Issue: Mar 2007


The Automotive Value Chain



by Lenny Case

For the last several decades, the Automotive Value Chain focus has been shifting from Operational / Production Efficiency to Product Leadership (Quality and Innovation) to Extending the Supply Chain (linkages to key suppliers and customers). This is now being extended to create a loop-back through the finally consumed product via Telematics, Prognostics and Diagnostics, Overall Safety and In-Cabin entertainment. This evolution has been catalyzed by the need of businesses to stay competitive in the fast changing global marketplace.

With the focus to uncover opportunities and ways for driving growth through innovation and profitable customer relationships and leveraging the IT-powered automotive value chain, Microsoft along with Frost & Sullivan and SIAM concluded its three city conference - "Automotive Executive Circle" in Pune, Chennai and Delhi on March 2, 2007.

According to Dr. Manuel Simas, Director, Automotive Industry, Microsoft Corporation, "Technology is shifting the contours of competition from Cost Efficiencies to Customer-Centricity and Innovation. For example, increase in personal mobile technology has accelerated integration of infotainment and mobile devices into vehicles. "

Microsofts Manufacturing Industry Marketing Director, Sanjay Raveendranathan says, "How businesses in the Automotive industry respond to and lead change is ultimately determined by how well the organizations enable their people to efficiently leverage all their information assets to achieve peak performance by Driving Innovation, Building High Value connections with Suppliers and Customers, Developing and Strengthening Profitable Customer Relationships, and Improving Operations."

"Whether your company owes its success to its superior products and breakthrough innovation, its operational excellence, or its superior customer service and partner relationships in the Manufacturing value chain, its safe to say there is an individual or team behind every breakthrough idea or winning approach. A business that empowers its people with the right tools is called a People Ready Business"

While most manufacturing control, execution and plant-floor security systems are based on Microsoft technology, the most advanced developments are enabling new approaches to lean manufacturing, as well. Reducing wasted time, effort and materials to create a lean environment requires the mapping of processes. Until now, process mapping has been a function carried out primarily on paper, covering walls with charts that are static in nature. Making a change in one part of the process did not automatically indicate the result that could be expected. Microsoft and its partners have created an application that can simulate the impact of changes in a process map. It analyzes the time required to complete the process, conducts value stream analysis and determines the time saved by making a specific change in a process. It can also simulate the impact of other revisions in the process, reporting what will happen if a particular step is moved to another point or if one event is separated into two and similar actions. It then uses Microsoft Project to create an actionable plan simulation, determining the impact of the changes on the production time for large numbers of vehicles.

Plant floor visibility is another area where Microsoft along with its solution partners helps people within automotive organizations improve operational excellence. Considerable data resides within the various stations involved in assembling a vehicle, but todays assembly line may stretch across ten plants on three continents. Globalization has diminished visualization of resources in the assembly process. Microsoft helps business decision makers determine impacts by shifting parts of a process to a different plant or sourcing a component, from an overseas component supplier.

Microsoft can install applications in each facility to connect them through a centralized hub that provides management with a "dashboard" that has complete information about the entire process. They can view the capacity in each plant; see the sources and impact of lost parts, productivity or efficiencies; and view where they can reduce losses in the process.

Elaborating on innovations for the next decade, Dr. Manuel Simas anticipates that "the global market for IT for in-car use will grow to as high as $40-50 billion in the next few years, from almost nothing today. Automakers are likely to appoint car CIOs to oversee their auto IT platforms, just as CIOs today look after the corporate network and technology infrastructure. We think 70-80 percent of innovation in the automotive industry will be IT- and software - related in the future. Competitive differentiators will shift in favor of what the car can do for you, and how it supports your making effective, safe use of the time you spend in the vehicle, which is over an hour a day average in some markets, and much of the day for a sizeable percentage of the customer base."

"The services and capabilities made available to drivers and passengers as part of this vision have their roots in technologies and solutions available today. Its just that no one puts the pieces together properly! Take navigation systems, everyone hates having to enter addresses into the unit, and in some cases you arent allowed to do that on the move for safety reasons and yet some piece of IT you interact with probably knows all the addresses you care about, whether it be your phone, your PDA, your laptop or some corporate website. If we could integrate those sources, youd just be able to select from a list and you wouldnt even need to do that if we integrated your calendar and task list theyd be made available for you contextually," Dr. Simas adds.

According to Alok Shende, Vice President, ICT Practice, Frost & Sullivan, "While the spectrum of challenges that the auto industry is facing are coercive in nature, technology led strategies can help address these challenges and facilitate automotive players to move to a next level of growth."

GE Fanuc, UGS and Microsoft Dynamics supported the conference, as solution partners


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