Project Management for the Automotive Industry

Project Management for the Automotive Industrythe order is ready for packaging.
 7. Packaging: Packaging is done mainly to protect the
Project Management can be seen in many differentproduct when it is being transported from the source
industries: software, construction, films, automotive,to the destination. It can also be used for promotional
etc. In the automotive industry the need for a morepurposes.
efficient way of doing business has become8. Parts and Service Support: This covers the whole
absolutely essential. It is said that "projectized"after-sales service process.
organizations are approximately forty times more9. Plant and Warehouse Site Selection: This function is
efficient than "functional" organizations. This chaptercarried to determine where the plant and the
will look more in depth into the history of projectwarehouse are going to be located, keeping
management in this industry and also delve into thecost-benefit analysis in mind.
organizational structure that a firm in this industry10. Production Scheduling: This function's task is to
might want to utilize. Computer-aided Design is brieflybalance demand for products with the existing plant
discussed as well as a glimpse into the future of thecapacity and availability of inputs.
automobile.11. Purchasing: This is a very important function in the
Historylogistics management as the quality of inputs that are
Project management did not become a major part ofpurchased determines the quality of the finished
the Automotive Industry until the Modern Era of theproduct. Vendor selection is an important sub-process
automobile, which defines the industry that hasof this function.
existed for the past 25 years. However, this shift to12. Returned Products: There are many categories of
a more efficient projectized organizational structurereturned products. A few are subjects of product
had to be made because rising fuel costs followingrecalls, meaning that a safety defect or hazard has
the OPEC crisis and increased competition from newbeen discovered. E.g. laptop battery recall by Dell.
firms entering the industry required companies toThese products are removed from the shelves, and
increase their efficiency to reduce costs.  One ofboth retailers and consumers attempt to return them
the first automotive manufacturers to introduce thisto the manufacturer. This is a form of reverse
practice was Toyota, which likely owes much of theirdistribution, with goods moving in the opposite
current success to switching to a projectizeddirection of their usual flow.
structure earlier than most automotive13. Salvage Scrap Disposal: How a firm takes care of
manufacturers.  Following the Second World War,its waste material is covered in this function. The firm
General Douglas MacArthur was given themight recycle its waste or sell the waste to various
responsibility for governing post-war Japan, with himprocessors who specialize in recycling it.
he brought W. Edwards Deming and Joseph Juran14. Traffic Management: All the transport
(two quality control experts of the time) from therequirements needed to move a firm's freight is
US to teach the Japanese people the fundamentalsknown as traffic management.
of quality control. The official story of how what is15. Warehouse and Distribution Centre Management:
known as "the Toyota Production System" came toThis logistics activity involves management of the
be has not been confirmed.  It is also possible thatlocations where the firm's inventories are stored.
the strict army training that the Japanese received 
was enough to increase their efficiency.  Yet, many 
still recognize "Piggly-Wiggly's just-in-time distribution 
system" for the credit.The automotive industry manufactured components
Masaaki Imai, inspired by the book "Total Qualityfall under six broad product categories according to
Control" by Armand Feigenbaum (1951), created aAutomotive Component Manufactures association
new business philosophy in Japan known as Kaizen,(ACMA). These are given in table below.
which can be defined as "a means of continuing 
improvement in personal life, home life, social life, and 
working life. These practices would later evolve intoTable : Classification of Automotive Components
many others, including Total Quality Managementaccording to ACMA
(TQM), Six Sigma, and Twelve Sigma. 
 Product Group
Organizational StructureProducts
The most prevalent of all the projectizedShare* (%)
organizational structures closely mirrors the Matrix 
structure where projects are listed top to bottomEngine Parts
and functional areas listed from left to right. Pistons, Piston Rings, Engine Valves, Carburetors, Fuel
Employees under a Matrix structure report to both aInjection Systems
functional manager and a project manager.  Kentaro23
Nobeoka and Michael A. Cusamano from MIT's Sloan 
School of Management further studied the structureElectrical Parts
of automotive companies to find that they do notStarter Motors and Generators
use this exact structure, yet in fact they use a slight7
variation.  In their research paper entitled 
"Multi-project Management: Stratagy and OrganizationDrive Transmission and Steering Parts
in Automobile Product Development" they found thatGears, Clutches, Axles
the basic Matrix model was much too14
"function-orientated", that is to say that there was a 
lack of "interdependency" between project teams.Suspension and Braking Parts
Interdependency is necessary in the automotiveBrakes, Leaf Springs, Shock Absorbers
industry because a vehicle has many parts that all11
must work together, so it becomes necessary to 
have many project teams collaborate to create theEquipment
finished product.Headlights, Dashboard Instruments
Nobeoka and Cusamano interviewed Japanese firms8
and found a variation of the matrix structure known 
as the "Differentiated Matrix"Others
In this version of the Matrix Structure one can seeSheet Metal Parts, Pressure Die Castings, Tyre Tube
that the functional departments have been furtherValves and Cores
broken down into individual parts of the automobile36
(Body, Chassis, etc) and also that some of these 
functional areas share resources across many project 
teams.  This increased "interdependency" was foundTechnology And Manufacturing Process
to lower the cost and time needed for the overallThe body panel and engine constitute a major
project; however, it was also apparent that such aportion of the total cost of car manufacture. A
structure requires not only a very strong projecttypical cost structure for car is as given below.
manager to ensure "inter-project coordination", butParts/assembly
also a very strong functional manager to ensure% of total cost
"cross-functional coordination" as well.Glass
Computer-aided Design (CAD)5
In 1982, a company known as Autodesk, Inc.Brakes/wheels/tyres
released AutoCAD, and although it was only 2d at6
the time, it still revolutionized the automotive industry.Interiors
It was the first Computer-aided Design software to7
run on a home PC (rather than a large mainframeTransmission system
computer).The use of this software by automotive7
firms has allowed them to optimize time, cost andIgnition/exhaust system
scope of their projects during the design phase.8
Future of the Automotive IndustrySteering/suspension
Automotive firms in the economic climate that we9
currently live in have no choice but to choose a moreComfort fittings
efficient projectized way of planning, designing and11
manufacturing their products.  Soaring fuel pricesEngine
have caused many consumers to reconsider if they16
should even be driving a car; therefore, automotiveBody
firms now face competition from the public18
transportation sector of the economy.  China andOthers
India, the worlds two largest countries by population,13
have now entered the market and are producing 
cars at a fraction the cost that Japanese orCar manufacturing is basically assembly of
American firms must pay.  Also, global climatecomponents procured from ancillaries or auto
change has had a huge effect on this industry, ascomponent manufacturers. Nearly 80% of auto
firms try to make their vehicles more fuel efficient orcomponents are outsourced by the car
even make use of new technologies.  On themanufacturers. This helps in reducing the capital cost
forefront of electric automobiles is the Teslaneeded to setup a car manufacturing plant.
Roadster manufactured by Tesla Motors of San 
Carlos, California, U.S.A.  Not only is this car 100%With the new entrants planning to start
electric, but it is also fast enough and stylized enoughmanufacturing facilities with a small capacity base in
to be considered a sports car.  Tesla Motors usesthe country, the role of auto component players will
project teams and has many project managementsubstantially become important over the years.
career opportunities. 
The following indicative list gives some of theProduct/ Services:
functions that a firm's logistics management system 
is supposed to perform4:Areas of shop Coverage:
1. Customer Service: All the activities that are done1. Press/ Dies, Body, Paint and Assembly Shop in
to keep the existing customers satisfied come undervehicle assembly plant
the gamut of customer service.2. Engine/Transmission machining and assembly line in
2. Demand Forecasting: This process includes variouspowertrain manufacturing plant.
statistical measures that enable the firm to estimate 
the demand in the future, which inturn helps in properServices:
demand management.1. Simultaneous Engineering
3. Documentation Flow: This process covers the2. Conceptual planning, Basic engineering, Basic design
movement of the paperwork that accompanies thefor new-line / line-modification in Green / Brown Field
movement of physical product.3. Logistics Planning
4. Interplant Movements: This is only applicable to4. Procurement of Machinery & Equipment
those firms where production process is5. Installation of Equipment
accomplished in more than one plant, requiring the6. Launching Support
movement of semi-finished products from one plant7. Quality Build Up Activities
to another.8. Coaching of manufacturing staffs/operators
5. Inventory Management: Inventory management9. Continuous Improvement "Kaizen" (covering parts)
requires a cost effective maintenance of stocks of10. Program Management
goods and materials.11. Digital Engineering
6. Order Processing: Order processing starts with the12.
receipt of an order from a customer and ends when