Driving Innovation for Automotive Suppliers
The Automotive Supply Chain
When it comes to Automotive & Heavy Equipment Manufacturing, explaining the supply chain can get complicated. At the top, we have the manufacturers. Called OEMs, or Original Equipment Manufacturers, they are the big-name industry titans who deliver the automobiles that we buy to the marketplace. The name can be misleading, however, because although OEMs do produce some equipment, they tend to focus on designing cars and assembling final products, not producing parts. But because the average car is comprised of 30,000 parts, sourcing those is a colossal task in it of itself.
This is where suppliers come in to play. The automotive supply chain can be segmented into Tier 1, Tier 2 and Tier 3 suppliers. Tier 3 form the foundation, supplying raw materials, such as metals and plastic, needed by Tier 2 and Tier 1 suppliers. Tier 2 suppliers buy raw materials from Tier 3 and use them to produce parts needed by Tier 1. Tier 2 suppliers are often experts in their domain, but because they also serve non-automotive customers, they do not have the ability or desire to produce automotive-grade parts.
Tier 1 suppliers are the top dogs. They manufacture and supply automotive-grade parts and systems directly to the OEMs. They have built their businesses on long-term relationships with these OEMs, with whom they often jointly set cost targets and share product developments.
New Dynamics Driving Innovation
The landscape of the automotive industry is changing. The growing demand for configure-to-order, advancements in technology and the introduction of electric vehicles have shifted the dynamics. OEMs must show innovation in their products and processes, or get left behind. This, in turn, has put pressure on their Tier 1 suppliers to do the same.
OEMs need suppliers who will implement solutions to help speed up their new product introductions, lower their operational costs and improve their profit margins. OEM purchasing managers now face a choice: should they continue to work with the same Tier 1 suppliers in hopes that their vendors deliver on the new demands, or should they find new Tier 1 suppliers that can innovate? The question is: how will you, as a supplier, show innovation?
Innovation for New Production Ramp-Up
Let’s look at a few challenges suppliers face today. The first challenge has to do with new product introductions (NPIs), which, thanks to a consumer market looking for customized products with the latest gadgets and gizmos, are becoming commonplace requests from OEMs to Tier 1. On top of that, OEMs want new products delivered quickly and manufactured at the lowest possible cost. But when setting up a new production line, inefficiencies at ramp-up are a given. Or are they?
Once upon a time, you had no choice but to work with your experience in order to build out a new line to produce the product. You built the line, you ran production, you saw the problems, then you fixed them if you could. Not surprisingly, this "trial and error" approach almost always ended up being time-consuming and risky for the business' bottom line in the long run.
Enter the Digital Twin. “The Sims” for manufacturing. Simulation modeling is becoming the industry standard when commissioning new products and production lines, because it enables you to study, test and optimize their behavior in a risk-free virtual environment. Today's Tier 1 suppliers can create a complete 3D model of their "to be" line and product, test different scenarios, eliminate inefficiencies and use intelligent algorithms to optimize processes and layouts before anything is actually implemented on the factory floor. As a result, they minimize risks and bottlenecks ahead of ramp-up, and they maximize productivity.
Let’s take that one step further. During the bidding process for a new contract, your Digital Twin can give you the upper hand. You can sit the OEM stake-holders down and show them your optimized model. You can run a “what if” simulation of their new product being produced on your new production line, providing verifiable statistics for throughput, operational costs and expected results. You can prove that you are the right supplier for them, reassuring them that your optimized manufacturing capabilities will deliver the best product, at the lowest costs and with the greatest margins.
Innovation on the Manufacturing Floor
Here’s another challenge: being first-to-market. To deliver a high-quality product ahead of the competition, you must be efficient and react to changes on the factory floor quickly and in the right way. Your production line might be producing the product, but if your OEM is changing the master sequence and introducing changeovers constantly, that could become a major disruptor to productivity. How can you handle all the moving parts in production effectively? How can you manage variations and changes without disrupting operations or margins?
They say change is the only constant in life. And in the automotive industry, to be best-in-class, you must conquer and control the 5 “Ms” of manufacturing:
- Man: How do you manage, monitor and support your people and their activities in production?
- Machine: How do you manage, monitor and control your equipment on the production floor?
- Method: How do you manage, monitor and control your production processes in real time?
- Measurement: How do you manage, monitor and control your product and process quality in production?
- Material: How do you manage, monitor and control the integrity and traceability of your materials in production?
You need to know exactly what’s happening on the production floor at all times. And with OEMs increasingly looking for more cost-efficient processes from their suppliers, like asking for integrations with In-Line Vehicle Sequencing (ILVS), Inventory Part Labeling (IPL) and Automated Line Control (ALC) solutions, you need to have the right Manufacturing Execution System (MES) in place.
MES solutions drive flexible, smart manufacturing. In addition to monitoring and synchronizing the 5 “Ms” for all work-in-progress on your factory floor, an MES will ensure collection of all necessary production and quality data, and give you real-time visibility and control over all your manufacturing activities and resources. MES can automatically register changes coming from ERP, procurement or planning, adapting and adjusting production order sequences in the most cost-efficient way for your customers and business. MES can also report inventory and order statuses back to the OEM in real time, giving all stakeholders access to the information they need.
So, why not let an MES take care of the multi-tasking and execution tasks on the factory floor, so you can dedicate your manpower to more value-add innovation? When the 5 points of control are in place, both your customer service levels and your margins are maximized. What a deal.
What's At Stake?
In the last year, the challenges faced by the automotive supply chain have become heavier than ever before. As Original Equipment Manufacturers are feeling the effects of the economic downturn caused by the pandemic, they are already making moves to reduce production and cut staff. As a result, they are applying pressure on their Tier 1 suppliers to invest in next generation technologies in order to lower costs and maximize margins. Industry 4.0 solutions, like Simulation, AI and MES, can enable process transformation and drive innovation, so that automotive suppliers can meet these demands successfully and without fear. We believe that innovation separates the leaders from the laggards, and our team of Industries eXcellence experts understand the laws that govern automotive production. We can help guide your journey.
