A Future of Change and Challenge
Going forward, automakers will have to learn how to deal with more wants and needs using fewer resources
By Michael Lalande
Americas Transportation & Mobility
Dassault Systemes Americas Corp.
Many would say the auto industry has undergone unprecedented change and restructuring in the past decade. Yet, according to industry analyst Roland Berger, the next 15 years will bring the greatest transformation the industry ever has experienced. Automakers now face a multitude of challenges including vehicle complexity, reduced time to market, quicker reaction to consumer desires, globalization, and stringent fuel economy standards. At the same time, there are fewer internal resources to accomplish daily tasks. There are many reasons for this—from new technologies to government regulations to urbanization and globalization—all adding stress to this highly complex, high-production industry.
An increased focus on fuel economy and pollution is forcing rapid development of vehicles with a smaller carbon footprint, compelling the industry to look at energy alternatives. Emission and mileage standards are being enacted across the globe, with the US annual rate set at a higher pace than elsewhere—US cars are expected to show a 5% average increase in mileage from 2017 to 2025; trucks a 3.5% improvement rate from 2017 to 2021, and 5% from 2022 to 2025.
Other regulations require automakers to incorporate eco-design practices, increasing the use of recyclable materials and accepting responsibility for environmentally sustainable disposition at the end of the vehicle life.
These developments are resulting in alternative powertrain strategies such as electric vehicles and hybrids, or more efficient turbocharged internal combustion engines. Additionally, other solutions aimed at environmental concerns include lower weight materials that improve the power-to-weight ratio and result in lower emissions.
However, all of these technologies that help meet environmental demands also increase the complexity of the vehicle as well as the development process where differing regulations need to be adhered to—putting additional cost on vehicle development. If end-of-life requirements are not considered early in the cycle, late-stage design changes occur resulting in launch delays, recalls, fines and poor customer satisfaction. Plus, the introduction of new technologies into the vehicle requires new development processes and manufacturing methodologies that can add time and cost.
Electronic and Embedded Systems
A typical new-model vehicle comes with 100 million lines of code and 50–80 electronic control units addressing 30,000+ functional requirements. Electronics now comprise 20–40% of current vehicle development cost. That number is expected to grow, rapidly affecting vehicle complexity and influencing the development process. It’s anticipated that 80% of vehicle innovations in the future will come from embedded systems with much of that focused on safety, entertainment and performance.
Consumers increasingly expect to be connected to their mobile devices 24/7 with seamless integration in their vehicle. Complex embedded electrical systems in active and passive safety, driving assistance and auto diagnostics are also becoming commonplace.
Technology has always played a key role in the industry. However, the recent pace of technology implementation has increased, with more advances taking place in systems that have highly intricate and interconnected relationships throughout the vehicle. Subsystems in cars are becoming smarter and ever more dependent on connecting with data from other systems. From headlamps to exhaust systems, understanding how the software, hardware, and electronics all work together is crucial.
It will become increasingly crucial to validate subsystem and vehicle performance earlier in the development cycle. New systems engineering methodologies that link disparate engineering domains will be necessary for dynamic testing of the vehicle prior to production, ensuring performance and safety standards are met.
With this increasing move toward embedded electronics, it's likely many OEMs will engage in partnerships with software and technology-focused companies in order to access technology and customers and secure economies of scale.
Competition in the industry will remain intense with every OEM looking to leverage economies of scale. With a shift in global buying power—car sales are expected to rise 70% in Brazil, Russia, India and China over the next 5–7 years as compared to 42% in the US, Europe and Japan—automakers need to design vehicles that meet the needs of consumers in both mature and emerging markets. This will require localization of the manufacturing base in emerging areas. At the same time, the industry has begun to reduce the number of global platforms and standardize on components in order to remain cost competitive.
The industry is becoming glo-cal, where a global platform is adapted to local preferences. Glo-cal organizations benefit from the use of a global purchasing base. They operate with an integrated multiregional setup where a related network of R&D centers develop products adapted for local markets. Manufacturing is mainly organized in a decentralized manner based on standard processes so that across the global facilities, high investment areas of the vehicle, such as foundry components and stampings will use the same tools and same materials, but everything the consumer touches will be localized for that market. An additional benefit of this approach is that companies with multiple “standardized” facilities across countries can shift production quickly as demand shifts.
For example, Ford’s “One Manufacturing” strategy aims at producing multiple models from plants across the world to save on production costs and quickly adapt to changes in consumer taste. It anticipates producing four–five models at each of its plants by 2015.
To achieve this glo-cal approach, global product development strategies will center around subcomponent modularization with suppliers being located near the manufacturer. However, developing the supplier network will be a challenge as many existing suppliers lack the financial strength to expand capacity to new markets. Qualified suppliers will need to show OEMs that they can handle demand change whether it goes up or down.
Globalization, however, comes with its own set of challenges including differing compliance requirements, materials availability and cultural issues that affect vehicle styling and features to significantly increase development complexity. Expanding the number of partners involved, especially when they speak a different language, increases risk of miscommunication to say nothing of exposing intellectual property assets. Additionally, pricing pressures intensify as global products become more competitive.
Shifting Consumer Demand
Besides rising car ownership in emerging markets and a strong global trend toward low-cost vehicles, a new trend is appearing: “demotorization.” The share of new cars purchased by those aged 18–34 dropped 30% in the last five years, according to the car shopping web site Edmunds.com. Among 18–24 year-olds 46% would choose Internet access over owning a car, according to a recent Deloitte study.
Consumers want cars that get great mileage, cost less, are safer, get delivered faster and have more options, especially in the area of electronics and software. This will result in the development of more customized-type vehicles that better meet the tastes of each consumer. Automakers will concentrate on offering more optional features that they can charge for in order to offset the lower profit margin of smaller vehicles.
The industry will need to develop better ways of listening and connecting to the customer in order to deliver a vehicle that interests this shifting consumer market. It will be critical to go beyond the typical voice of the customer and to involve the consumer in the vehicle development experience, resulting in what will feel like a customized mobility solution.
Continued Focus on Productivity, Quality, Safety
All of the trends add complexity to the vehicle development process. Yet, the focus on traditional industry drivers—productivity, quality, and safety—is also increasing. Ten years ago, the idea of reducing new vehicle development time from 60 to 24 months seemed a pipe dream; yet the pressure will remain to reduce this further in addition to having faster refresh cycles on vehicle software systems.
As more new technologies appear, each will require safety testing to ensure adherence to the multiple standards that exist—from mechanical durability to electronic reliability. Plus, the number of driver-assist technologies that are supposed to make driving safer (gesture control, lane departure warning, night vision enhancement systems, etc.) are growing at an increasing rate, which puts additional pressure on automakers.
Today, vehicle quality is often taken as a given with year-over-year gains noted by virtually all automakers in most areas of initial quality according to J.D. Powers. Yet, pressure to bring new technologies to market more quickly can force market introduction prior to all the bugs being worked out.
Another industry trend is a reduction in the resources that can be deployed due to financial constraints. Additionally, the recession changed the demographics of the industry as many older, experienced workers retired. Companies have needs for certain skills, capabilities, and facilities, but lack the pool from which to gather these resources and apply them to projects.
Manufacturing Strategies for Today’s Trends
A typical bill of materials for a vehicle contains 2200 items, the individual parts and assemblies that come together from hundreds of suppliers to produce the powertrain, climate control, instrument panel, frame, suspension, and other components necessary to build a complete vehicle. Add to that the factor that these subsystems are becoming smarter and more dependent on connecting with data from other systems.
In terms of product development this requires tighter integration, better management and a rise in use of 3D development, simulation tools and digital manufacturing.
Although concurrent development, simultaneous engineering, single-source database, and real-time visibility have been enabled by implementation of PLM tools the reality is that these tools have not been implemented to their full capability. Engineers, purchasing, manufacturing, the supply chain, etc., all need to play the same game at the same time. The foundation to this scenario is access to live common data, enabling a Work in Process collaboration from peer to peer, domain to domain, and region to region, helping to drastically reduce formal work process flows. Software platforms are available that allow all stakeholders to share a single open platform with multiple domains accessing the same piece of information at any time from any place while breaking down language barriers through the use of the universal graphical language of 3D.
This environment encourages the use of 3D product data early in the development cycle to simulate product functionality and manufacturing feasibility. The concept of Virtual Mockup that integrates vehicle requirements, function, geometry and behavior is key to simulating the car of the future. System behavior modeling and simulation are transformed into 3D Functional Mockup illustrating how all vehicle domains will function together, enabling design-right-the-first-time capability and detecting any integration issues early in the process. This becomes increasingly important as new and untested technologies are introduced into vehicles.
This single-source environment provides a dedicated solution that supports the concept phase and shifts the product development process from an eBOM approach to a function-based one with full traceability. There is digital continuity throughout the process enabling seamless simulation capabilities to be integrated with design and manufacturing.
A collaborative platform can also bring the consumer into the design process and provide an early vehicle experience, enabling upfront input on fulfilling consumer desire early in the development process and helping to avoid new launch missteps.
With such a platform, companies can rebuild and enhance their manufacturing discipline so that it is able to properly influence design for the better. Digital manufacturing, which is currently not being leveraged to its full capability, is a primary device for OEMs to compress production cycles, reduce expenses, tooling, and plant construction costs. It provides a holistic view of products, design and manufacturing, and puts them in the larger context of a product’s life cycle from conception to end-of-life. It supports process, tooling and factory design planning; simulates operations, ergonomics and human factors. As part of a broader PLM process that includes supply-chain management, digital manufacturing encompasses all stakeholders in a collaborative process that breaks the linear pattern of design-planning-tooling-production and enables them to all happen at the same time.
For automakers to meet increasing product variants and global production requires an end-to-end planning methodology. Planning will now be centralized as a single site for worldwide production use, allowing companies to monitor the entire manufacturing chain at all points on the globe. Production managers can know at all times of the progress of the shop-floor operations. The system is continuously fed with production data. The right decisions can be made without delay based upon the indicated resources. ME
This article was first published in the September 2013 edition of Manufacturing Engineering magazine. Click here for PDF.