Operational Excellence and the automotive industry

Automotive manufacturers face an incredible amount of internal and external pressure to operate as effectively as they can.

Inefficiencies mean reduced profitability and competitiveness in a hectic marketplace, and poor quality safeguards can mean legal and reputational disaster.

So how can automotive manufacturers improve factory performance and achieve operational excellence?

Today, we’ll answer the following:

What is operational excellence?

Operational excellence in manufacturing is when a factory, or multiple factories in a group, have reached near-peak productivity and efficiency.

It means different things to different companies and markets, but it’s the ultimate goal of any factory that wants to be as profitable as possible.

As you can guess, this is no easy task. Manufacturing, no matter the product, is plagued by waste and inefficiencies.

In fact, as we discovered in a previous blog, waste accounts for 20% of global manufacturing spend. It’s no wonder that so many companies are now looking to reduce waste to improve their profitability.

Though demand and market conditions fluctuate, creating natural peaks and troughs in orders and renewals, every business has the power to tighten their own processes and influence how and what work is done on their premises.

That’s why there’s such an emphasis on operational excellence across the board. Achieve this, and you can be much more confident that you’ll weather economic storms, and make the most of sudden spikes in consumer demand.

The problem for car manufacturers in particular is that quality is absolutely critical to the product they manufacture, creating a more urgent need to improve in-house operations.

How does the automotive industry measure quality?

For many decades, the automotive industry has been a watchword in industrial standardisation. Techniques that are now general across manufacturing were first introduced in car factories.

Modern mass production could be said to originate in the car factories of the 20th Century. But as a product with numerous individual parts, the importance of ensuring every last vehicle rolling off the production line meets quality standards is no small task.

From product design through to road testing, manufacturers must cover all bases to ensure their product is fit for purpose.

But of course, this presents challenges.

A Deloitte report from 2020 found that more than 50% of Original Equipment Manufacturers (OEMs) see a significant risk if nothing is done to improve the industry’s problem-solving processes.

And for a sector on the verge of a revolution, this makes a lot of sense.

The legal implications of substandard self-driving cars, for instance, would be enough to keep any manufacturer awake at night. Flaws in your organisation’s problem solving processes could mean weaknesses in your product go undetected.

For this industry in particular, that’s not something to put at risk.

Why is quality important for the automotive industry?

The automotive industry has a particularly important role to play in quality assuring its own product. Why?

One word: safety.

Car manufacturers cannot afford to be slipshod in safeguarding the quality of their output. Standards must be met, and safety features in particular must be proven to work beyond any reasonable doubt.

Failure to do so could jeopardise the customer, lead to expensive product recalls, and cause untold reputational damage lasting long into the future.

Even without the serious risks inherent in poor safety assurance, it’d be one side competitors could outflank you on in an extremely competitive marketplace.

So ensuring quality is up to scratch is an absolute must for the industry. How does it typically work?

How does the automotive industry ensure operational excellence?

Over the decades, manufacturers have implemented various tools and processes to improve their operations, and ensure the quality of their finished product.

Let’s take a look at a handful of proven examples. 

Lean manufacturing

A hugely popular methodology for reducing costs and increasing efficiency, lean manufacturing has allowed automotive firms across the world to become more effective and profitable.

Lean manufacturing is both a simple set of principles and an ever-evolving school of manufacturing.

Arising from the Japanese automotive sector in the 50s and 60s, the ‘Toyota Production System’ formed the blueprint for lean best practices. It’s therefore hardwired to the sector, and many of its finest examples of operational excellence come from the automotive industry.

It’s therefore no surprise that there’s an almost limitless amount of material published on lean principles and production. We’ll save you the long-reads for now, and instead refer back to its simple, core goal:

Reducing waste by measuring and controlling your processes.

Continuous improvement and Kaizen

Closely related to lean manufacturing, though a discrete discipline in its own right, continuous improvement is an operational philosophy aimed at reducing waste and increasing efficiency through experimentation and iteration.

You’ll find enthusiastic champions of continuous improvement throughout the automotive industry, not least because it gives plant managers much greater control over key metrics and KPIs.

Kaizen, the culture that supports continuous improvement, is simple enough to be immediately understood across all levels of a factory, while being broad enough to apply to all manner of situations. 

Kaizen continuous improvement allows automotive manufacturers to root out waste and non-value-added activities across their lines. And the greatest gift it gives plant managers is a workforce that proactively seeks out inefficiencies.

According to Kaizen Institute case studies, manufacturers have seen a 5% OEE increase, an annual saving of 43% over 3 years, and 20% reduction in the average number of tests per product after adopting the methodology.

No wonder it’s becoming general across the industry. 

Digitalisation

Digital transformation is reshaping how industrial processes work, and relate to each other.

Whereas manufacturers always had to accept a certain amount of waste coming from any industrial process that depended on analogue methods, this is no longer the case.

Digitalisation of lean manufacturing and continuous improvement practices allows automotive manufacturers to log everything from their lines.

It allows them to distribute information instantly among teams.

And thanks to AI, digital tech can now learn from their factory and make tailored recommendations based on the data they gather.

Essentially, it allows for a more connected, better monitored, and more easily optimised factory.

And the gains for manufacturers could be enormous.

Digital lean manufacturing made easy

The mlean Production System (mPS) takes lean and continuous improvement methodology digital.

Gone are paper-based routines, visual displays, and endless spreadsheets.

Now, automotive manufacturers benefit from a system that lets them manage everything from one platform, unlocking the benefits of lean and continuous improvement in the process.

It’s caused factories from manufacturers like OPmobility to see some impressive results.

And as it’s a modular system, we’ll help you identify and implement the tools you really need to achieve operational excellence in your factory, and exclude the ones you don’t.

Let’s have a quick chat to get started!


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