Drive Engineering Through Your Supply Chain

Conventional Wisdom

Automakers and their suppliers are plagued with dozens of conflicting product development and engineering design formats. This incompatibility costs industry $20 billion worldwide and at least $1.4 billion annually in the auto industry, according to the Automotive Industry Action Group (AIAG). That’s why the AIAG made such a big splash at its recent annual conference, Auto-Tech, with the results of a pilot project funded by a $300,000 grant from the National Institute for Standards and Technology (NIST), an agency of the U.S. Commerce Department.

The successful “round trip” transaction of Product Data files demonstrated at the conference promises to accelerate the push for online engineering collaboration and speed up vehicle development. But the news is bigger than that. Various people MHM interviewed at Auto-Tech pointed to supply chain savings that will be made possible by connecting engineering to logistics professionals everywhere in the enterprise. Here are some of the best sound-bites MHM came back with from the Detroit event.

— Tom Andel, chief editor

Eric Wines, senior CAE support engineer, Siemens Automotive:

“The automotive industry doesn’t have a centralized standardized work order process. Using the XML Step format, a centralized way of doing changes to work orders could be created. For suppliers this facilitates an understanding of product structures and the PDM [product data management] systems they’re working with. Getting product structure to pass between PDM systems is not an easy thing to do, and if you can understand how your component fits in with the bigger picture in a quicker way, you could make changes and improve your design with a quicker turnaround instead of having all these meetings to try to figure out how the pieces fit together.”

Akram Yunas, program manager, collaborative engineering, AIAG:

“Everything is being worked on as a supply chain issue. They’re saying if you’re going to reduce the cost of a car and get it to the market faster, you must have a solution that’s not only good for OEMs and tier ones, but for mom-and-pop shops, as well. We’re giving access to information that 10 years ago used to be shared only between the OEM and tier ones. It levels the playing field and reduces costs to suppliers. Instead of supporting 15 different departments, each talking to different OEMs, now you can consolidate your people, training them on one system no matter which part of the world the OEM is in.

Simon Frechette, group leader, manufacturing engineering integration division, National Institute of Standards and Technology:

“This effort will remove barriers to collaboration. It will allow trading partners to accelerate their development efforts without losing data or operability. Cars will get to market faster, and the market response will be more sensitive — so people can get the cars they really want faster.

“Communication of a design change will be much more rapid up and down the supply chain. I worked at Black & Decker for a while, and we had that problem where we’d build stuff that was already obsolete. We didn’t know that a design change had come through. With these types of systems it will happen a lot faster, and companies won’t be stuck building things that aren’t right. Producers will not have an inventory of things that are scrap. How far away we are from this depends on the economics of changing over some of the software. I think in a couple years the software will start catching up with the specification.”

Gary Flum, general manager, automotive business unit, QAD:

“Tier 1 suppliers in North America are doing astronomical inventory turns. The engineering changes you see in automotive manufacturing are incredible. These people are trying to manufacture those individual circuits that go into the assembly of a wiring harness, and stay ahead of the game and not eat the inventory as these changes are coming through two or three a week. The problem is when you look at the supply chain in North America you’re not eliminating material from the supply chain, you’re displacing it. If tier ones don’t have it, the tier twos have it in buffer stock. What needs answering is, ‘Am I using all my excess and obsolete inventory? Do I have the appropriate revision-level changes communicated to my supply chain so procurement can handle it on time? If not, then will I incur premium freight charges to get that stuff in here on time in order to be able to send it out?’ So suppliers have problems with cost, delivery and quality. That’s why there has to be a bi-directional message broker between the [design engineering] system and the ERP [enterprise resource planning] system. This is absolutely essential to help suppliers maintain their margins in a very low-margin business.”

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