The Components Conundrum

Desc: It is crucial for the existing auto OEMs to not rush the NPD for EVs but focus on reducing the NPD lead time drastically while also moving towards a significantly better output. Read to know more.

The Automotive New Product Development (NPD) ecosystem is one of the most complex environments. This is because of the following two reasons:

1. There are many parts developed by different auto component manufacturers that must not only fit together in the final vehicle, but also function together as a flawless system.
2. While developing auto components is important, equally important is to deliver them through a process that is robust, precise, and repeatable at scale.

Thus, while the end customer gets to see a stylish high-performance automobile, there are numerous auto component manufacturers toiling to achieve this complex and audacious goal.

A saga of skips & misses

The automotive landscape is changing. Electric Vehicles are predicted to take over the industry- IC engines will eventually become extinct. The advent of Electric Vehicle (EV) and elimination of IC engine, the most complex part of erstwhile vehicle design, has democratized the industry. With entry barriers being razed to the ground and new EV players entering with advanced technologies, the existing auto OEMs are feeling the heat like never before, to be the first to market in the EV segment!

As a result, there is an urgency to move in the OEMs from the drawing board to reality faster than before. Pressure from top management to move the project to the tooling development phase often prompts OEMs to persuade vendors to concurrently start development with final tooling, even as the prototype is being finalized. The assumption is that this will help save time. This wishful thinking, however, never materializes. The components manufacturers proceed to hard tooling only to realize later that there are glaring gaps in design/ cost estimations. Any changes made in hard tools are expensive & consume a lot of time. This leads to a series of actions in the advanced stages of development to minimize changes in design or even trying to get some leeway from OEMs to accommodate whatever best can be achieved.

The juggernaut rolls ...

The situation is aggravated by the fact that any change made in an  auto component can have a big impact on other interfacing components in a vehicle. One small late change in a component can therefore create urgencies in many auto-component vendors for the same OEM. Invariably, the auto component manufacturers’ engineering teams find themselves juggling urgencies in the development work of different OEMs that they cater to. The Result – elapsed time in part development increases by leaps & bounds.

Also, each component may have multiple child parts coming from different (Tier 2) vendors- electrical, mechanical or electronics. Sudden urgencies & expediting created in the component vendors by the OEMs transmits to their Tier 2 vendors supplying the child parts. This has the effect of creating de-synchronization in the arrival of child parts and consequently leads to delayed start of testing. But since they have to meet timeline expectations of OEMs, components are often mass produced prior to completion of testing & full production stabilization. Not only does this lead to loss of production capacity, but many issues continue to remain unresolved since both the design and development teams are now forced to shift their attention to other new development projects.

What managers think!

This perpetual struggle of co-ordination issues and frequent delays make the managers conclude that more detailed planning and scheduling is required. They also tend to believe that design mistakes are due to lack of skill/ experience of designers. Frustratingly, however robust the plans are, and however skilled the designers are, neither helps them stick to their plans or prevent re-work in design. This is because a large proportion of the planned timelines are under the ambit of OEMs. Variability in one task timeline tends to have a cascading effect all the subsequent tasks of the auto component NPD team. Even a highly skilled designer will tend to have skips and misses in an environment of expediting & urgencies. Under these circumstances, what is the way out?

Four simple rules to increase NPD productivity

The best an auto component manufacturer can do is to ensure that they provide the fastest response to OEMs from their end. This will help make them a “Preferred Supplier of Auto components”. In order to achieve this, they need to take control of the flow within their NPD organizations, irrespective of what is happening outside. The solution for faster lead times is to follow these four simple rules:

1. Respect Full kits/Design Gates: Do not start the development phase of a project until the full kit of interacting designs has been completed and verified (“gating” rules). This way, there will be minimal interruptions (and iterations) during development. Managers are aware of the benefits of gate control, but they break this rule owing to time pressure. However, if the design phase for an auto component can be completed quickly, it would be easier to abide by the Gating rules.

2. Limit WIP with Clear Priority: The time taken to complete the design phase can be reduced if multi-tasking can be avoided, and the designers are able to work uninterrupted to the best extent possible. And this is possible if Work in Progress (WIP) is limited, and clear priority is assigned to all the tasks. This can bring the focus back on closure of projects in the required sequence and quicker issue resolution. Outcome - reduced lead time as well as increased capacity in design!

3. Follow High Frequency Management: To speed up the process further, management must observe the workflow at a pre-defined frequency (daily at the execution level, weekly at the department/ section level, etc.), and proactively intervene to address any interruption to the flow. Take needed decisions, provide help, and resolve any collaboration issues.

4. Buffer the Project and not Tasks: Traditional project planning, with its emphasis on task deadlines, hides buffers in each task. These buffers usually get wasted during the execution phase. A changed planning approach would be where the tasks are first stripped of their buffers to get an aggressive estimate of project completion. Then the information about the buffers is used intelligently to predict the most likely completion date (ETC). This visibility into the expected date of completion at any given time can give out periodic signals that will help auto component manufacturing companies’ top management understand where their intervention may be needed.

Conclusion

Adopt these four simple rules –have a design full kit before development, control WIP, perform high frequency management, and monitor projects ETC – and one can experience the lead time for NPD going down drastically (50% improvement, at a minimum) while also leading to significantly better output (more than 100%) in your organization!

About the Author:

Suhas Kini (XLRI) is a Project Manager with Vector Consulting Group. The company consults with auto, and auto component companies to solve chronic industry problems using a systems approach and by applying first principles thinking. The companies Vector has worked with include TVS Motors, Ashok Leyland, International Tractors Limited, Kirloskar Oil Engines Limited, Tata Motors, Royal Enfield, J.K Fenner, Fleetguard Filters etc. amongst others.

(Above mentioned article is consumer connect initiative. This article is a paid publication and does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever)