The missing link - Manufacturing - Brief Article

Automotive Industries, June, 2002 by Ron Harbour

What's the biggest difference between the best manufacturing operations and the rest? It's a question I'm often asked - even by some people who spend a lot of time in automotive plants.

Every automotive company is making a greater effort to improve manufacturing efficiency these days. Quality and productivity have never had more important roles in the making of cars and trucks. And automotive plants have never been more efficient.

Yet, as The Harbour Report's analysis of automotive manufacturing points out each year -- and will again this year, when the report comes out on June 13--there are some major gaps between the best and the rest

So why, with all of this emphasis on manufacturing efficiency, are some plants better than others? Why do some companies have smooth launch after smooth launch, while others struggle to get their new cars and trucks off their production lines? And what is the No. 1 thing a company must focus on if it truly wants to improve its quality, productivity and costs?

In my mind, the missing link is product development.

Design and engineering, which take place long before a vehicle makes it to the production floor, are critical factors that determine manufacturing efficiency, and vehicle profitability.

Let's face it, any automotive company can be creative and innovative when not encumbered by cost or manufacturing limitations. But the companies that can be creative, innovative and cost competitive are the ones that will win in the marketplace. And in today's world, cost is a considerable factor.

Because there are so many models and brands to choose from, many automakers are finding themselves in a period of price deflation. Gall it what you want, but rebates and discounts are nothing more than selling vehicles for less than the manufacturer's intended price.

At the same time they are seeking deflated prices, customers also are demanding certain features on their vehicles. Most minivan customers, for example, now want side airbags, even though they don't want to pay extra for them.

The companies that are succeeding in today's environment are figuring out how to offset these additional manufacturing costs without adding cost to their own bottom lines. And the way to make that happen is through the design and engineering that takes place at the product development stage.

The best companies are designing and engineering products with manufacturing in mind. They know the efficiencies they develop will enable plants to produce vehicles at higher efficiency, better quality and lower cost. And these cost savings, in turn, can be used to add more customer features to their vehicles, to improve the company's bottom line and to help the company develop even more lower cost, higher efficiency systems, processes and features.

On the other hand, companies that are not talking the necessary steps in design and engineering find themselves fighting an uphill battle all the way through a product's launch. Without the up-front commitment in the product development stage, these companies tend to introduce vehicles that suffer from poor launches, first-time quality issues and ultimately higher costs that cannot be passed on to customers.

I like to think of automaking as a three-legged stool. There is the manufacturing process that takes place at the plant, of course. But there is also the design and engineering that takes place in the product development stage. All three legs of the stool are equal, and unless they are equally strong, the stool will not stand.

Manufacturing operations do not stand alone. It is the responsibility -- make that a requirement -- of design and engineering departments to deliver easy to manufacture, low cost products, and simple processes. Only then can plants be responsible for eliminating waste in their own systems and processes, and building the best quality, lowest cost products possible.

RON HARBOUR is president of Harbour and Associates, manufacturing consultants in Troy, Mich. www.harbourinc.com