Opportunities exist to use Lean principles to optimize information flows within the pre-production process. Most of the pre-production supply chain work at automotive Tier I suppliers is completed manually in spreadsheets though, which limits visibility, increases direct labor costs and causes late deliveries.
The pre-production process itself is also facing new headwinds. As the industry migrates toward electric vehicles, the number of parts along with the associated data, is exponentially growing because original equipment manufacturers (OEMs) are producing both traditional and new propulsion systems. Further, global changes from microchip shortages to tariff transitions are requiring our supply chain input data to adjust more frequently.
Where to Look for Productivity Gains
Automotive pre-production builds can range from early one-off prototypes to final production parts that go into “mule vehicles” for critical safety and vehicle certification testing. Pre-production parts can total hundreds of units for an all-new vehicle program. Tier I suppliers arguably have the hardest job in the value chain where OEMs have increasingly relied heavily on Tier I suppliers for large complex module assemblies. The supply chain for assemblies like seats and bumpers, in many cases, forms a diamond shape with most supplier management requirements fanning out at the Tier I level.
While OEMs have standardized and streamlined their Pre-production processes, Tier I suppliers by default have a more complex process and they must support a wide range of purchase order data formats from manual-based systems, from multiple OEMs. Reducing waste during these vital OEM to supplier information system handoffs can dramatically compress launch timelines, which ultimately reduces costs.
What does information flow waste look like? One example is team members reading an OEM purchase order in a paper, PDF, and/or system record and reentering the data into an offline spreadsheet for tracking. Typically, this supplier bill of material (BOM) rapidly evolves into multiple bills of materials for manufacturing and purchasing, making it easy to see why eliminating manual data entry/re-entry and multiple information sources reduces labor costs and human error.
Build a Solid Data Foundation
Apply the 5S methodology to organize and clean pre-production data, then value stream map information flows to identify information flow bottlenecks.
“Change can be uncomfortable, prepare teams by removing obstacles. Identify potential actions that can be taken and then break them down into smaller manageable bites,” says Jill Hays, Inventory Optimization Manager at Plymouth, MI-based Adient.
New program launches are some of the most labor- and capital-intense supply chain activities. The art then is selecting the right tool(s) that best empower teams to standardize work, reduce repetitive work, and eliminate errors. As with physical material flows, information flows are all about reducing time by eliminating the waste.
Utilize Plan For Every Part (PFEP), a proven Lean tool, earlier in product development to enable a digital twin, or “bridge,” of the product and its components from idea to prototype and then through production. Implement software tools to automatically import OEM purchase orders into a standard, collaborative PFEP environment for teams to concurrently view and update information in. The result is fewer data handoffs, fewer mistakes and faster product time to market.
Align Tools with Outcomes
The robustness of pre-production processes varies across suppliers. Part of this reason is new market entrants (e.g., new electronics suppliers not far removed from being startups) now supplying critical systems for new electric vehicles. Also, new startup OEMs are rapidly scaling all-new products and new ways of working. The disruption across the industry is very real but presents opportunities to further enable competitive advantage by getting better at launching new products.
“We have been successful in past launches, but you never want to rest on your laurels, because you’re only as good as your last launch. We continuously re-evaluate our whole program management launch process,” adds Randy Pappal, Vice President of Grand Haven, MI-based Shape Corp.
Embrace digital tools that reduce the effort required for teams to complete tasks. The macro trend within automotive is embracing collaborative productivity software tools. These Lean tools are intended to eliminate manual offline processes to facilitate better information flows between cross-functional team members throughout your organization. Further, these same tools are enabling collaboration outside the organization with Tier I suppliers’ suppliers (Tier II suppliers) to enable a true Lean extended enterprise.