research plan & project initiation document day car programme research plan & project...

THREE DAY CAR PROGRAMME

Research Plan &Project Initiation Document

Version 2

March 1999

Three Day Car Programme Research Plan & Project Initiation Document

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CONTENTS

1 INTRODUCTION....................................................................................................................... 4

1.1 REPORT PURPOSE ................................................................................................................ 41.2 TERMS OF REFERENCE & PROGRAMME SCOPE................................................................... 4

2 PROGRAMME OBJECTIVES ................................................................................................. 5

2.1 DEFINED METHOD OF APPROACH ....................................................................................... 52.2 PROGRAMME DELIVERABLES & DESIRED OUTCOMES ....................................................... 52.3 DEFINITION OF PROJECT SUCCESS...................................................................................... 6

3 PROJECT ORGANISATION.................................................................................................... 7

3.1 STEERING GROUP ................................................................................................................ 7Composition ...................................................................................................................................... 7

3.2 PROJECT MANAGEMENT TEAM ........................................................................................... 73.3 CONTROL & REVIEW MECHANISMS ................................................................................... 93.4 PROJECT REPORTING........................................................................................................... 93.3 PROJECT ADMINISTRATION................................................................................................. 9

4 RESEARCH PLAN................................................................................................................... 10

4.1 RESEARCH STREAM DESCRIPTIONS .................................................................................. 104.2 MARKETING – THE VOICE OF THE FUTURE CUSTOMER................................................... 10

4.2.1 Overall Stream Objectives ................................................................................................... 104.2.2 Relationship To 3DayCar Objective.................................................................................... 104.2.3 Research Areas .................................................................................................................... 114.2.4 Deliverables......................................................................................................................... 12

4.3 TECHNOLOGY - DESIGN AND ‘BUILDABILITY’ ................................................................. 124.3.1 Overall Objectives ............................................................................................................... 124.3.2 Relationship to 3DayCar ..................................................................................................... 124.3.3 Specific Research Areas ...................................................................................................... 134.3.4 Deliverables......................................................................................................................... 16

4.4 ORGANISATION – THE KEY RELATIONSHIPS .................................................................... 164.4.1 Overall Stream Objectives ................................................................................................... 164.4.2 Relationship to 3DayCar Objective..................................................................................... 164.4.3 Specific Areas of Research .................................................................................................. 164.4.5 Deliverables......................................................................................................................... 20

4.5 SYSTEM: THE PROCESS DYNAMICS .................................................................................. 204.5.1 Overall Stream Objectives ................................................................................................... 204.5.2 Relationship To The Three Day Car.................................................................................... 214.5.3. Specific Areas Of Research................................................................................................... 214.5.4 Deliverables......................................................................................................................... 24

4.6 ENVIRONMENT - THE VOICE OF SOCIETY......................................................................... 244.6.1 Overall Stream Objectives .................................................................................................. 244.6.2 Relationship to 3DayCar ..................................................................................................... 244.6.3 Specific Research Areas ...................................................................................................... 254.6.4 Deliverables......................................................................................................................... 26

4.7 FINANCE STREAM.............................................................................................................. 26


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4.7.1 Overall Stream Objectives ..................................................................................................... 264.7.2 Relationship To 3DayCar Objective.................................................................................... 264.7.3 Research Areas .................................................................................................................... 274.7.4 Deliverables......................................................................................................................... 29

4.8 THE SIMULATION OF THE TOTAL SUPPLY CHAIN ........................................................... 294.8.1. Introduction .......................................................................................................................... 294.8.2 The Process............................................................................................................................ 294.8.3 The Simulation ....................................................................................................................... 304.8.4 The Output ............................................................................................................................. 31

4.9 BUDGET & RESOURCES..................................................................................................... 32ICDP: Marketing And Finance Streams ......................................................................................... 32BATH: Technology And Environment............................................................................................. 33LERC : Organisation And System................................................................................................... 33

5 PROJECT COMMUNICATION & DISSEMINATION ...................................................... 35

5.1 INTRODUCTION.................................................................................................................. 355.2 CONFERENCES & SEMINARS ............................................................................................. 355.3 PUBLICATIONS................................................................................................................... 355.4 WEB SITE........................................................................................................................... 355.5 NEWSLETTERS ................................................................................................................... 355.6 TRAINING PACKAGE .......................................................................................................... 365.7 SPONSOR LIAISON ............................................................................................................. 36

APPENDICES...................................................................................................................................... 37

APPENDIX I - PROJECT PROGRESS REPORT ................................................................................. 38APPENDIX II - CONFERENCE THEMES ......................................................................................... 39APPENDIX III - GANTT CHARTS .................................................................................................. 40


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1 Introduction1.1 Report Purpose1.1 This report describes the research plan for the Three Day Car Programme; it outlines what the

programme is aiming to achieve, who is going to be involved in managing the process and whattheir responsibilities are, and how and when it is all going to happen. It aims to bring togetherthe key information needed to start the project on a sound basis, and to convey that informationto all concerned with the programme.

It is the core planning document for the programme, and represents the formal statement of theprogramme design, to be endorsed by all parties involved. The main sections included are:

• programme objectives - what we are aiming to achieve, and the key deliverables envisaged

• programme organisation

• the detailed research stream plans

• programme communication and dissemination

The report represents the initial statement of objectives and plans, which will be revised andupdated as the programme progresses.

1.2 Terms of Reference & Programme ScopeThe programme was developed in response to an EPSRC submission invitation (November1997). It is being undertaken jointly by the International Car Distribution Programme (ICDP),the Lean Enterprise Research Centre (LERC) at Cardiff University Business School, and theSchool of Management at the University of Bath. It involves a number of industrial sponsors,who have funded it together with the EPSRC. It will last three years, starting in January 1999.

The programme is concerned with all organisations involved in the production and delivery ofcars (encompassing manufacturing, parts supply, logistics, retailing), primarily in a UK context.

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2 Programme Objectives2.1 Defined Method of Approach

The proposed work will blend pure and applied research methods drawn broadly fromengineering and management disciplines. In an industry as complex as motor vehicleproduction and sale, a firm grasp of the organisational building blocks will be essential.Management and organisational theory will be deployed to understand the formal and informalrelationships between the players in the chain. Particular focus will be given to areas of co-operation and conflict between independent contracting parties, and the ways in which thesewill be resolved.

Supply chain dynamic modelling and value stream mapping skills will be of prime importance,as simulation tools will be essential to quantify the impact of projected organisation andtechnological changes. The impact on management decision making will also be an importantstudy area.

Consumer marketing and behavioural concepts will be applied to the examination ofdownstream impacts of the three day car model. Activity based accounting and other costmanagement frameworks will be used to assess the overall commercial implications, and theprofit transfers between inter-related organisations.

The extent of the business process re-engineering implied by the research curriculum makes ithighly innovative and challenging. In particular, the full integration of the ‘downstream’elements of the vehicle supply process has not previously been achieved in any known carindustry research projects. The unique ability of the research team based on their past trackrecord and sector experience to take a holistic view of the entire chain is at the core of theproject proposal. The impact of this work is likely to be extremely high as it will to a largedegree help set the agenda for intra- and inter-company change and technological requirementsover the next two decades.

2.2 Programme Deliverables & Desired OutcomesThe overall goal for the project is to develop an organisational and process framework withinwhich a customer’s need for a vehicle can be fulfilled in three days - from order placement todelivery. Three days has been selected as the project headline, as it reflects the ultimateambition of a truly lean automotive enterprise. A supporting goal is to underpin the frameworkwith the economic, systems and environmental impact models that can help organisations in thevalue chain restructure their activities and compress overall lead times.

The development and dissemination of the organisational and technical concepts needed toachieve a “three day” car will provide a powerful catalyst for the achievement of truly “lean”automotive enterprise. While other researchers are addressing various aspects of the nexttransformation of the auto industry this project is, as far as the proposers are aware, taking amore radical approach to the total automotive industrial system than any other studies currentlyin progress.

The objectives for the research are as follows:

• To identify the product technology, production, marketing and distribution methods thatwill be needed to meet a three day goal.

• To examine the impact of three day production methods on both upstream activities(suppliers and assemblers) and downstream (assemblers and distributors)


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• To consider the new technologies, roles and competencies that may be required at all layersof the chain - in particular, to examine the potential need for late configuration close to thecustomer and the implications for the distribution chain

• To identify the scope for new entrants into a re-configured supply and distribution chain,examining lessons to be learnt from other industrial sectors.

• To examine the overall environmental and resource impact of a large scale move to3DayCars, and the potential environmental benefits of a re-configured system - forexample, the ability to rebuild and recycle products within the distribution system.

• To examine total system cost and profit implications

2.3 Definition Of Project SuccessObjective: To develop a management, systems and process framework within which acustomer’s order can be delivered from build at a factory within three working days

Conditions: While research will not be constrained by the following, the core conditions forsuccessful achievement of a 3DayCar are:

• A UK customer orders a vehicle which is built at a UK factory

• Three days can be achieved in 99% of cases

• Any increase in the total cost of operation across the total supply chain from the currentlevel is fully justified by improved profitability

• The development of a total package of customer fulfilment allied to 3DayCar supply

• The system must cope with product complexity and demand variation in line with thecurrent market place : only adjusted for known changes such as the decease of the Augustregistration change

• The project will be based around existing technologies in the fields of materials, fuels,design, production and information. New technologies will be assumed, where sufficientlydeveloped, to be current in a 10 year time span.

• The solution satisfies current EU legislation in terms of environment and congestion, andknown or anticipated future legislation.

• The overall solution is recognised as feasible to each area of the supply chain and theexperts in associated fields, as represented by the sponsors.

In addition, international implications will be fully considered both in terms of an internationalmotor company producing for several markets in the same plant, and in terms of minimisingtransportation time to export markets.

While the pursuit of a 3DayCar is central, the project will be considered a success if potentialchanges in technology, systems, legislation and environment are identified which lead tosubstantial lead time reductions over the current position.

The use of simulation modelling will be used to test the proposed solutions under a range ofproduct and market circumstances. To the extent feasible, pilot projects and “parallel” trials willbe carried out to verify the reality of proposals.


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3 Project Organisation3.1 Steering Group

CompositionThe structure and composition of the steering group is shown in the chart below:

The Steering Group will have responsibility for overall direction and management of theprogramme. It is accountable for the success of the project, and is the project's voice to theoutside world; key aspects of its role include:

• review, approve plans and authorise deviations

• sign off stages and authorise the start of new stages

• ensure the correct resources are committed

• arbitrate on conflicts within the project

Steering Group members will represent the interests of three groups:

1. the 'owner' of the business case (the EPSRC)

2. those for whom the programme will achieve an objective or who will ultimately use thedeliverables of the project, (the industry sponsors/participants)

3. those who are designing, developing, implementing the programme products, andundertaking the necessary research for the programme(the three research organisations -ICDP, Cardiff University, and Bath University)

The Steering group will be chaired by a representative of the sponsors, and will contain at leastthree other representatives of the sponsors, representing different aspects of the supply chain(selected by the sponsors). A senior executive from each of the three research organisations willsit on the board, and an EPSRC representative will also be invited to participate.

3.2 Project Management TeamThe Project Management Team will have the following key responsibilities:

• direct, co-ordinate, control and motivate the project teams

Project ManagementTeam

SystemTeam

TechnologyTeam

MarketingTeam

EnvironmentTeam

FinanceTeam

OrganisationTeam

Steering Group

Project support


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• plan and monitor the programme (prepare project plans, covering activities, resources,deliverables etc)

• manage the communication of the project, including prepare progress reports, informationdissemination through newsletters, web site, conferences etc

• project administration (budget control, organisation of steering group/team meetings etc)

• ensure the appropriate quality of research outputs

The team will consist of:

• the senior project representative from each of the research organisations

• two project managers

• research stream leaders who are not jointly leading the project

It will be chaired by the programme director.

The breadth and complexity of the programme has led us to divide the day-to-day projectmanagement tasks into two areas: one relating to research streams management, and the otherto project control. The prime responsibilities of these roles are:

Project Manager - Research:

• prepare co-ordinated plans for each research stream in terms of resource and time

• monitor the progress of the programme and resolve any differences between the streams,calling for project management meetings as necessary

• ensure all streams are aware of interrelated research and data

• prepare progress reports for the project management team and board and ensure that bothbodies are in a position to make decisions on quality, resource and timing matters.

• liaise with sponsors to ensure full participation and usage of in-kind support, and with theEPSRC in all aspects of research.

Project Manager - Planning & Control

• manage internal and external project communications

• ensure all material published to sponsors or for general publication is presented, marketedand circulated appropriately, including the development and management of the three daycar web site

• ensure that appropriate project management procedures and policies are followed

• maintain the overall cost budget in terms of original, actual costs to date, and projectedexpenditure

• ensure that all EPSRC reporting requirements are met

The Research Manager will be full-time, and the Project Controller will be 50% dedicated to theproject.

Each research stream will have its own project team, and dedicated project support will beprovided at LERC and ICDP. Formal reporting will mainly be through Project HighlightReports, which will be produced quarterly for the steering group. These will detail progress onkey activities and deliverables for the period, key activities/deliverables for the next period, andidentify any issues or problems.


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Each research stream will have its own detailed plan, sub-divided into the key stages of itsindividual projects. Project for Windows (Microsoft) will be the tool used to graphically displaythe project plan (for example, via Gantt Charts), and assist in the management process.

3.3 Control & Review MechanismsThe PRINCE1 approach to project management will be used as a basis for management andcontrol

Quality assurance is an important feature of the PRINCE methodology, and a review procedureof the 'products' and deliverables of the project will be established, mainly using experiencedresearchers at the three centres, who will not be directly involved in the project.

Project stream meetings will take place on a monthly basis, and Steering Group review meetingsare scheduled to take place every four months.

3.4 Project ReportingA series of progress reports will be produced, highlighting the main activities undertaken, ordeliverables produced during the reporting period, the planned activities or deliverables for thenext period, and a summary of any issues that have arisen, which have been or will need to beresolved.

These reports will be produced for each research stream on a monthly basis, and an overallprogramme report will be produced to coincide with the four monthly Steering Group meetings.The latter will be circulated to all sponsors.

Appendix I contains the report proforma.

3.3 Project AdministrationThe programme project office will be based at ICDP in Solihull, to where all programmecommunication should be initially addressed. Each research centre will have its ownprogramme co-ordinator, and provide its own local administrative support.

1 PRINCE is structured method for effective project management, and a widely recognised standard

used extensively by the UK government and other organisations. The key features are its focuson business justification, a defined organisational structure for the project management team, itsemphasis on dividing the project into manageable and controllable stages, and its flexibility tobe applied at a level appropriate to the project.. It encourages formal recognition ofresponsibilities, and focuses on what a project is to deliver, why, when, and for whom


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4 Research Plan4.1 Research Stream Descriptions

The programme is divided into six research streams, with each centre having primeresponsibility for two streams each. All researchers will contribute to the whole researchprogramme, and there will be regular meetings of the entire team. This process will beimportant and will enable us to succeed in our task of creating a synthesis of the entireprogramme - the integration of all the results and conclusions. The creation of the ‘simulationmodel’ (described in 4.8) will be central to this.

The stream responsibilities are shown below:

Cardiff: Organisation and System

Bath: Technology and Environment

ICDP: Marketing and Finance

Detailed descriptions of the plans for each are outlined below.

4.2 Marketing – The Voice Of The Future Customer4.2.1 Overall Stream Objectives

• To ensure that the systems and processes developed to fulfil the 3DayCar objective, fromsales forecast to after sales, are clearly focused on meeting customer requirements, takinginto account the full range of customer types and preferences

• To anticipate ways in which the flexibility and choice offered by a 3DayCar productionsystem can be exploited in new formats of customer service

• Within the overall 3DayCar process framework, to define the appropriate sales and serviceformats and processes, segmented by customer types as required

4.2.2 Relationship To 3DayCar ObjectiveThe likely consumer response to an entirely fresh supply approach for an existing product willbe a key issue of the whole 3DayCar Project. What does the customer want, includingspecification choice, timing and relationship with the means of retail? Can the market besegmented into clearly defined different types of customer? The supply chain redesign must befocused around enhancing the consumer offer – as the “Recognition of Achievement” statementmakes clear, the 3DayCar will only be fully achieved if customer choice is not compromised.

The customer interface with the 3DayCar system is a critical area of process design. The salesorder generation and fulfilment activity must be considered as the key front-end part of the totalprocess, not as a free-standing activity. Supporting activities – such as vehicle customisation,acquisition finances and after-sales servicing – must also be redesigned as part of a total,customer-focused, delivery system.

Information from the marketplace is vital to enable accurate sales forecasts and to expediteflexible production with minimum cost. The technology and process for real time informationto be disseminated back through the supply chain is therefore a key element of the research.This information must include customers who are lost because of inability to supplysatisfactorily and an assessment of the natural sales demand in the marketplace. How doesmarketing affect this natural demand, and how can it be used effectively to encourage stableproduction without distorting the marketplace, or to overcome production capacity problems?


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4.2.3 Research Areas

Consumer Responses to Existing SystemsTo provide a starting point for the research, existing data on consumer responses to the newvehicle supply system will be consolidated from existing research sources, supplemented bysponsors’ input. Planned surveys within dealerships, including focus groups with sales staff andcustomers, will be used at this stage.

Particular attention will be given to buyer behaviour under supply systems which already offerhigh levels of product configuration and choice. Comparative studies will be made of buyerattitudes under more ‘advanced’ systems, compared to traditional ‘stock driven’ approaches.The importance of price, rebates and other financial inducements will be a critical study area, tolink into the modelling work that the Finance Stream will carry out on profit implications.

Capturing Market DemandTo ensure that sales forecasts can be made as accurate as possible, methods of capturing realcustomer demand will be investigated, including lost sales opportunities through carrying outsurveys of customers in the marketplace, and obtaining sponsor data as available. It will also benecessary to assess the natural volatility of demand, both including and excluding internalmarketing actions. This level of natural variability is key to the amount of flexibility required atthe manufacturer, although it is often made significantly larger by poor information flows interms of time delays and inaccurate forecasts. On the other hand the time planning of suchvehicles as demonstrators and employee cars can smooth out the variations required inproduction to meet the natural demand. Investigations of such marketplace factors will assist inensuring that the simulation accurately reflects the potential real world.

Impact of Reconfigured Supply Chains on Other IndustriesTo provide a parallel frame of reference for the changes implied by a 3DayCar supply system,case studies will be carried out in a selected number of industries where supply chainreconfiguration has been carried out for an existing, well established, product. The particularfocus of the case studies will be a change in consumer attitudes to the product – specificationand price – brought about by a change in the delivery cycle. Has a dramatic compression of thedelivery timescale significantly altered consumer behaviour and buying patterns? Do customersexploit short lead times by using products in a different way? What changes have to be made toproduct offerings as a result of lead time compression?

The three principal industries where case studies will be considered are personal computermanufacturing, photographic film development, and spectacle manufacture. An examination ofthe ‘made to order’ policies of key makes such as Dell will take place. In the other cases,mature products have been subject to a complete supply chain reconfiguration and a relocationof production choice to the customers. Any lessons which can be drawn from thesereconfigurations will be investigated.

These case studies will be developed from an initial literature review of any published materialfollowed by a structured interview programme with suppliers and customers.

Core Sales and After-Sales ProcessesTo provide the basis for a redesigning and reconfiguring of the demand assessment, salesgeneration and order fulfilment process, including the current activities carried out by dealers(and manufacturers where involved) will be examined and documented. The implications ofsupport processes – financing, insurance, leasing, handover, after-sales – may also be analysed.For example, how will the parts supply system operate both within and outside warranty? Thisprocess analysis will then feed into the overall organisation and system process map being co-ordinated by the LERC research stream.


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Taking the core processes, consideration will then be given to the way in which these need to bealtered to configure and deliver a 3DayCar. The new processes will be structured aroundconcepts for revised consumer offers developed from parallel research activities.

Sales and After-Sales System RedesignThe redesign of sales and after-sales systems will be driven by the process analysis findings.Roles and responsibilities will be assigned as part of the overall system model, in co-ordinationwith other research streams.

Existing organisation models, skills and competencies will be factored into the system redesignin order to produce a practical model that exploits existing resources. Commercial implicationsof asset ownership and profit flows will also be considered, in conjunction with the FinancialModelling Stream.

4.2.4 Deliverables

• the identification and analysis of future customer requirements from the purchase and after-sales process

• an analysis of differing customer needs by segment (in terms of both car specification andtype of process required)

• recommendations on future retail, marketing, and information structure requirements

• recommendations on changes to the sales process to achieve the optimum purchasingexperience for customers

• new forecasting tools based on customer inputs

4.3 Technology - Design and ‘Buildability’4.3.1 Overall Objectives

• To identify the production and process technologies that will be needed to cope withfluctuating demand and individually configured production within a 3DayCar. This willinclude:

− The facilities required, focusing on factory layout, production scheduling and toolingissues

− The key design and process parameters to permit reduced production lead times.

− ‘Enabling’ product technologies, based on the assumption that product variety must bemaintained.

• To define the role of logistics technology and late configuration and customisation in theachievement of a 3DayCar

• To determine the IT systems necessary to pass information from the market placethroughout the supply system and to co-ordinate the production of a 3DayCar.

• To ensure that proposed technologies are practicable within the revised supply chainmanagement required for the 3DayCar

4.3.2 Relationship to 3DayCar

Technology will be central to achieving the three day objective. The initial task will be toinvestigate to what extent time compression can be achieved using existing plant and facilitiesand employing as many current technologies as possible. The project will then proceed topropose changes to production processes, factory layout and systems, car design and possiblyvehicle technologies, together with information systems and transportation as necessary, to


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enable the goal to be met. Production and design technology will be at the heart of any systemthat will enable customisation and late configuration.

Whilst it is hoped that 3DayCar will be able to point the way towards new technologies andprocesses for the period up to 2010, the research will assume that automotive technologies,finished vehicles, and the processes employed in their production, will at least continue toresemble current or near future norms. This pragmatic approach will ensure that the researchremains realistic and focused on achievable goals.

However, the research stream will consider the proliferation of new materials, structures andtechnologies which are sufficiently developed to be current in a 10 year time span. Wherenecessary for the three day objective to be met, alternative ‘enabling’ technologies will beproposed. The project will seek only to provide guidance as to the nature and requirements ofsuch ‘enabling’ changes.

4.3.3 Specific Research Areas

Production and process technologiesThe research will initially consider whether it will be possible to meet the 3 day objective usingexisting factory locations and plant. The project will seek to establish to what extent timecompression can be achieved using management and planning tools to schedule demand led,individually-configured production. It will then go on to consider what changes to currentproduction systems will be needed to allow order fulfilment within three days. This willencompass investigating a variety of approaches from the Toyota Production System, throughrelated lean systems, to variants of mass production, both in the UK and globally.

These changes may be needed to reduce build times, increase supplier co-ordination (includingsystems that may place orders for components from the moment the car is specified in thedealership), allow a remarkable level of customisation and permit late configuration (possiblyaway from the assembly line). The research will therefore relate closely to the work on designparameters.

Proposals will also need to ensure that stock and component buffers can be kept at minimallevels despite the need to rapidly alter production scheduling. It will be particularly difficult todesign a system that allows the split of different model variants (i.e. 3 versus 5 door) to bealtered constantly without constraint. Such flexibility will need to take account of aspects suchas supplier ‘trigger times’ and BIW identification. Furthermore, any solution must address thetraditional summer closures of many current assembly plants.

There will be considerable overlap with the research into Organisation and System to be carriedout by LERC, Cardiff.

Layout and tooling issues

The research will start by examining how existing UK factories could be re-organised to allowtime compression in the manufacturing process. It will also consider how manufacturing andassembly could be re-distributed between OEMs’ facilities and those of suppliers. This researcharea will relate closely to the findings of the work into late configuration and the possiblemodularization of options and body panels.

Such research will also need to consider how manufacturing tools may need to be redesigned ordeveloped to allow the three day objective to be met.

Key design and process parametersOne of the many elements behind the success of lean production has been the ability of Japanesemanufacturers to design cars that are easy to manufacture and assemble. The terms DFM(Design for Manufacture) and DFA (Design for Assembly) are familiar now that components


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are often designed by suppliers in association with OEMs.2 Similarly, the use of ComputerAided Design and Manufacturer (CAD/CAM), accessed jointly by manufacturers and suppliers,has ensured that cars can be designed to be faster and less problematic to build.

3DayCar will develop such methods to examine how the design of cars can be improved tofurther accelerate build times, simplify the specification and configuration of cars, and facilitateagile production, both on the assembly line and nearer to the end customer. This will includeinvestigations into specific current problem areas such as RHD/LHD production. The researchwill investigate how the need for late configuration will alter the design of the car, possiblythrough the use of option ‘modules’ or even different exterior and/or interior panels. Similarly,it will be necessary to consider how to co-ordinate and locate the late configuration process tofulfil the customer’s order.

There will be considerable overlap with the research into marketing and customisation to becarried out by ICDP.

‘Enabling’ product technologiesStructural materials

The research stream will assume initially that the majority of UK manufactured cars willcontinue to be constructed from steel monocoques. The majority of evidence suggests that steelwill remain as the preferred material due to cost considerations. Only certain environmentalarguments support the use of aluminium, whilst affordable composite materials currently remainrestricted to non-structural components.3 However, it may be necessary to consider theattractions of lightweight steel.

3DayCar will also assume initially that the majority of cars produced in the UK will use amonocoque structure. There appears at present to be a growing trend (especially amongstcarmakers using a platform structure) towards the use of steel frames clad in composite panels,such as Renault’s Espace, Fiat’s Multipla MPV and certain US products4. However, at presentsuch vehicles tend to be lower volume, ‘niche’ models, often built or finished away from normalproduction lines.5 Such products tend to take longer to build and so, subject to further analysis,would appear unlikely to aid the time compression objectives of 3-Day Car. However, if otherpossibilities such as late configuration away from the production line appear necessary, then itmay be the case that conventional structures will no longer be viable and the research will needto identify potential alternatives.

Whilst 3DayCar will assume initially that a steel monocoque will remain as the standard vehiclestructure, the research will consider the use of alternative materials for certain body panels, suchas bonnets, rear hatches etc., and possible systems for body ‘cladding’, if they offer timecompression and late configuration opportunities.6 Where such changes offer benefits in termsof both unit cost and responsiveness, then they are a vital contribution to the success of theresearch programme.

2 Original Equipment Manufacturer, term used to denote car assembler.3 See IMVP research.4 Saturn coupe.5 i.e. Espace, despite many common Renault components, built by Matra in Dieppe.6 i.e. DaimlerChrysler Smart.


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Sub-systems, modules and other components

With the typical car having as many as 10,000 components, purchased from as many as 440suppliers,7 the complexity of time compression will mean that much of the burden will fall onsuppliers, especially given their increasing involvement in the assembly process.

The research will initially assume that the current level of sub-assembly supply andmodularization will remain constant and then changes to the current level of outsourcing will beinvestigated in order to enable the three day objective to be met.

Electronic content

The research will assume that the electronic and microprocessor content of near future vehicleswill continue to increase, or at least remain constant. The three day objective cannot be satisfiedif predicated on a reduction in electronic content. If the objective is to be met and thespecification and installation of electronic features proves to be a substantial part of the totalassembly time of a vehicle, then it will be the task of 3DayCar to seek solutions to allow timecompression.

Supply chain management and transport logistics

Although this area of research relates very closely to the work to be undertaken by LERC,Cardiff into Organisation and Systems, it will be necessary for the Technology stream toexamine both the supply chain management and the logistical implications of time compressionand late configuration. The transportation time for particularly finished vehicles is likely to be acritical element in achieving the overall objective and thus transport technology will bereviewed as necessary

The demands made on the supply chain will depend closely on the conclusions reached aboutproduct technology and potential production systems needed to allow order fulfilment withinthree days. Supplier co-ordination, including systems that may place orders for componentsfrom the moment that the customer specifies the car, will be central to the achievement of theproject’s goals. Similarly, the relevance and practicality of new process technologies mayrequire a full understanding of transport logistics.

Information Technology

The requisite IT systems and technology that will enable the co-ordination of three day carproduction will be investigated. The passage of information back from the marketplacethroughout the supply chain and its dissemination throughout the production process isfundamental to the achievement of a 3DayCar

Co-ordination in the assembly plant is obviously key, since production scheduling in a verylimited timescale can be expected to pose difficulties. Tracking the BIW, instructing the pressand paint shops (to ensure the correct split of 3 and 5 door etc.) and getting the correctcomponent and option mix to the line will be fundamental and will demand an understanding ofcurrent implemented IT systems and potentially available solutions.

The integration of market place and factory IT systems with those of suppliers will also beessential and we expect to track the ‘trigger points’ for key suppliers and understand howimproved, co-ordinated IT systems could improve demand forecasting and scheduling. We hopeto examine how production scheduling at both the assembly plant and at suppliers could beinitiated as soon as the order is placed at the dealership.

7 Figures correct as of 1990, from The Machine that Changed the World, probably now lower (i.e. Ford Focusc.3,000).


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Similarly, getting the completed car to the customer as expediently as possible through thedistribution network using logistics technology will require IT input.

4.3.4 Deliverables

• the identification of design parameters and processes required to achieve a three day car,particularly the key elements needed for late configuration and customisation

• an analysis of the anticipated materials, technology and manufacturing process for the carof the future, and their potential impact on customer service and fulfilment.

• recommendations on the requirements of public policy

4.4 Organisation – The Key Relationships4.4.1 Overall Stream Objectives

• To determine the current structure of the organisations involved in the entire automotivesupply, manufacture, and distribution chain in terms of their particular position or tierwithin it, and the nature of their relationships.

• To develop a model which can evaluate the need for changes to the existing organisationalstructure both inside and between companies, based on an appropriate management of thekey processes that have been identified for achievement of the 3DayCar

• To test the model in the context of identified key enablers and inhibitors of change towardsa 3DayCar in order to obtain a practical organisation structure for the future

4.4.2 Relationship to 3DayCar Objective

The supply chain is at the core of inter-relationships between and within companies. Forinstance, the implementation of Lean Production and Lean Distribution has caused manydifficulties in the organisational relationships between the various players in the supply chain.This is seen in resistance to change because of too much weight being applied to one area anddiffering non-compatible objectives being applied due to organisational priorities. In order toobtain a 3DayCar, all companies and internal functions in the total supply chain must havecommon objectives and be pulling in the same direction.

There has been some movement organisationally towards the creation of logistics functions inmanufacturers which control the whole chain at the manufacturer from purchasing to vehicledistribution. However, although such logistics people are generally in favour of LeanDistribution, there is considerable opposition from some functional areas, and at board level, ifit comes to reducing production and wholesales, or significant production volume variation, inorder to remain lean. The organisation structure and the relationships within it are therefore avital key to ensuring a 3DayCar is practicable.

4.4.3 Specific Areas of Research

The Current Organisation StructureThe research programme will start with an analysis of the current organisations involved in thetotal supply chain. These organisations include all firms involved in the total design,development and delivery of cars, as well as all ancillary organisations, such as finance house,after-market, and logistics providers. Figure 1 illustrates a framework model for the automotiveindustry structure within which each organisation can be identified in terms of their particularposition or tier.

The role that each organisation plays in the key customer facing activities (e.g. order fulfilment,quality, cost management, design) and non-customer facing issues (e.g. environment, safety,supply net integration) will then be examined as illustrated in Figure 2.


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The key internal relationships for each process will also be mapped out (within and betweenprocesses), together with the existing inter-company relationships. This is illustrated in a verysimplified form for product design in Figure 3.

ORGANISATION: FIGURE 1: AUTOMOTIVE SUPPLY CHAIN STRUCTURE

ASSEMBLER

3RD

2ND

1ST

1ST

2ND

3RD

DISTRIBUTIONTIERS

AFTER MARKETDISTRIBUT

SUPPORT FIRMS

(E.G. FINANCE, DVLA,AA/RAC,TRANSPORT/DISTRIBUTION

SUPPORT FIRMS(E.G. DESIGN HOUSES,CAPITAL EQUIPMENT,MANUFACTURERS,TOOLING FIRMS,TRANSPORT/DISTRIBUTION

COMPONENT SUPPLIERS

VEHICLEMAK

RAW MATERIALS

DISTRIBUTOR TIERS

SUPPLY TIERS


ORGANISATION: FIGURE 2: KEY SUPPLY CHAIN PROCESSES NECESSARY FOR THE ACHIEVEMENT OF A THREE DAY CAR

RAW MATERIALMANUFACTURER

COMPONENTSUPPLIER

VEHICLE MAKER DEALER CONSUMER

ORDER FULFILMENT

QUALITY

COST MANAGEMENT

PRODUCT DESIGN

ENVIRONMENTAL MANAGEMENT/RECYCLING

SAFETY

SUPPLY NET INTEGRATION

CUSTOMERFACINGPROCE

NON-CUSTOMERFACING


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ORGANISATION: FIGURE 3: AN EXAMPLE OF RELATIONSHIP MAPPING FOR PRODUCT DESIGN

KEY DESIGNERS ATSUPPLIERS

INTERNAL DESIGNTEAM

PRODUCTDESIGNER

MARKETING

SUPPLIERS

FOCUS GROUP

VEHICLE MAKERBOARD

R &D

SUPPLIER

SEARCH

TEAM

SET UP

NEWPRO

IDEA

MARKET RESEARCH

CONSUMERUPDATE

FINAL DESIGNPRESENTA

OUTLINEDESIGNTEST

TECHNOLOGYSEARCH

145

6

3

2

8

7

9

DETAILEDDESIGNQUOTATIO


The Ideal Organisation Structure for 3DayCar

Having defined the current organisation structure, the need for changes will be examined bothinside and between companies based on an appropriate management of the key processes thathave been identified for achievement of the 3DayCar. In addition, by applying actual data toeach section the overall automotive supply chain structure, an understanding of the number offirms, present cost structure [with reference to the wider value Stream Mapping activity beingundertaken within the Systems stream] and value adding structures. This existing structure canthen be evaluated on an industry level along Value Analysis lines that will aim to establish theoptimum work allocation between different players.

A further aspect of research will be to identify the type of relationships that will be requiredboth inside and between companies together with the appropriate structural mechanisms thatwill be required to ensure that these relationships are successful

The outcome will be an “ideal” model, both from an organisational and geographicalviewpoint.

Examination of the Enablers and Inhibitors for implementation of the 3DayCar

The various inhibitors or forces for change (e.g. power [with-held power], branding, inertia,regional grant aid) will be identified and tested against the “ideal model”. In order to do this afull listing of the enablers and inhibitors will be developed by interview with the sponsors andother industry sources, together with the use of secondary resources and research teambrainstorming. At this point, a clear link will be made to the other research streams, in particularthe Marketing, Technology and Environment teams and a final practical model of the requiredorganisation to meet the requirements of the 3DayCar developed

4.4.5 Deliverables

• a practical, robust, organisational structure, location and relationship set

• an analysis of the role of the major players, how these may change, and the factors drivingthe change, and their impact on the system, and how such an organisational structure maybe brought about

• an analysis of the necessary organisational and geographical relationships, and their impacton the system.

4.5 System: The Process Dynamics4.5.1 Overall Stream Objectives

• To produce a time based model of the customer fulfilment process throughout the totalsupply chain in relation to the current processes and time relationships. This will major onthe vehicle supply process, but also cover the recycling process and possibly the partsprocess.

• To develop a simulation model of the total vehicle supply chain which will enable:

− An assessment of the potential lead time with the current production and distributionprocesses from customer order to delivery (noting changes in information flow)

− An examination of the key decision points along the process and the

− de-coupling point(s) where the product becomes customer tagged


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− The identification of critical areas for the reduction of process time, in order thatinvestigations of technology, information flow, organisation, and process can be carriedout which will enable the achievement of the 3DayCar

− Necessary variable costs to be quantified across the total supply chain for use by theFinance stream in optimising the system

4.5.2 Relationship To The Three Day CarThis is the stream that interfaces fully with all other streams to determine whether a 3DayCar isfeasible. It is the core on which the research programme will prove successful or otherwise.While the normal lead time between a customer placing an order and the vehicle beingdelivered, having been built at the factory, is around 50 days currently, there are severalmanufacturers aiming at a 15 Day Car which they are achieving to a greater or lesser extent.The reasons for long lead times are:

• Poor information systems which delay information being passed through the supply chain

• Long planning periods for decision making at the key points

• Large sales order banks to enable lean production to be fully planned

• Inability of manufacturers to utilise the flexibility obtained by JIT production processes toimprove the sales order fulfilment process. This is because they wish to minimise the costof production in terms of component stock, labour, variable overheads, etc.

Any time lags in determining production backward through the supply chain will introducedistortions that cause greater variation in demand than are existent in the market place. Takingtime to plan production more accurately may be counter-productive. The System stream willinvestigate whether it is possible, with better information flow, to separate the planning activityfrom the sales order fulfilment process, thus achieving major advances in lead time towards a3DayCar.

While this may well require additional component stock in order to reduce vehicle stock in themarket place, the improvements in component scheduling envisaged should allow this increaseto be minimised. A crucial point is whether the system can match specific demand at thedetailed level, despite a wide range of specifications being made available, and if lateconfiguration will assist this process. The stream will thus show whether the 3DayCar isfeasible from a time point of view as well as providing data to demonstrate that overall costneed not be increased.

4.5.3. Specific Areas Of Research

The Current System

This work will evolve from an extension of the existing Value Stream Mapping approachesdeveloped and pioneered on the IMI Land Transport LEAP Programme in developing a timebased systems model of the total supply chain process. It will primarily concentrate on the threeknowledge streams within the central order fulfilment processes for new cars within the totalsupply chain as shown in Figure 4. The research will map the information flow stretching fromconsumer demand back through vehicle assembly, component manufacture through to rawmaterial sources, and the return physical manufacturing, logistics and distribution flow (seesimulation section).

In addition the reverse logistics flow (car un-building) and its link back to the car component orraw material sources for subsequent product recycling will be mapped. This data will providefor the development of in depth “As is” models for a minimum of two complete value streams(and one for car un-building). All manufacturer new vehicle supply systems will beinvestigated at a macro level.


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The modelling will allow an effective customer fulfilment and production model to bedeveloped along ‘ 3DayCar principles’, paying particular attention to the key aspects of quality,cost, delivery and time compression. The newly developed ‘3DayCar’ (new car and re-cycling)model can then be costed and tested for viability before optimum solutions are determined. Thiswill be achieved through a series of sponsor focus groups.

Simulating The Effect Of Changes In The Future

A simulation model will be developed, (See Section 4.8), based on the conceptual frameworkresulting from mapping the current system. If possible, the recycling system for re-using parts inproduction will also be integrated into the model. It is not intended to include spare parts unlessthis is seen to add significantly to the overall output of the research programme in relation to theadded complexity of the new vehicle simulation .The first objective of the simulation is toquantify and cost the typical current system. The effect of changes to information flows,production and distribution processes including late configuration, planning processes, stocklevels, etc. will then be investigated and information obtained in order to determine whether a3DayCar is feasible and to cost the total supply chain .The research will provide a conceptualframework for a decision making information package and a practical simulation model.


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Information Knowledge Stream

Distribution

Vehicle

Supply

Primary Knowledge Streams

Secondary Knowledge Streams

Figure 4: The Order Fulfilment Process

Physical Knowledge Stream Recycling Knowledge Stream


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4.5.4 DeliverablesKey deliverables of this stream include the identification of:

• the overall structural system required for the three day car (time, stocks, flexibility)

• the communications and process flow requirement

• the future recycling process system and its working mechanisms

• the optimum cost framework for the total process

4.6 Environment - The Voice Of Society4.6.1 Overall Stream Objectives

The environment stream will address the total environment impact and resource utilisation ofthe 3DayCar from technological, logistical and environmental perspectives. Specific objectiveswill include:

• To establish the current environmental impacts and resource utilisation of car manufactureand use, including non-legislative issues, in relation to technology, logistics, and “green”issues

• To determine the environmental pressures on the automotive industry, in relation to

− leading edge legislation existent currently in the EU in terms of environment andcongestion, and known future legislation

− to assess social pressures on the industry, which may constrain required changes.

• To identify the environmental constraints on systems proposed by the project to achieve thethree day objective

• To ascertain the impact the 3DayCar will have on the environment through thedevelopment of effective modelling tools to enable adequate analyses of predicted changesto industry practices, including relationships with other research streams

• To analyse the cost/benefit relationships of the current and 3DayCar scenarios and detailthe impact on the industry

In addition to analyses of current and pending legislative pressures, possible opportunities forreducing programme risk due to changes in the environmental ‘market’ will also be examined.This will be especially related to manufacturing and recycling infrastructures and how newmaterials and configuration options may impact on this. It may also be necessary to considerproduct liability and type approval issues and the emerging area of intelligent road and vehicletechnologies.

4.6.2 Relationship to 3DayCar

It will be imperative to take into account the environment and the wider voice of society if the3DayCar objective is to be met. The initial work will concentrate on legislative and socialpressures on the industry and how the 3DayCar will be constrained by these. It is not thoughtthat this research stream will necessarily provide the best environmental option, but will identifyminimum constraints and areas where best practice could be applied within the programmethrough modelling techniques and how 'lean manufacture' may equate to reduced environmentalburdens.


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4.6.3 Specific Research Areas

Legislative pressures in the car industryThe research will consider how current legislation constrains the industry in general terms andhow pending legislation may provoke further pressures and constraints. This will be examinedin the context of the research to be undertaken by the other streams.

Specific legislative areas which may affect 3DayCar outcomes include:

• Producer Responsibility Regulations relating to recovery of materials

• ‘Green’ levies generally

• EU/ACEA agreement to bring in a reduction in CO2/ vehicle fuel consumption by 2005

• Auto Oil programme, fuel directive and possible further air quality standards

• End of Life Vehicle Directive, which aims to ensure collection, treatment underenvironmentally sound conditions, re-use and recovery.

• Restraint on delivery accessibility

The identification of legislative constraints will provide part of a framework for modellingenvironmental impacts resulting from proposed changes to the production process.

Social pressures on the car industryMore general social pressures will also be examined in order to discuss the wider context ofchanges to car industry practice including likely social effects involved in factory reconfiguringand labour structures within the system upstream and downstream of OEMs. Changes inenvironmental impact receptor points will also be considered as likely changes becomeapparent. Environmental indicators such as 'quality of life' parameters, will be examined in thecontext of developing the scope and framework of the next research phases.

Current environmental impacts of car manufacture and supply - life cycle analysisBaseline data will be discussed in relation to how suggested changes may interrupt currenttrends in baseline impacts such as waste production, resource use, space utilisation, emissionsstandards and other areas. This will involve the use and possible generation of automotive sectorenvironmental indicators. The research will use information from parallel research streams toidentify and assess impact in the following areas:

• Marketing - current public perception of impacts and expectations for near future cars

• System - impacts related to logistical systems, transport and distribution systems forindustry and how materials may return against the normal flow

• Organisation - EMS and structure for controlling impacts of changed structures

• Technology - general impacts from current technology options relating to end of use andmanufacturing wastes

• Finance - current costs related to wastes in the system

Modelling environmental impacts of car production systemsModelling techniques for assessing sector environmental impacts will be examined with casestudies taken from other comparable industries. The applicability of these modelling techniqueswill be examined and related to current automotive sector environmental indicators as affectedby system, technology, organisational and financial parameters and likely changes arising fromparallel research streams. Opportunities to utilise computer modelling of system relationshipswill be investigated using current techniques in comparable areas of environment and industrymodelling.


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Prediction data for modelling 3DayCar impacts

Actual environmental impacts of producing a car in 3 days will be quantified, using indicatorsidentified in previous research stages and streams. Appropriate metrics may relate to areas suchas:

• transport use- not only by the customer, but also in delivery of the car to the customer. Thiswill cover congestion, accessibility of customer handover points, power, noise level, andpollution.

• urban developments - expansion of dealerships to hold modular specification components

• technological impacts on the environment

• re-adjustment of supply chain impacts – from raw material supply through to delivery tothe customer, including international factors

• changes in geographical relationships

These predictions will utilise indicators identified in previous research stages and will react todata parameters and metrics taken from parallel research streams and fed into the model. Thisstage will also reflect on how changes may affect current work such as the Toyota pledge tohave cars 90% recyclable by 2000. This will be key to delivering a system which does notcompromise OEMs’ broader environmental aims.

4.6.4 Deliverables

• the development of the understanding of the relationship between the motor industry andthe environment across the full life cycle of a vehicle

• an analysis and impact assessment of proposed/anticipated UK and EU legislative changesthat will affect the validity of the 3 day concept

• an assessment of the impact of a three day car on the environment, detailing both positiveand negative factors

4.7 Finance Stream4.7.1 Overall Stream Objectives

• To provide the financial analysis framework within which the total commercialimplications of a 3DayCar can be fully evaluated.

• To ensure that the systems and processes developed to fulfil the 3DayCar objective are acommercially attractive proposition to all parties.

• In the worst case, to ensure that the revised processes do not incur an increase in the cost ofoperation across the total supply chain from the current level unless they are fully justifiedby improved profitability

• To understand the financial implications of individual system and process design decisions

• To evaluate the inter-relationships between the various aspects of a complex sales supplychain

• To develop a sound methodology for understanding the financial workings of the totalsystem under different sets of external and internal variables.

4.7.2 Relationship To 3DayCar ObjectiveThe 3DayCar Project Team is acutely aware of the profit pressures on the British motor industryat the moment and is determined to ensure that the project is of practical help from a financialviewpoint. Companies need to maximise their profits under widely differing circumstances.Our intention is to ensure that the work of the finance stream shows how to optimise the cost/


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profit relationship throughout the total supply chain. Thus, sponsors will be able to understandhow they can maximise their financial opportunities under their individual circumstances,within the context of the overall supply chain requirements.

When developing new approaches to system design, it is often best to try and derive very simpledesign rules. Even though such rules may be sub-optimal in detail, in practice the advantagesstemming from ease of understanding and communication may outweigh these disadvantages.However, in the current auto industry, the sums of money involved are so large and the overallprofit margins so narrow, that a more sophisticated approach is required.

In the past, effort has often been applied to optimising only one part of the total supply chain,whether by one company or by one function within a company, to the detriment of the otherparts. This research into the total supply chain will highlight where such an approach hasgenerated significant extra cost in the total system.

Sales supply chain performance is indeed affected by a number of inter-related factors withdiffering impacts on profit: product range size and mix within the overall market segmentationof product type, network design, sales volumes and spread, stock levels, etc. Thus, whenlooking at the financial evaluations, we expect to find many U-curves across the range ofpossibilities: e.g. costs varying slowly about the optimum position but then increasing rapidly atthe two extremes. Under these circumstances, taking system design to extremes may be veryunprofitable when compared with a compromise solution.

4.7.3 Research Areas

Profit and Cost StructureChanging the fundamental design of so complex a system as the total supply chain will changethe finances of the companies involved in many different ways:

• Revenue: the extent to which potential customers buy cars will depend upon the ability ofthe system to deliver the required specification(s) within an acceptable time. Lost salesresulting from poor supply performance could have significant effects on revenue.

• Opportunity costs: these revenue reductions reduce profit contribution: in effect they are anopportunity cost. This profit loss has to be considered in the light of the marginal costsinvolved winning these sales.

• Operating costs: to help analyse the proposals, it will be necessary to relate the manychanges in operating costs to activities to identify the most cost-effective way ofproceeding, probably using an activity based costing system. For presentational reasonshowever, these costs must also be presented in a format consistent with normal accountingpractice.

• Assets employed: it is anticipated that although the balance of stock may change betweenthe various parties in the supply chain, there will be a significant reduction in the stockassets in the total system. This will release substantial amounts of cash compared withcurrent systems. The cash released will have a large profit effect dependent upon the valueput on debt reduction or additional profit opportunities.

• In addition the stream will investigate the effect on capacity requirement of the probablecounterbalancing elements of:

− production flexibility required to satisfy the volatility in the market place

− improved information and decision processes within the 3DayCar.

− The more the variability in demand, the wider the gap needs to be between anticipatedaverage volumes and laid down complexity. The 3DayCar information processes must bedesigned to reduce this gap.


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An activity analysis of the total system is needed to understand the timing impact of the mainprocesses in the system and to determine whether the 3 Day objective has been met. Theexercise will also be used as the basis for costing the system.

Once the processes are described, the costs associated with each major process can be readilyestimated using a combination of methods:

• Interviews with sponsors to determine cost drivers in the system.

• Modelling the key cost drivers

Because the costs will inevitably vary substantially between companies for reasons of detailedmethodology adopted, country related factors, negotiation etc., confidentiality should not provea problem in practice.

The impact of agility on profitabilityUnderstanding and quantifying the benefits that should flow from better manufacturing agility iscentral to the 3DayCar Programme and must therefore be an important part of the financialanalysis. Being able to respond to changes in the pattern of demand is of little value if there arefew such changes, but extremely valuable if there are many.

Thus a key concern is the level of sales volatility: would better matching of supply and demandresult in an intrinsically more orderly market or is the car market inherently disorderly? If theformer case is true, then improvements in data management and forecasting techniques shouldhold great promise. However, it is possible that the large numbers of competitors in the carmarket all seeking advantage by means of product and specification actions means that accuratedetailed demand forecasting is inherently impossible.

An inherently disorderly market would make the ability of the manufacturing system to respondrapidly to changes in the pattern of demand relatively much more important. However, theability of production to respond could be very expensive in terms of capacity, stock, labour, etc.New employment contracts are currently being introduced which minimise the labour cost ofvariable production and the simulation will demonstrate the effect on component stock costs. Itwill also show the reduction in variation due to reducing the lead times throughout the systemtowards the objective of a 3DayCar, and therefore it’s effect on capacity planning. If it is foundto be feasible, an assessment of the agility required for a 3DayCar on overall capacityrequirements will also be carried out

This will enable the costs of an agile production system to be compared with the costs andprofits in the market place of holding stock and selling “wrong specification” and ageing cars atoften substantial discounts; as, for example, when new cars are sold as used after a very shortperiod of use. In addition to the cost of these discounts, such cars may also replace moreprofitable and customer satisfying cars built to order, a substantial opportunity cost. In the past,the industry has generally chosen to ignore the uncomfortable fact that it often makes cars forwhich there is no demand, preferring to rely on dealers to dispose of them somehow.

Agility could have a number of different impacts, depending for instance on the number ofspecifications in the product range, the seasonality of the market place, and the preparedness ofcustomers to wait. Thus overall system profitability could depend significantly upon the chancesof the system making the right match between supply and demand under quite widely varyingcircumstances. We move from the world of certainties to that of probabilities. This means thatthe financial assessment will require a sophisticated approach to come up with valid results.

The simulation will, thus, be the basic instrument used to determine the cost balance betweenproduction agility and the marketplace. This will enable the costs and benefits to be determinedthroughout the total supply chain, including the level of performance against customer demand,for various configurations of the total supply chain in relation to a range of factors, including:


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• The retail network and delivery structure (National Sales Companies, regional distributioncentres etc.)

• The component supply and vehicle assembly structure

• Manufacturing agility

• The information and production programme decision processes

• Logistic performance

• The product range and sales level per derivative

• Customer preparedness to wait and to accept alternative specifications

• Market volatility

The computer simulation will be an indispensable tool for assessing the profitability impact ofchanges to the overall system, since it will enable the modelling of revenues, costs (includingopportunity costs) of different approaches.

4.7.4 DeliverablesThe major deliverables are expected to be:

• The definition of costing techniques to allow quantification and comparison ofinterrelationships between each part of the supply chain

• The costs, pricing and profit relationships, and the financial signals sent down themanufacturing and sales supply chains

• The identification of the critical cost areas and profit generators of the supply chain andmethods of optimising returns

• Forecasts of the future relationships and power balance of major players within the industry

• A financial assessment of the conventional supply system

• Report identifying and quantifying the major factors impacting on the profit performanceof an agile new car manufacturing and supply system

4.8 The Simulation Of The Total Supply Chain4.8.1. Introduction

The simulation of the total new vehicle supply chain will underpin the whole researchprogramme in terms of quantifying the feasibility of the 3DayCar and the cost of operation. Aswell as being integral to the System and Finance streams, it will also have stronginterrelationships with the following streams in terms of identifying:

• Marketing: The effect of changes to the variability of demand on production, caused by theadoption of differing marketing approaches to those employed currently.

• Technology: The critical areas in the process for time compression through changes intechnology.

• Organisation: The key decision points in the supply chain which have to be managedsuccessfully within any organisational structure.

• Environment: The effect of legislative changes on the ability to produce a 3DayCar

4.8.2 The ProcessThe process can be divided into the following sections for the vehicle supply chain.

1. The Planning Process


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The process from:

• The sales forecast, including seasonality, through to the generation of a productionprogramme at the vehicle manufacturer at volume, market and mix level

• The generation of component supplier schedules through the various tiers and frequenciesof information movement at different time horizons.

2. The Order Process:

The process from

• The customer ordering to receipt by the vehicle manufacturer and passage through theorder bank, to identification with a specific vehicle in the production process, includingorder amendment as necessary. This to include external individual and fleet orders, and“internal” orders such as demonstrators, showroom cars, and employee cars.

• The dissemination of order information to component suppliers etc.

3. The Production Process

The process from generation of raw material, through the various stages of componentproduction and vehicle assembly, to the availability of an acceptable vehicle for distribution.This to include production, inventory, transportation, and rectification.

4. The Distribution Process

The process from the vehicle being made available after the production process to handover tothe customer. This to include transportation, storage, late configuration and PDI. Whileregistration, financing of the car, etc. are part of the process they will be investigated outside thesimulation.

4.8.3 The Simulation

The simulation will be a Monte Carlo model dealing with individual transactions. It will bedeveloped in Visual Basic, possibly complemented where greater speed is necessary. It willprobably operate on an hourly basis with processes expressed in minutes, over several years.This is in order to ensure the necessary detail within a 3DayCar while ensuring representativeresults from each scenario investigated. The objective is to ensure that the maximum run timefor one scenario is less than one hour.

The existing simulation will be modified to become an integral part of the Total Supply Chainsimulation. This is the NFDA simulation of the new vehicle sales supply chain, developed byKevin Turner and Geoff Williams under the auspices of Harbour Wade Brown, the consultancywing of ICDP. Kevin Turner and David Simons, who developed the spare parts simulation atLERC under the auspices of ICDP, will co-operate in the programming development of theTotal Supply Chain simulation. The Finance module will be developed separately to takeoutputs from the Total Supply Chain simulation and analyse the resulting costs.

Inputs to the simulation will be the:

• Process and Time

• Key trigger points for dividing the process into distinct areas of research in terms ofmeasuring the process time and investigating changes to the process. (e.g. points where theorder can be identified with the vehicle in production)

• Demand at market, volume, mix, and individual order level. This will be investigated atcurrent distorted and natural market variation level where feasible.

• Capacity


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• Inventory

• Rectification

• Costing

The simulation will be designed so that each of the above can be altered to investigate the effectof change.

Component suppliers will be simulated in terms of a minimum number of categories (say 10-15), established on the basis of lead times, type of material technology, and optional or standardcomponentry.

Information for the simulation will be based on:

• Existing research data from the LEAP programme at LERC, IMVP, and, ICDP

• Benchmarking of sponsor vehicle manufacturer processes in an anonymised form, plusinformation from component supplier sponsors

• Knowledge of other leading edge processes

4.8.4 The Output

• A practical simulation tool which can be used by the members of the motor industry toinvestigate their own specific processes. (It should be emphasised that this will be a highlycomplex model which will probably need assistance from the 3DayCar researchers tooperate).

• Identification of the feasibility of the 3DayCar with current technology in terms ofinformation flow, production process, and product, and where time has to be taken out ofthe process to achieve the objective.

• Investigation of the effect of the Lean Supply Chain principles within the 3DayCar oncapacity requirements throughout the supply chain

• The ability to cost the total supply chain

• Assistance with the determination of the optimum cost strategy and how to make decisionsacross the total supply chain

• Investigation of the effect of changes to the basic cost structures within the supply chain.(i.e. new payment methods which minimise labour costs related to variable productionvolumes per week)

Note: If the recycling of parts is included in the simulation a similar process description willtake place with necessary quantifications, and the process integrated into the overall simulation.

The results of the modelling will be tested, as appropriate,

• Testing new information systems and flows in the workplace with a relevant sponsor(s), atleast in parallel with existing systems, to demonstrate reduction in process time

• Carrying out test markets to practically test the viability of the 3DayCar (or 4 or 5 day) inthe market place.

The organisation and system research areas will cover the following topics in detail:

• The effect of sales forecasting inaccuracy and dealing with variation in demand throughoutthe supply chain, including the effect of critical events and distorted demand patterns. Howto maximise stability in the production supply chain while matching market demand?

• Sales planning and supply policies including product segmentation


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• Vehicle manufacturer and component supplier capacity as deemed feasible

• Information system and process requirements including

− the need for real time information throughout the supply chain

− the integration process between the customer and manufacturer, including the point ofidentification of the order with the vehicle

− the decision points necessary in the system

− cross-company and cross-functional requirements

• The role of late configuration

• International (export) aspects of the supply chain in terms of multi-national planning andproduction, the geography of component supply, and delivery to export markets

• Delivery of the vehicle from factory to customer involving:

− alternative forms of transport

− information and process requirements

− the effect of legislation on the accessibility of the retail network

− the effect of congestion

− the technology of logistics transportation

4.9 Budget & ResourcesA budget of £1,260,000 has been set for the three year duration of the project commencing from1 January, 1999, equivalent to c£420,000 per annum. This is based on direct funding alreadycommitted of c.£267,000 per annum from the EPSRC and £153,000 per annum from industrialsponsors. In addition, £135,000 per annum “in-kind” sponsorship has been committed fromindustrial sponsorship. Where appropriate, this will be allocated to specific research streams. Itis envisaged that further sponsorship will be forthcoming, and this will be used to investigate inmore depth and further improve the outputs of the research.

Resources which are committed within the budget, together with anticipated involvement ofsponsors in the interview and data generation of the streams are as follows:

ICDP: Marketing And Finance StreamsInternal

A full time research associate will carry out the major research for both the Marketing andFinance streams. The position will be based at ICDP in the West Midlands, together with theResearch Project Manager, Geoff Williams, and an administrator. The research associate willreport for day-today guidance and progress to Geoff Williams.

Professor Jonathan Brown will be actively involved in the Finance Stream and Kevin Turnerwill represent ICDP in the simulation development within the System Stream. No specialcomputer requirements or technical support are envisaged beyond the normal office support.

External

Sponsor companies will be extensively engaged in the Marketing stream, and contacts will besought for interviews at the appropriate level. The dealer sponsors will have a specific role toplay in providing facilities for assessing customer response to 3DayCar sales or service


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offerings and the RMIF will provide facilities to survey a wide cross section of dealers. Supportfor the parallel industry case studies will be sought by direct approaches to other industries at asenior level. Some budget will be available, if appropriate, to purchase external reports. Budgetprovision will also be made for consumer focus groups, organised with the help of an externalfacilitator, if these are felt to be appropriate. Consumer surveys may also be commissioned aspart of larger scale “omnibus” type studies.

BATH: Technology And Environment

Internal

Two full time researchers will be appointed at Bath, with responsibility for the Technology andEnvironment streams. It is expected that a more senior researcher will be employed on theTechnology stream with greater responsibility for research planning and sponsor liaison. It isenvisaged that the researcher employed on the Environmental stream will also be involved inother Programme research, potentially in the Marketing stream and the computer modellingwork.

Max Warburton, IMVP researcher at Bath, will be involved in the Programme and will assistwith project management and certain areas of research as appropriate.

The 3DayCar researchers will share an office in Bath with Max Warburton but will need newPCs and other facilities which have been budgeted for, and he will be provided with secretarialsupport.

External

Sponsors will be closely involved within the Technology stream. Access will be sought to anumber of assembly plants in the first year to map the production process, in order to identifythe barriers to time compression. In due course, interviews at the appropriate levels will besought to establish ‘trigger points’ for key suppliers and to establish sponsors’ views onproposed changes. Similarly, interviews will be sought with key engineering and design staff todiscuss the merits of various potential ‘enabling’ technologies.

The IT research will require the input of those sponsors with particular expertise in the field, toexamine the viability of information and scheduling systems from both a technical and practicalviewpoint.

Sponsors involvement in the Environment Stream will also be sought, particularly in the area ofidentifying the environmental constraints on proposed changes to production systems. Sponsors’data on the environmental impact of manufacturing, including life-cycle analysis, will berequested and will be used as a basis for further analysis of the impacts of fluctuating demandand individually configured production.

LERC : Organisation And System

InternalOne full time researcher will be employed to carry out work on both streams. David Simons willbe involved in the modelling work on both streams, but particularly on the simulation for theSystem stream. There will also be work input from relevant supply chain researchers currentlyassociated with LERC.

Simon Elias will be Project Controller on a part time basis, Matthias Holweg will be employedfull time as a research associate, and there will be administrative support.

In addition, Geoff Williams and Kevin Turner will be actively involved in the research workcarried out within the Systems stream through the auspices of ICDP.


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External

The Organisation stream is likely to involve interviews and input from the complete companysponsor group as well as other industry experts. The development of the ‘As Is’ and ‘3DayCar’Models are likely to involve two example value streams stretching from dealer to raw materialsource.

The System stream is likely to involve interviews and input from the complete company sponsorgroup as well as other industry experts. In addition the detailed development of ‘As Is’ modelswill be completed within at least two sponsors’ supply chains and later testing and validation ofthe ‘3DayCar’ model will probably be applied to one sponsor supply chain.


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5 Project Communication & Dissemination5.1 Introduction

The dissemination and exploitation of the research forms a key element of the project. In theconcluding year of the project, plans will be made for comprehensive communication of theresults. Planned routes include a book, a video and a large-scale public conference. In addition,feedback to various representative bodies will help them to provide their members with a futureframework of technological and managerial change in the industry spanning the next twodecades.

Key internal communication mechanisms will include conferences and seminars, newslettersand the web site. External communications during the three year period will mainly be thoughthe series of publications (eg in research journals), and to a certain extent, through the web site.Note that research outputs, reports etc will not be circulated externally for one year after internalcommunication.

5.2 Conferences & SeminarsThe sponsoring organisations will be invited to participate in an annual conference, lasting twodays, at which all the preceding twelve months’ work will be presented and reviewed. Thisconference will be supplemented by a shorter mid-year sponsor seminar. Appendix II detailsthe proposed themes and topics that will be covered in both the mid year and annualconferences. Proposed dates for these events are shown in the project plan Gantt chart.

5.3 PublicationsThe research teams will contribute journals articles and present papers to specialist conferencesthroughout the programme. We will aim to produce around twenty journal papers and attendaround thirty conferences during and immediately after the project.

5.4 Web SiteThere will be a project web site with links to other automotive-related programmes. The sitewill describe the programme’s aims and approach, list sponsoring organisations, and be a pointof access for anyone wishing to find out more about the programme. The site will have a‘private’ content only available to sponsors, which will also be used as a means to communicategeneral news (eg via a ‘noticeboard’), and will allow access to the growing library of papers andreports.

The site will also offer a ‘discussion facility’ for researchers and sponsors to interact online on arange of topical research topics.

The web site address will be www.cf.ac.uk/3daycar

5.5 NewslettersSponsors will receive a “Three Day Car Bulletin” every four months, updating them on work inprogress, future research and other information relevant to the project. The bulletin will also beheld on the web site.


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5.6 Training packageTowards the end of the programme, it is intended to produce a comprehensive training package.This will be a key mechanism to enable organisations communicate new ideas, to bring aboutchange, or implement new techniques that result from the programme.

The precise design and structure of the training package will be shaped as the programmeprogresses, when the type and range of outcomes begins to emerge. However, it is anticipatedthat some aspects of the outputs from the simulation model will be included in the package.Work is not expected to begin on this until year three.

5.7 Sponsor LiaisonIn addition to formal conference participation and strategy group representation , sponsors willbe encouraged to participate actively in the research streams. Within reason, any sponsorrepresentative who wishes to participate in a specific research team will be invited to attend theresearch stream meeting every 3 months. Sponsors who wish to, particularly those offering “inkind” support, will also contribute to the work of the research stream through the medium ofthese quarterly meetings.

Specific research stream workshops will be held once or twice per annum. These will involveinterested sponsors and ,as appropriate, representatives of outside bodies and other industries.


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AppendicesI Progress Reports Format

II Conference Themes

III Gantt Charts


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Appendix I - Project Progress Report

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PROJECT PROGRESS REPORT

Research Stream

Review Period:

Activities & deliverables this period:

•

•

•

•

•

Activities & deliverables next period (period):

•

•

•

•

•

Issues:

•

•

•


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Appendix II - Conference ThemesDate System Marketing Costs Technology Organisation Environment

Jun-99

Value Stream Mapping:i - Information process:Customer back throughsupply chain ii- Supplyprocess: Raw material tocustomer handover

Simulation format

Other Industriesreference frame

Customer and Dealersurvey contents

Current Organisationstructure

Dec-99

Requirements for3DayCar

Current and naturalvariations in demand onfactory

Customer purchaserequirements

Differing sectorrequirements

Impact of IT

Key design parametersand processes for3DayCar

The role of the players andtrends in relationship

Key environment andlegislative requirements

Jun-00

Overall structuralsystem and informationflows for 3DayCar fromsimulation investigation

Future retail, marketinginformation structure and

Requirements of newcosting system andshortcomings of presentsystems

Future organisational andgeographical relationshiprequirements

Dec-00Simulated costrelationships in the newcar supply chain

Actual costs in the totalsupply chain

Effect of anticipatedmaterials, technology,and manufacturingprocesses

Changes in the role ofmajor players and impacton the system

Impact of legislative andenvironmental issues on3DayCar

Jun-01

The recycling system After Sales requirements

New forecasting tools

Social trends and"green" issues

Definition of new costingtechniques

Critical cost areas andprofit generators

The technology of the3DayCar

The future organisationstructure

Impact of 3DayCar onenvironment

Identification of social andgreen trends affecting3DayCar

Dec-01

Optimum costframework

Cost, pricing, and profitrelationships for optimumdecision makingFuture industryrelationships & powerbalance

Relationships in the supplychain

Relationship betweenmotor industry andenvironment fromproduction to recyclingEffect of changes toservicing


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Appendix III - Gantt Charts

research plan & project initiation document day car programme research plan & project...

Documents