Will the European Industry ever
build a 3 Day Car?
ICDP
Cardiff University
University of Bath
Introduction
•
Why is building-to-order attractive - to customers
and to the industry?
•
Where is the European industry at present - how
does it schedule, build and deliver?
•
How far is it, both practically and theoretically,
from a full build-to-order system?
•
Summary of the 3 Day Car research carried out to
date
IMVP, 6-7 October 1999
Why build to order?
•
•
Cost of finished stock sitting at OEM and dealer
Too many customers given incentives to take a
car specification alternative to the one desired
•
Loss of customers due to wrong spec and/or
failure to quote accurate delivery time
•
•
Current system keeps product mix low (Europe)
Changes to distribution will equalise prices
between regions and consumers - so OEMs need
another way to maximise price
IMVP, 6-7 October 1999
Why build to order? - OEM
benefits
•
•
Radically reduce level of finished cars
Minimise model obsolescence - both with annual
spec. changes and with model changeover
•
Changes relationship with supply base transparency and instant information ends
complaints about inaccurate forecasts,
scheduling unreliability
•
Marketing advantages maximise pricing…..
IMVP, 6-7 October 1999
Why build to order? - marketing
benefits
•
Customer gets exact specification, views car as
custom made, encouraged to up specification
•
•
Totally reliable delivery times
Changes problematic relationship with dealers no push and less price negotiation?
•
With price equalisation inevitable in Europe,
allows OEM to re-segment market
IMVP, 6-7 October 1999
The industry at present
•
Research to date shows a multitude of different
forecasting, scheduling and delivery systems
•
Most a complex mix of old practices, various IT
systems, only semi-successful initiatives etc.
•
Little attempt to understand the link between
scheduling and transaction price in the market
•
•
Some lead times too long for customers to wait
Some systems cannot build a car to order at all!
IMVP, 6-7 October 1999
The industry at present (II)
Order lea d Ti m e in Days
• Order lead times vary between segments
• 120
90
100
199 4
199 7
78
80
53
60
40
40
39
34
20
0
V o lu m e
Japan - U K
S p e c ia list
IMVP, 6-7 October 1999
The industry at present (III)
• Sales sourcing (1997 - volume orders may
not be customer allocated)
•
20%
48%
22%
65%
10%
14%
9%
9%
5%
48%
29%
21%
D EALE R ST O CK
T RANS FERS
C OM PO UND S
O R D E R (P IP E L IN E /F A C T O R Y )
IMVP, 6-7 October 1999
The industry at present (IV)
•
To understand more about this inflexibility, 3 Day
Car researchers have ‘big picture mapped’ all the
sponsor OEMs - travelling to suppliers, assembly
plants, head offices, national sales organisations,
dealers
•
Research reveals an incredibly complex set of
arrangements with little or no link to market
•
Complaints and failings at every level!
IMVP, 6-7 October 1999
Allocates capacity
to markets
Offers capacity
‘An OEM’ -
Vehicle
Programming
Big Picture Map of
Order Fulfilment Process*
7 wks ahead:
market
allocations
Schedules
4 weeks
EDI
Over
night
Main scheduling
system
Central Order
Scheduling
-at plant
EDI
6 days locked
sequence
3 mths out
Order
Generation
3 mths out Volume
Commitment
Dealer
Allocation
Decisions
Agreed Sales
Forecast
Code
conversion
Weekly
report per
car-line
(7-3 weeks
segmented)
Order Entry
System
Order
Amendment
Min 6 days
locked
Constraint
Assessment
Pipeline
Locator
System
8
4
5 6
7
8
Dealer
(Europe)
2 mths out Specification
Commitment
Report to
Sales Planning
for Allocation of
Constraints
Segmentation
Process - monthly
First Tier
Suppliers Sequenced Delivery
4 mths out Free
Forecast
System
Call-Off
daily
2nd Tier
Suppliers
Sales Targets
Analysis
Forecast
weekly
6 mths out
First Tier
Suppliers
Historical
Sales Data
Check
allocation
against
capacity
Rolling
7-18 mths
plan
Plant build
volumes/day,
down-days
Version 1.1, June 1999
*Data for XXX plant
National
Sales Company
(Market)
Market and dealer allocations
Sales
Planning
Monthly
programming Change
meeting
request
9
C
D
;
E
7
:
5
;
9
5
<
D
7
7
:
6
=
>
F
; @
7
;
:
5
?
:
5
<
7
6
6
=
B
Sequencing
C
>
A
Synchronised
Materials
Centre
Traffic
?
%
&
$
#
#
!
"
System
#
Sequenced
delivery lineside
System
Up to 90 days stock in pipeline
System
routing and
labelling
System
Controls
body shop
,
-
.
/
1
(
'
(
)
*
2
2d
3
1
0
+
?
Distribution Point
Dealer
D
,
0
Local Delivery
/
Controls
sequence
Weld
Press
200
Paint
2 hrs
AS/RS
Paint Bank
360
110
CFC 200 -buffers
different shift patterns
3 shifts
2
shifts
?
Assembly 2 trim lines
Final
Inspection
Gate
Release
(‘Counting Point 7’)
Mixing Centre
Max
2days
?
Ship
VIN
Allocation
Rework Area
Scheduled Rail
Transport to
Distribution Point
?
Channel Port
Channel Port
?
Truck
?
Dealer
UK
?
Average 1.3 days
Moving to build-to-order
•
We are trying to understand the objectives,
motivations and role of each part of the extended
organisation
•
We’ve identified some of the factors - both
constraints and incentives - that support the
current system
•
Research is focusing on these factors - with
detailed value stream mapping and specific issuebased work
•
IMVP, 6-7 October 1999
The basic auto supply chain
Prod.
Purchase
Prog’ing
control
1st tier
NSC
Dealer
Information flow
2nd tier
Customer
Physical flow
Raw Mat.
TEST
ASSEM
PAINT
WELD
PRESS
IMVP, 6-7 October 1999
D.C.
Dealer
Constraints on lead time
reduction in the supply chain
Prod.
Purchase
Prog’ing
control
•Paint
•Batching
1st tier
•Volume
•Time
2nd tier
•Instability
•Forrester
•Batching
•Dealer
allocation
NSC
•Batching
•Push
Dealer
•Discount
•Stock
Customer
Raw Mat.
TEST
ASSEM
PAINT
WELD
PRESS
•Batching, quality,
shutdown, volume, IT
D.C.
Dealer
•Fluctuations
•Wrong stock
•Long PDI,
customer loss
IMVP, 6-7 October 1999
Summary of research to date
•
•
Big picture mapping of all sponsor OEMs
Detailed value stream mapping of constraints focusing on product variety funnel and supply
chain responsiveness
•
Specific issue-based research and papers on:
– paint plant
– alternative design and assembly (spaceframe)
– marketing and customer wants
– IT
IMVP, 6-7 October 1999