The global automotive industry is pinning its hopes on e-business to help bring it closer to its Holy Grail — the five-day car.
Delivering a customer-specified car to that customer within a working week has been a staple topic at automotive conferences for a few years. Most industry analysts agree the distribution chain holds the key to making a reality of what currently remains a car maker’s daydream.
As a director of e-business supply chain software specialist SynQuest, Paul Bender has been closely involved with Ford Motor Company’s efforts to achieve greater efficiency throughout its complex logistics processes.
Ford recently awarded the Atlanta-based company a major contract for e-business software designed to shorten its order-to-delivery times. It was the latest deal in a relationship between the two companies which stretches back to 1997 and has seen the automotive giant take licences for the majority of the solutions in SynQuest’s product suite.
Doing the right thing
As a director of the software provider, Bender is hardly impartial, but Ford’s consistent adoption of SynQuest’s products backs up his assertion that it must be doing something right.
However, Bender is also an internationally-known consultant on supply chain management, with an impressive record of publications and membership of professional bodies.
Bender points out that the time-consuming element of car manufacture is not the production line. With all the necessary components to hand, assembling a vehicle is a fairly quick process, and certainly one that fits in the theoretical five-day time frame. Bender says: ‘The issue is the synchronisation of the flow of material — getting the right things in the right place at the right time.’ But with 23 assembly plants in the US alone dealing with around 4,000 suppliers on any given day, that is far from a simple matter.
SynQuest aims to address the problem by combining advanced optimisation techniques — working out the most efficient way for a company’s supply chain to work — with the power of web-based systems to make it happen.
Bender accepts that many companies are concerned about their return on investment from e-business systems, but claims the potential savings to be made dwarf the initial outlay. ‘If you just look at simple transactions, the savings achievable using the web are so huge that any company not doing it is saddling itself with an unnecessary extra cost.’
The automotive industry is well aware of this, and Bender rates it as one of the more forward-thinking manufacturing sectors when it comes to using the internet. He says Covisint, the global automotive e-marketplace, is a genuine attempt by the big car makers to give suppliers a common platform on which to trade with them. He adds that the apparent slow progress of the exchange has to be seen in the context of the scale of its ambitions, and the scrutiny it is attracting from regulatory authorities. ‘The US government is not known for moving at internet speed,’ he says.
Bender believes the biggest challenge for the sector is to take a wider view of its supply chain. ‘Everybody in the auto industry’s thinking centres around the plant,’ he says. ‘They tend to think about pre-production logistics and post-production logistics, not the whole supply chain.’ Bender claims this has to change if manufacturers want to get anywhere close to the five-day car. ‘All the elements needed to make the five-day car exist, but the change in management culture needed to bring it about means it is unlikely to happen soon.’
Producing a customer-specified car in five or even 10 days against the current US norm of 60 plus will require the industry to re-think all its processes. It will entail sophisticated synchronisation of supply and demand, more flexible manufacturing processes and the ability to treat the whole supply chain as a virtual assembly line.
Bender claims e-business will revolutionise the sector because it allows this type of real-time data exchange and collaboration. ‘The technology to enable the five-day car is available now. All the components are there but getting it down to this sort of timescale is going to take years, not months, because the governing factor is managerial, and things don’t happen that quickly.’
Consumer demand for cars ordered via the internet to their personal specification and delivered quickly will force manufacturers to look at their logistics ever more closely. Even the outbound distribution of finished vehicles — which in Bender’s view is often given less emphasis than the supply of components into the plant — will come under closer scrutiny. ‘The outbound is on the face of it much easier. But it only accounts for 30% of the cost of the vehicle,’ he says.
There are some costs in the supply chain which Bender admits e-business is powerless to control, notably the popularity of using new-car transporters for target practice by drunk US rifle enthusiasts.
Crazed gunmen notwithstanding, Bender believes the application of e-business to the supply chain can help the industry make cars far more quickly — and still make a profit.
Eventually, one manufacturer is going to achieve the five-day car, or get close enough to it for consumers to notice. ‘That company will gain a major strategic advantage over its competitors, at least until two or three others catch up,’ says Bender.
Synquest are on the web at www.synquest.com