Transforming the auto industry for long-term success

By Kevin Baughey

K. Baughey,  Dassault Systemes

This next year is critical for the American automotive industry. Given the struggling economy and strict terms of the bailout, Detroit’s Big Three need to quickly develop and execute a plan that can help them not only survive, but to emerge with advantage once the market starts to improve. To accomplish this,  the auto manufacturers have to transition through four distinct phases over the course of the next 14 months to ensure the long term sustainability of the North American auto industry.

In the first phase,  given the industry’s heavy losses and shrinking customer base, automakers and suppliers have to ensure that they are managing their bottom lines as efficiently as possible. In addition to the obvious operational requirements, companies need to evaluate the viability of their product lines and how they’re managing the process of innovation from concept to end-of-life.

As part of this, all information across the extended enterprise needs to be integrated to improve decision-making accuracy and speed. Decisions can no longer be made without critical pieces of information that, in the past, were too difficult to gather or not deemed relevant. Questioning everything within the organization to achieve a lean efficient base is a crucial starting point.

Once the firms have conducted their internal audits and implemented short-term containment actions, phase two must be implemented. A business and technology strategy must be developed that enables adaptability to changing global conditions as well as management of the changing nature of the supply chain. Beyond the design and development of new products, this involves determining regional customer needs around the globe and regional devel- opment capabilities that can be leveraged globally. For example, India is a preferred location for software development.

The third phase involves implementing innovation for the next generation.

After establishing this business model, it’s imperative for the automakers to be able to harness their innovative processes for a new generation of vehicles. This means implementing a technology solution that enables them to manage all of the information and business processes from all key stakeholders from suppliers to consumers.

With product lifecycle management (PLM) technology,  automakers can main- tain traceability from ideas and requirements throughout the product lifecycle, closing the gap between what is produced and what the market wants—and thus accelerating market-driven innovation. Creating a unified database of information and business processes is crucial to become a true learning organization.

Managing and competing in a global economy is the fourth and final phase. The next generation of automotive firms will be adapting and accelerating development faster than ever before. The most effective firms will exploit opportunities quickly by shifting the footprint of the firm as opportunities are identified.

For an industry that has typically been viewed as slow moving because of the heavy assets and infrastructure required to produce complex products, this will pose a challenge. Therefore, eliminating aspects of the enterprise that weigh down the firm will be critical. To do this, automakers will require a PLM infrastructure that provides the flexibility needed to enable much faster reaction to future changes rather than serves as a hindrance to change.

With some short-term adjustments and a long-term focus on global collaboration and unified business processes, the North American automotive industry can emerge from its current state to become a competitive force once again.

Kevin Baughey leads the Automotive Industry Solutions group for the ENOVIA brand within Dassault Systèmes. Send e-mail about this subject to [email protected].