Aspiring For Automotive Excellence: Achieving Continuous Cost Reduction

The Call To Reduce Automotive Lead Times
To compete in increasingly global markets, automotive enterprises must excel in the areas of cost, quality, on-time delivery, and product innovation. Compounding those challenges is an effort by the industry to reduce the lengthy delivery lead times associated with producing a built-to-order vehicle. While the "5-day car" remains an ideal, industry thought leaders believe that reducing traditional lead times from 60 or 70 days to a fraction of that time is a very achievable goal.

Cutting build-to-order lead times benefits both OEMs and consumers. For the OEM, shorter lead times mean increased customer satisfaction, leaner inventories, and a reduced need for incentive-driven sales techniques, which have cost automakers in North American markets US$25 billion annually 1 . Consumers benefit by finding the right car at the right time and having to accept fewer compromises on their vehicle of choice. All involved realize that the ultimate goal requires a transformation of the enterprise's entire foundation—its culture, structure, business processes, and technology. Yet the competitive advantage gained by those who achieve this transformation will be decisive.

The Key: Accurate, Timely, and Shared Information
To achieve the ultimate goal—a minimal amount of lead time with a minimal amount of inventory at the lowest operational cost—OEMs must go beyond improving their internal processes, core competencies, and outsourcing strategies and drive toward increased visibility of demand information between all links in the supply chain.

Now more than ever, all participants in the value chain need accurate and timely information in order to share inventory information; common tools to check inventory levels; and inter-enterprise common part names, numbers, and descriptions. With these tools, participants can more effectively manage production cycles and ultimately meet consumer demand. To be successful in this business climate, speed, accuracy, and rapid information access is required from every level of the automotive value chain—with ubiquitous information-sharing among dealers, importers, OEMs, suppliers, and consumers.

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