Nowhere in manufacturing are the stakes higher than in automotive production.
Bringing a car from concept through design to production is a study in complexity. Auto makers must coordinate intricate global supply chains, massive production facilities, huge payrolls - and bet it all against a fickle and unpredictable car-buying public. It’s a gamble that every auto manufacturer works to win by deploying the best technology strategies against the industry’s most daunting challenges - including fierce competition, time to market and cost control.
Not surprisingly, chief among these challenges is cost control. In industry terminology, the list of components for any product is known as the "BoM", or bill of materials. The majority of a product’s cost resides in the BoM, and in its management resides the greatest potential to drive the type of cost savings that can stack the deck in the house’s favour - and improve shareholder value. BoM management can impact 80 to 90 percent of a product’s cost during its design and sourcing stage, well before the car is manufactured, assembled or shipped.
If BoM management is a critical discipline in the search for competitive advantage, technology is a likely and logical tool for its mastery. But poorly conceived technology strategies can complicate risks, and ill-informed IT investments worsen already long odds of success.
In keeping with trends begun in the 1990s, however, manufacturers reflexively turn to enterprise resource planning - ERP. Almost by definition, ERP focuses almost entirely on the manufacturing, inventory and service of the physical product. But these stages of the product’s life cycle become real only after all the design and sourcing decisions are made often too late to significantly affect a product’s profit margin.
The high stakes that define automotive manufacturing have driven these automotive companies to become leaders in enterprise innovation. Recently, many have elected to implement a powerful, enterprise-wide software solution, complementary to ERP, to manage the product’s digital life - known as product lifecycle management, or PLM. PLM solutions manage all the product components located in the BoM, while facilitating the internal and external - truly supply-chain-wide - collaboration that automotive manufacturing demands. Cost and performance are affected more in the critical design phase than in any other, and it’s here that PLM is central to a winning product design.
Posted by James E. Heppelmann, President and CEO of product lifecyle management tool provider PTC