In the automotive industry, new-vehicle program launches provide some of the largest-scale collaborations in the industrial sector. Supply management professionals often cite learnings of where they and their teams combined resources to accomplish the impossible.
Such investments lead to intensified pressure to get it right. With the billions of dollars original equipment manufacturers (OEMs) and suppliers have invested in manufacturing technology — software, automation and robotics — supply management seems to be waiting for its opportunity to join the Industry 4.0 revolution. New technology investments in the supply chain can dramatically improve the speed and business outcomes of new program launches.
Digital Launch Journey
Today, as parts, modules and vehicles are engineered in product life-cycle management (PLM) software systems, most of the critical program-launch commercial data remains offline. Many OEMs and suppliers track data up to production launch — task lists, supplier interactions, tooling-build statuses and prototype-delivery dates — on manual spreadsheets. This can result in untimely and poor decision-making, which can result in timing delays, rework waste and cost overruns.
The manual spreadsheet process has led to a common industry program launch term — the “mountain man chart” — that forecasts the number of additional internal and external employee resources required to support spikes in launch workload. With historical industry profit margins between 6 percent to 8 percent on average, the productivity gains by digitizing manual launch processes present opportunities to unlock substantial cost savings.
“The first, and perhaps the most important step, is to assess where your company is today: What systems do you currently have in place around your people, processes and assets?” says Catherine Rae, principle of Livonia, Michigan-based engineering and ergonomics services firm Sandalwood.
OEMs and suppliers alike are finding success by viewing new software technologies as simply tools to do a job. To accelerate digital transformation, a growing number of leaders are turning to partners. Expert resources are not only deploying software and training teams but are (1) supporting teams in assessing their current state and (2) co-creating plans to realize business outcomes.
“One of the biggest errors companies make when undertaking their digital transformation journey is not properly assessing their current state and mapping out their desired future state,” Rae says. “This can lead to multiple false starts and a lot of wasted time, effort and money.”
The below chart highlights an Industry 4.0 supply chain digitization journey framework that combines cloud software with internal and/or external change agent teams to deliver business outcome solutions. This simple approach can prove powerful to realizing quicker and more lasting new-program launch results. Once institutionalized collaborative software-productivity tools can empower sustainable-launch competitive advantage through lower cost, time and risk.
Industry 4.0 Supply Chain Digitization Journey Framework
Forming the Right Goals
At first glance the magnitude of Industry 4.0 jargon — from big data to artificial intelligence (AI) — can seem overwhelming. A lean-systems mindset offers a helpful lens to view a digital journey. Organizations can gain clarity by approaching digitization goals as they do continuous-improvement initiatives.
This does not mean settling for incremental productivity improvements of 3 percent to 5 percent year over year. In fact, the opposite is true, as many manufacturers are realizing up to 20-percent improvement in productivity by digitizing their new-program launch activities with collaborative software productivity tools like automated plan for every part (PFEP).
When deciding to scrap spreadsheets, it is important to set clear organizational goals based on historical results. This will establish a current state baseline from which to improve upon. For example, let’s say launching an all-new assembly requires 30 full-time equivalents, 78 weeks and US$10.3 million in investment, with program KPIs reviewed once a week. The goal could be to optimize people productivity by 10 percent, the program timeline by 15 percent and investment by 10 percent for the next launch.
Utilizing the new digital tools, identify three to five KPIs to improve on during the next launch. Focusing on the most manual labor-intensive processes within the program launch process will ensure maximization of early productivity gains.
“Ask how many fingers and systems have touched the data that went into the graph you are reviewing and how far back are you looking in the rear-view mirror,” says Gary Schkade, president of Northville, Michigan-based AMBE Engineering LLC.
Identify spreadsheet templates and duplicated data during a new program launch. Mapping the data flows and then quantifying and ranking the potential productivity gains can help build digitization momentum.
Automating Data to Accelerate Results
As the industry shifts from automotive to mobility with compressed launch timelines, real-time tracking of program KPIs, tasks and statuses across an enterprise and from suppliers are imperative. Supply management organizations need to enable an end-to-end “digital twin” of the physical products they bring to market. Once consolidated and digitized, data can be connected to existing systems utilizing application programming interfaces (APIs) to free up the team to act on information.
“Launch success is all about efficiently and effectively gathering transparent and real-time data at a granular level and accessing it as knowledge that drives action,” says Schkade.
During product development, all departments should utilize the same commercial bill of material data set on a common software platform such as automated PFEP. Having engineering, purchasing, manufacturing, materials and logistics tracking their own siloed data is costly, repetitive and slow. Once data is digitized and uploaded onto a common software platform, teams are empowered to easily maintain and accelerate new program launches.
Intelligence for Business-Enhancing Insights
I have heard countless new program launch tales involving teams working backbreaking hours to deliver a program on time. Leaders must empower teams to work smarter, using the new digital tools available now. By better balancing workloads, such tools enable teams to get more flow. The proper game plan, preparations and team buy-in can enable a swift transition from slow manual spreadsheets to real-time collaborative software.
Launch stakes are being raised. The growing adoption of electric autonomous vehicles will reduce both production volumes and vehicle parts. Current headwinds present a rare opportunity for leaders to accelerate their digital transformation journeys. As with the continuous improvement results realized in manufacturing, this same logic can be applied to mine digital big data for fresh new insights to improve company agility and profitability.
Digitizing new program launches also can unlock continuous improvement cost savings, creating a flywheel effect by further compressing technology-investment paybacks. In the future, technology deployments likely will present quicker returns on investments and save, not cost, companies money. A cost-savings approach paired with launch improvement goals presents a strong business case to quicken budget approvals.
As organizations realize productivity success by first digitizing data and then automating exchanges within the launch process, they can leverage intelligence for greater insights. Machine learning and AI present immense potential to create competitive advantage through predictive insights. As a result, supply management professionals will be able to more closely partner with suppliers to generate better outcomes and build better products.