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Automotive Supply Industry
Customer Quality‘Going the Extra Mile’
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Knibb Gormezano
• KGP is a specialist automotive consultancy focussing on:– Analysis and forecasting of
technology based markets– Investment appraisal and
commercial due diligence– Lean approaches to all business
processes
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KGP operates World-wideRecent Projects in:• Malaysia• Indonesia• Philippines• China• India• Russia• N. America• Korea• W.& E.Europe
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Multi-Segment
• OE• Aftermarket• Components• Distribution• Logistics• Design• Manufacture
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This Subject
Two Relevant Briefing papers:
The Use of Customer Needs Assessment and Satisfaction Benchmarking in the Automotive Supply Industry
Dysfunctional New Product Development – the nightmare that is a daily problem for many companies
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Global Drivers
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Key Industry Drivers
• Emissions control
• Fuel economy (CO2)
• Safety
Technology Forcing}
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Key Industry Drivers
• Emissions control
• Fuel economy (CO2)
• Safety
• Price/cost downs• Globalisation • Global Growth
Technology Forcing}
} Competition & Economics
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World Vehicle Sales
1995 % 2015 % % Ch
DCs 38 74 50 53 31
LDCs 14 26 42 47 217
World 52 100 92 100 81
Source: Pemberton Associates
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World Vehicle Production
• Production shift will be more pronounced than sales
• Levels of VM vertical integration declining as more is outsourced
• Global sourcing trend continues• Outsourcing growth includes specialist
engineering and scientific services (FEA, CFD, combustion research & development etc.)
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Patterns of world investment (95-15)
21%
6%0%43%
11%
12%7%
N AMERICA
W EUROPE
J AP/KOREA
ASIA(exc.J ap/Kor.)
E EUROPE
Central and SouthAmerica
ROW (Africa andOceania)
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Products & Technologies
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Product & Sector Summary
UP• Feature content• Safety &
environmental standards
• Performance & Fuel efficiency
• Inherent cost• Global sourcing• Number of model
variants (off the same platform)
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Product & Sector Summary
UP• Feature content• Safety &
environmental standards
• Performance & Fuel efficiency
• Inherent cost• Global sourcing• Number of model
variants (off the same platform)
DOWN• Real cost• Lead times (3 day
car)• Number of OEM
customers• Number of Tier One
suppliers• Number of base
platforms• Volumes per model
variant
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Key Changes
• CO2 Agreement– Diesels– GDI / HCCI– Light weight materials– Transmission developments– Mild & Full Hybrids– Regenerative Braking
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Key Changes
• Energy demands– 42 volt– Integrated starter / alternator– High power density devices– Electronic power management
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Key Changes
• ELV directive– 1st stage 2007 (85%)
• Hazardous waste designation• De-pollution stipulations• Licensed premises
– 2nd stage 2015 (95%)• 2m+ tonnes of shredder residue with
no current technology available
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Key ChangesMeeting road death targets• Passive systems will peak• Active Systems take up the future
challenge– Adaptive Cruise Control– Brake-by-wire– Steer-by-wire– Electronic Stability Systems– Lane Guidance– Driver Alertness
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Aftermarket
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• Service intervals and parts life increasing
• Increased sophistication– Means raising knowledge standards
• Independent sector growing – helped by Block Exemption changes
• Off-shore supplies increasing• Users shopping around
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What are the Implications for Supply Chains
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Implications for Supply Chains
• The traditional competitive race will be unsustainable.
• Supplier selection and development based solely on QCD factors is not enough.
• Supplier partnerships needs to become a reality, not a slogan.
• A shift from supplier development to supply chain development is required.
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QCD Focus Shortcomings
• QCD are the fundamental and most basic quantifications of customer requirements.
• QCD focus undervalues many important elements of the supplier’s service.
• QCD focus, together with competitive tendering can distort customer – supplier relationships.
• It can lead to simplistic attitudes on collaboration, performance and waste.
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Successive Quality Initiatives
- Are they working?Quality Circles – TQM – Taguchi/DOE - Kaizen – Six
Sigma…..• You have probably been through many of these
waves of activity.• Maybe you can point to successful projects.But• How many of you can say that you have been
really successful in cascading the discipline into your suppliers?
• Can you honestly say that they have have made your company a leader not just a survivor?
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Our Experience Indicates• Most automotive suppliers focus
improvement activities on manufacturing.
• Kaizen based improvement programmes predominate in-house and at suppliers.
• Programmes such as Accelerate and SMMT IF et al have been beneficial, but there is a growing realisation that they do not go far enough.
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Our Experience Indicates• Most automotive system and component
suppliers focus improvement activities on manufacturing operations.
• Kaizen based improvement programmes predominate in-house and at suppliers.
• Programmes such as Accelerate and SMMT IF et al have been beneficial, but there is a growing realisation that they are narrow in focus, and do not go far enough.
• Not enough attention is given to the customer.
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So how well do we listen to customers
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Customer Satisfaction – How do you know?
• In a survey conducted by KGP nearly half of all suppliers questioned had not used any form of systematic customer satisfaction measurement (CSM) in the last 3 years
• However, 80% of users found the process useful and rewarding
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• Only one company in our survey used customer satisfaction techniques to gain competitor comparisons or benchmark performance
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Aspects of C SProduct Dimensions Interface
Dimensions
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Aspects of C SProduct Dimensions Interface DimensionsPerformance CredibilityFeatures CompetenceReliability SecurityConformity AccessDurability CommunicationServiceability CourtesyAesthetics ReliabilityQuality ResponsivenessCost / Value Understanding
the Customer
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Aspects of C SProduct Dimensions Interface DimensionsPerformance CredibilityFeatures CompetenceReliability SecurityConformity AccessDurability CommunicationServiceability CourtesyAesthetics ReliabilityQuality ResponsivenessCost / Value Understanding
the Customer
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J D Power CS reports• Their research is with the end
customer not your customer.• Customers are asked very
detailed questions about the performance of systems within the cars they own. The answers are linked to known suppliers for those parts.
• This is a growing business.
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The (Customer Driven) Lean Business Approach
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What Sort of Model are We Talking About?
• Policy Deployment• Cross-Functional Teams• Lean Operating Systems• Supply Chain Integration
World Class companies are known to use four key approaches:
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Lean is a more powerful and lasting solution than Kaizen and
other quality based tools
Quality Initiatives as applied it in the West, have been mostly:
• Manufacturing operations centred• Carried out at middle and lower functional
levelsLean Thinking ensures that:• Senior Management have a vital role in the
process• There is a recognition of the big problem of
waste between functions and companies• There are practical methodologies and tools to
use on non-manufacturing problems
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Lean Supply Chain Approach • Deployment of Strategy & Policy
throughout the Supply Chain• Creating a Common Sense of
Purpose• Strengthening Trust &
Relationships• Developing & Learning Together• Eliminating Waste Between &
Inside Companies
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The Ideal Business Model
The traditional watchmaker – personally responsible for:– Securing customer commissions– Design – Development– Production– Installation– After care
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The Ideal Business Model
The traditional watchmaker – personally responsible for:– Securing customer commissions– Design – Development– Production– Installation– After care
Get close to mirroring
that with a seamless
process
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A Decade On - Where Might We Be (Europe)?
• Competitiveness thru higher value added products– Raising the game on technology– Higher proportion of NPD effort
• Lean business second nature– Cross-functional effectiveness– Waste removal freaks
• At all levels!
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The Survivors
• Extreme dedication to customer needs– ‘Total’ Cost & Quality – throughout
the process map– Emphasis on the relationship factors
• Awareness of and proactive attitude towards J D Power style supplier satisfaction analysis
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