Competing Against Time

The new Internet based business world has impacted numerous industries with a singular success factor: competing against time.  From a macro business standpoint, the major “quality” challenge facing these industries is speed, or how to get the hardware to the consumer at a very rapid pace.  The one industry that has aggressively addressed shorter supply chains, or at least quicker ones, is the auto industry.  In addition, automakers now emphasize minimal inventory, lower costs and lean manufacturing.

It should be noted that the Internet supplier exchange that Ford, General Motors and Daimler Chrysler have developed will add to this “speed” pressure across continents.  Closer home, the likes of BconnectB.com, with appropriate Asian enrolment, will accomplish the same in the auto, electricals and other industries.  In the final analysis, e-commerce, is speed to market, or bringing the customer closer to the manufacturing base.  (Is that right?)

So what’s the issue?  In my opinion, when you reduce the supply base and shorten the reaction time, you cannot tolerate products that are inferior in quality.  Such manufacturing processes are very sensitive to product flow and material flow – they have got to be perfect.  That is precisely one of the reasons one is hearing so much about Six Sigma these days.  In simple terms, Six Sigma implies a significant improvement from where the global auto industry is today.  Because of speed, low inventory and rapid response requirements, original equipment manufactures (OEMs) cannot tolerate PPMs (defects measured in parts per million) in the three to four sigma range.  Ask Sampathkumar Moorthy of Sundram  Fasteners about his General Motors experience, and success.  No defects four years in a row!  That’s what it takes to reduce the supply base of General Motors for radiator caps to “one”.

The most important lesson: Perfection is doable in our Indian environment.

Another factor that is facilitating speed is the move towards integrated systems and modules by all the top ten automakers, globally.  This is not a new game.  The ability of a supplier to provide integrated systems rather than a single component is where the auto industry is headed.  And correctly so. Adding spice to the dynamics is the fact that customers are turning rebellious.  To deal with this, auto manufacturing processes need to be flexible and economical in order to survive.  Is there a better way to crash fixed costs, than purchasing integrated systems?

As supply options for auto OEMs turn globally seamless, they will continuously reduce their supply base in order to reduce variation.  However, this will require a lot stronger partnership than in the past.  It means that suppliers and OEMs will have to be involved very early in the product design and development process.  That is when most of the quality issues will be highlighted and addressed.  There will be a partnership very early on to solve problems when the problem is still on the drawing board or in the computer.  Using unfamiliar tools of reliability engineering.  Substantially enabled by the Internet.