Smart 'BOM' your factory

Business drivers are forcing a major shift in the global automotive industry. Cost pressures, supplier and OEM consolidation, emerging markets, outsourced manufacturing, shorter consumer lead times, shorter design cycles and eroding profit margins are all contributing factors. US-based Tier One automotive manufacturer DCT makes welding and assembly systems for the major vehicle OEMs such as Ford, Daimler Chrysler and General Motors. There’s 1.1 million square meters of manufacturing and assembly floor space and the business turns over around $200m a year. There are 1,200 employees in all across seven sites, with the headquarters in Michigan. DCT’s vice president e-commerce Mark Yadach explains the situation when he joined the company two years ago: “The heartbeat of DCT is its BoM data. There are 60,000 different components in all. But they [the BoM managers] were trying to manage it all using [Microsoft] Excel spreadsheets. They had eight disparate BoM versions within the site!” Yadach says the system was both crude and costly. “Managing the BoM data involved too many manual tasks: generation and input was manual, and the transfer of BoM data to other departments within the company was also done manually – there was a high degree of inaccuracy and redundancy. “There were also excessive time delays during and between functional processes,” he continues. “This meant we were losing revenue because of poor tracking of engineering changes – We decided we needed some kind of PDM [product data management] tool to solve it all.” Yadach says the company had several objectives at this point. To reduce multiple entry of BoM data through the lifecycle of a product; to make the data and documents accessible and secure to anyone who needed it; to develop design and process standards to reduce re-engineering; to make reporting easy, yet valuable; and to give external parties access to consistent, accurate and comprehensive BoM data. So the firm evaluated several of the major PDM software vendors. “We looked at MatrixOne, Windchill [from PTC], i-Man [from UGS, now EDS] and Smarteam,” says Yadach. “Apart from meeting our functionality requirements, we chose Smarteam’s product [SmartBOM] because we liked the way they ran their business. They’ve a similar culture to us really – they’re risk-takers. But they’re interested in businesses of our size, not just the big guns.” Interesting point. IT infrastructure problems But the project itself had to be phased in gradually. Yadach explains: “We naively thought we could just drop-in the Smarteam application and everything would be solved. But we’d overlooked the IT infrastructure. We realised we needed to integrate Smarteam with our existing JDE [ERP] system first.” Yadach refers to Phase One as the “eBoM” phase and he states, “It was a very necessary step in establishing a stable, usable electronic BoM system. The actual integration work with the ERP system has now been completed; and we’re now in the second phase of the project: putting in place a business-wide document management foundation involving our AutoCad software users.” The firm uses multiple different CAD applications including AutoCad, Catia, MDT, Unigraphics and I-deas. And Yadach sees the eBOM as, “The centrepiece of the whole business model, which feeds all other areas [design, manufacturing, purchasing, receipt of order, sales and marketing] with one accurate, consistent BoM version.” So what about the benefits so far? According to Yadach: “Phase One has been a real success. Having a BoM released electronically allows us to pre-order items. We no longer have to wait for paper to arrive in the purchasing office to order something. And because of our integration link with JD Edwards, we can now semi-automatically create works orders and purchase orders instead of manually doing it all.” The company has further phases planned. Phase Three will be all about integrating the eBOM and document management software with its existing mechanical CAD applications, Catia and MDT. The next stage after that, says Yadach, “Is about change management and other workflows.” But already, over the last 12 months, DCT has also expanded the use of Smarteam’s application to give its customers access over the web. Branded ‘SmartXChange’, the project, says Yadach, was about implementing the company’s own re-branded version of Smarteam’s software. He describes it as a, “Collaborative web-based system, allowing clients to log in, check BoM versions online, look at CAD models and make decisions and react much more quickly to problems. And the website itself looks very comprehensive, but is clear and easy to use. “The idea of SmartXChange is to improve the cost, speed and quality on each of our capital projects, whether it be a Ford or Daimler-Chrysler project. Difficulties often occur when launching new vehicle programs and managing the plant operations. Often, it’s done in an uncoordinated manner, resulting in a lack of a single-point contact to drive the overall programme objectives. And there’s fragmented communication on engineering changes, multiple standards, regulations and customer requirements, as well as poor associativity between cost and content.” Yadach refers to a recent example – the launch of Daimler-Chrysler’s new truck. “We were tasked with designing and delivering all the frame assembly tooling for a full-size truck platform, on time and within budget. We spent 18 months working with Daimler-Chrysler (D-C) and another Tier One component supplier on this program.” And the results? “Not good,” according to Yadach. “D-C expected a total of 52 operations, but they received 175 – They expected 5,438mm of laser cutting but got 14,450mm – The number of robots increased from 170 to 276 – Floor space went up from 160,000 square feet to 261,000 – And the number of parts in assembly went up from 58 to 142.” In terms of figures, this equated to a total capital investment of $140m, “Up from a budgeted figure of $63.5m. It more than doubled,” exclaims Yadach. “We couldn’t point the finger at anyone in particular. It was simply a lack of overall communication and we needed a set of tools to project manage the whole thing. It proves that traditional methods of managing projects just don’t work with today’s cost and time to market demands. We needed speed, visibility, discipline and accountability.” Yadach sees an opportunity for SmartXChange (which went ‘live’ a couple of months ago) to coordinate these various functions and provide that single point of contact on big capital programs. “We’re already seeing lower operating costs, reduced complexity, reduced launch times and reduced capital costs with SmartXChange and the eBOM system. “People can look at things in real time,” he adds. “And it takes less time [and cost] for tooling programs now. We’ve reduced the number of engineering changes too.” And he points to an, “80% reduction in the cost of a tooling project,” as being an achievable figure for the future. Project visibility for all SmartXChange actually consists of workflow management tools and reporting and project collaboration software and templates, plus the BoM management tools from Smarteam. “Since July last year, it’s been hosting the service for the new M Class Mercedes project,” says Yadach. “It’s working very well indeed. Everyone can see, at any stage of the project, who’s responsible and accountable for what. Users can drill down into BoMs, update them, see an engineering change note and who made that change and why.” Whilst he doesn’t point to actual cost savings made on the Smarteam implementation or SmartXChange, Yadach does state that, “We’ve seen an ROI already.” And he points out that he’s drawn up a detailed ROI matrix for the SmartXChange implementation. “On a typical $150m project for an OEM, we’re expecting to save $25m by using SmartXChange – That’s a saving of almost 20%. “These expected savings will come from a 30% reduction in travel-related expenses; a 20% reduction in labour costs; a 50% time saving on the launch of new vehicles; 10% savings from reverse auction-related activity; 3% less scrap; 30% cut in design and build costs; and a 20% saving on shipping costs.”