At present, Europe’s carmakers can produce 22 million cars a year but there is only demand for 15 million. The same is true around the world: car manufacturers have the capacity to make far more cars than people want to buy and industry insiders are asking whether the mass production of huge numbers of near-identical vehicles is the best model for the 21st century.
Mass production achieves economies of scale, of course, but is there another way? Rather than churn out vast numbers of cars to keep in stock in the hope that people will buy them, what if each car could be custom-made to order? After all, the personal computer industry does exactly that.
That is the thinking behind the European Union’s “Five-day car” initiative which seeks to explore how the industry can move towards meeting the needs of customers more directly by building a car to order in less than a week.An end to mass production?
Some argue that it must be done. “The only way to ensure the economic survival of organisations, establishments and employees in the European automotive industry is to escape, in the long run, the competitive pressure from cheap labour countries,” says Rene Esser of ThyssenKrupp Automotive, the project coordinator. “ILIPT tackles both the conceptual and the practical aspects of the automotive industry’s radical new concept: the delivery to the customer of a bespoke vehicle only several days after placing the order.”
ILIPT is a four-year project running until June 2008. Its €16m budget includes a €9 million injection from the European Commission. Its 27 partners include big names, such as Daimler, BMW, Siemens and TRW, as well as SMEs and universities. They are based in nine EU countries plus Switzerland, Russia and Brazil.
ILIPT has tackled the challenge on three fronts.Modular car
Of course, making a car in five days requires more than a modular design. The automotive industry is a complex network of independent but often poorly coordinated suppliers and assemblers. Component makers down the supply chain may know little of the demand at the top and it is currently very difficult to coordinate production and stocks right down the chain.
To tackle this, ILIPT is developing collaborative processes for planning demand, capacity and replenishment among all the members of a supply chain and also for ordering and supplying components. The partners are creating standard data models and system interfaces to ease the free flow of information up and down the chain.
The third theme is to develop methods to pull all this together and assess and validate innovative concepts in product and process design, as well as order processing. The “ILIPT Demonstrator” is a software package that shows how ILIPT could be applied in practice and includes several case studies arising out of the project.No need to keep stock
Suppliers will need to keep little or no stock, so dramatically cutting inventory costs, and production costs will be lower as component makers will be better informed of demand and can plan accordingly to optimise their production. And customers will be able to get exactly the car they want only a few days after ordering it.
“The initiative’s true breakthrough is the realisation of a stockless vehicle supply system in Europe to supply a customer-ordered vehicle within five days,” Mr Esser says. “It goes beyond the industry’s usual response of shutting down assembly plants or increasing production capacity to capitalise on orders for popular models.”
He argues that the lessons learned in ILIPT will be applicable not just within the automotive industry but to any of the manufacturing and transport sectors that are subject to similar pressures of time and cost.
Christian Nielsen | alfa
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