byrne, Account Manager, Majenta Solutions Antony has 9 years of experience working with automotive manufacturing, and has seen first-hand the evolution of the industry’s supply chain management. He is a keen proponent of replacing wasteful ad hoc work with systemised processes, and believes that further positive transformation lies ahead for forward thinking carmakers.