Optimum Lean Production Saves Manufacturing Costs, Business and Industry Trends Analysis

The standard in automobile manufacturing today is optimum lean production.  This is a business model under which a high (but not necessarily perfect) level of quality is sought while high-efficiency goals are set that save time, money, manpower and floor space.  Optimum lean production applies to the complete manufacturing cycle, from concept design, development and engineering to assembly and shipping.

Computer-aided design (CAD), computerized testing and computer-aided manufacturing (CAM) have been big factors in efficiency gains.  As a result, the number of months necessary to fully design and launch a new model has been drastically cut.  More recently, 3D printing (also known as additive manufacturing) has enabled designers and engineers to output prototype samples of their designs instantly, in the studio.

On the factory floor, high manufacturing volume of specific components can be instrumental in achieving optimum efficiency.  This is one of the factors that has led to consolidation of manufacturers and to cross-use of components and designs.  To a great extent, the more units that are produced, the lower the cost per unit.

While the early mass-production car factories of pioneer Henry Ford’s days were vertically integrated, producing nearly all of their own parts and building materials in-house, from glass to steel to batteries to finished cars made from basic raw commodities, modern car plants are assemblers more than creators.  That is, each manufacturer works very closely with a handful of suppliers to design and price the components necessary to assemble a completed vehicle.  Primary suppliers (called tier-one suppliers) deliver complete “systems” or “modules” to the carmakers.  Such systems may consist of large interior, exterior or drivetrain units.  These tier-one suppliers in turn buy from groups of tier-two and tier-three suppliers that manufacture smaller parts and components.

Meanwhile, manufacturers require that their suppliers bear much of the cost and responsibility of inventory.  Under today’s just-in-time delivery requirements, suppliers bring their portion of the car to the factory door shortly before it’s needed.

The need for suppliers to be able to participate in the design phase, deliver sophisticated systems and provide just-in-time service means that only large, highly evolved companies can compete.  As a result, immense consolidation has taken place in the automotive components industry.  Carmakers tend to buy from a limited number of suppliers, and do so in vast quantity.

Efficient, fast and cost effective production techniques can make or break a manufacturer.  Factory automation, linking robotics on the factory floor to computerized component designs, is critical to today’s optimized production methods.  BMW is betting heavily on a new process that creates car bodies from lightweight, extremely strong carbon fibers instead of steel.  Its new i3 plug-in hybrid electric vehicle (PHEV) design utilizes a carbon fiber body which significantly reduces weight and extends the car’s range.  Carbon fiber is 30% stronger than aluminum and 50% lighter than steel.  In order to incorporate carbon fiber, BMW had to redesign its production process in which molds, heat and pressure are used to fuse fibers together with resin into a workable material.  The company has reduced the process, which can be performed by robots, to a few minutes from start to finish.

GM made headlines by spending $545 million to remodel an existing manufacturing plant in Orion Township, Michigan to produce a subcompact called the Chevrolet Sonic.  The production line was reduced from 1 million square feet to 500,000 and lighting was switched to banks of fluorescent bulbs, saving $430,000 per year in energy costs.  The plant produces 80% less solid waste and uses 20% less water than it did before.  Stages along the assembly line, including the trim area and body shop, are smaller and fed with parts from independent suppliers who work inside the plant, thereby reducing inventory costs and increasing productivity.  Fewer workers are needed.