By David Michael and David Lucke
Due to a shift in consumer behavior, automobile purchases in the U.S. market have become driven by fashion trends. As a result, new models are launched at a higher rate than in the past. Just a few years ago, one would expect to see approximately five new models launched in one year. Now it is not unusual to see 10. Consumers expect new cars immediately, with a variety of colors and features, as well as options to customize. While this is a significant change for the auto industry, it also creates a unique challenge for global automotive logistics providers.
Regardless of the business, preparing for a new product launch is time consuming and complex. Here we'll discuss the design and logistics planning process based on Ryder System Inc.'s experience working with DaimlerChrysler, while sharing strategies for success that are relevant across industries.
The key to a flawlessly executed product launch is planning. Ryder's engagement in the pre-launch planning process begins in the decision period between concept and production. This can be two to three years before volume production. Key decisions concerning the new vehicle have already been determined — target market, customer profile, platform and concept design. Moving from concept to production involves many product cost studies to determine the total landed logistics cost to the program.
Different functions within a manufacturer, such as procurement, logistics and material handling, must come together to work on a new vehicle launch. For example, in addition to sound program management practices, DaimlerChrysler has automated the collaborative process between the functional groups. An internal system, iPass, serves to provide and link key informational elements necessary to the making of good procurement, material handling and logistics decisions. This system centralizes the data and decision elements for timely access across the organization.
Ryder's overarching role in the launch process is to provide decision-support analysis for DaimlerChrysler. DaimlerChrysler's Plan for Every Part (PFEP) is the culmination of the entire pre-launch planning effort. From point of use, every part is analyzed for its ergonomic and line-side presentation. Internal and external material flow impacts are considered and coordinated to optimize inventory levels, material handling efforts and transportation requirements throughout the supply channel. Best practices are leveraged across platforms and programs in promoting launch standardization in methods and procedures.
Development of the PFEP is a work and rework process. This may involve numerous iterations as decision data are analyzed for program impact on cost and quality. Ryder's launch support involves the informational exchanges between tier-one parts suppliers, material-handling equipment (MHE), packaging and logistics suppliers in the creation and implementation of a logistics plan for every part to support the manufacturing effort.
There are a number of things that manufacturers can learn in order to best work with outside parties like Ryder. From the perspective of network design and logistics planning, a lesson learned in the pre-launch planning process comes in the area of change management.
Bringing a vehicle from concept to launch involves multiple groups within the organization. Each has a defined and distinct responsibility for the launch of the program. The decision of one group impacts the decisions of another group. Analyses of decisions made throughout the launch process need to be shared and communicated quickly and accurately across the product team members. Both internal and external team members should be included. A disciplined project management approach is critical to a successful launch. Deadline adherence and accountability for milestone attainment from every participant are paramount.
Every launch involves tremendous volumes of data. Data elements originate from multiple sources and providers, and all the data must be collected and validated for accuracy and completeness. Standardization in the informational exchange processes, timings and formats eliminates error and waste.
As the saying goes, nobody plans to fail, but they often fail to plan.
Right decisions made early in the pre-launch process can only come through collaboration between the internal and external product team members. This requires a disciplined and laser focus. The time and effort expended in the pre-launch process enable improved quality and promotes a program cost-avoidance approach, which is always better than attempting to go back to add quality in and take cost out.
One of the largest challenges in supporting the launch process is in the gathering and validation of the data elements necessary to the design and implementation of an effective logistics network. In the case of DaimlerChrysler, Ryder has identified over 60 data elements for every part record necessary to the design and optimization of a supporting logistics network. With flexible manufacturing, each launch may require over 200,000 individual pieces of data. Ryder keeps an inbound transportation cost model for each launch and provides a financial journal of all changes affecting the inbound cost.
To address the sheer data volumes, Ryder developed the tools and processes to collect, maintain and conduct analysis on manufacturing parts in a database that currently houses over 1 million parts. Synchronized program launch goals help unify functional group goals and support right decision-making. Timely and free sharing of decision data is necessary for all program members to ensure the quality and cost effectiveness of the launch.
Working together with the customer, Ryder applies a number of best practices to ensure success. DaimlerChrysler has created an overarching supply launch timeline, and DaimlerChrysler Logistics and Ryder have standardized the logistics launch timeline to support the manufacturing process. Information and data requirements have also been incorporated into a launch plan, giving consideration to the key dependencies of the functional groups and extended partner providers. We have also leveraged our knowledge capital to help DaimlerChrysler lean out time and waste in the launch timeline.
There is a lot of uncertainty over the success of a new product launch, and manufacturers don't know how a new model will do until it hits the marketplace. For a logistics provider, the primary measurements of a launch's success are "on time" and "on budget." The success of a launch is also judged on its concept to production cycle time and the seamless integration of new processes and suppliers into the production value stream.
Keys to Success
Keys to a successful program launch and network design include:
- Starting early
- A predetermined launch plan (with program goals)
- Willingness to adjust priorities
- Frequent communications — Integrate cross-functional group processes and pay attention to the value stream
- Right tools
- Right people (knowledge capital)
- Project discipline (review the plan)
Automotive program launches are enormous undertakings, and launches in other industries can be no less challenging or complex. Regardless of the industry or product, companies gearing up to support a program launch initiative would be wise to consider identifying and aligning with a capable partner-provider that has the experience, tools, patience and perseverance to finish the race. Companies need to empower and support strong leaders that can direct and channel the efforts of the collective program group members.
About the Authors: David Michael is director, business development, and David Lucke is logistics project manager at Ryder System, Inc. More information at www.ryder.com.