OM in the News: The New Push for Standard Auto Parts
“Automakers have long sought standard parts that can be used in various cars to cut costs,” writes Automotive News (Aug. 6, 2014). Now they want standardized modules and systems. “The requirement that we face is clearly to develop products from the outset in such a way that they can be used in all the platform derivatives without the expense of making changes,” said one German exec. But with mass standardization, a part with a quality problem can now be supplied to millions of vehicles. That puts a premium on quality.
The growth of global platforms is accelerating the trend of standardized parts. Currently, 24% of all manufactured vehicles are built on the 10 biggest platforms worldwide, with the figure expected to rise to 30% by 2020. In the process, the need for common parts that can be swapped in and out of various models will grow substantially. Why are car makers moving in this direction? First, building multiple models off one basic platform saves money in product development, tooling, and facilities. Second, manufacturers benefit from risk pooling; if one model is not selling well, it may be offset by another that can be built at the same plant.
Meanwhile, internationalization complicates the job of making standard parts and systems. To exploit regional cost advantages, automakers are pushing their system suppliers to make parts purchases in local markets. But the quality standards of suppliers in different markets vary greatly. “When there are new product launches, we train our suppliers in the appropriate methods and processes when necessary and go into their factories to make sure there is a stable production process,” said a parts supplier. Common parts with the same specifications from various countries and on different tools may have to be manufactured in a way that they are absolutely identical in quality so that they can be installed at any other factory at any time.
Classroom discussion questions:
1. Why are standardized parts and systems so important?
2. Why are global platforms becoming the norm?