Friday, 1 April 2016

Industry Practice – 'Value Stream' Exploitation – Identifying New Possibilities (Part 5.3)

The very essence of civilisation as we know it - from the provision of basic shelter onward to the construction of wells and waterways, to the creation of clinker-built wooden boats, iron based steam-engines and thereafter mostly steel, partially aluminium and other alloys for the construction of ships, locomotives, automobiles, girder-framed buildings, skyscrapers and aircraft - has relied upon the art and science of engineering.

The 21st century sees a new era which seeks to use a philosophy of advanced materials, engineering and processes, mated with digitally enabled systems efficiency leaps. To achieve a new chapter of AM and latterly EM worldwide ecological appreciation, promoting carbon reduction across NO2, NOX and particulates, and pertinently the potential reorganisation of energy uses and solutions.

Ultimately to continue to reduce humanity's impact upon the earth's own natural systems and improve mankind's 'ecological balance' with the planet.

Engineering :
The term's etymological origin lays in the Latin 'ingenium' – to devise / design.

[NB It will be noted here that the original definition of 'design', as a holistic activity, was very much aligned with 'engineering' up until the rise of a more artistically infused 18th century consumerism onward. Thereafter the advancement of specific ever new populist stylistic fashions, as promoted by the media, in turn grew the role of the aesthetically orientated 'stylist']

Engineering is endemically aligned with physics, chemistry, materials science, which having been through mechanical, electrical, electro-mechanical evolution, also today encompasses the robotic and latterly increasingly pervasive digital realm, with at its furthest advances a melding with bio-mechanics and the possibility of biologically aligned or derived robotic components and devices.

However, as specifically regards all things automotive, since the early days of chassis, engine and transmission experimentation which led to the “horseless carriage” the results and consequence of permanent ongoing testing, learning, adaption and innovation, to ever improve the breed and brand to retain consumer appeal, has meant that the discipline of automotive engineering has grown prolifically over the last 120 years or so.

Sector competition from the earliest days, and so and ever improving vehicle performance, comfort, style and safety, meant that the original prime focus upon the basic construct of the vehicle was soon joined by an expansion of efforts toward ever expanding integral and complementary systems; the ongoing improvement and refinement of the purely mechanical joined by an ever broadening of electrical (and electronics), cosmetic and functional trim and hardware and improvement externally and internally.

The early auto-industrialists (Ford, Sloane, Peugeot etc) recognised that they essentially operated as 'engineering integrators' - using either readily available parts, or adapting the standard bought-in item for improvement of function or style. Quite early on by the mid 1920s this led to the commissioning of an all new dedicated part – so with the growing complexity of vehicles and need to ensure sales success, came the need to compartmentalise the engineering process itself.

These five segmented disciplines – chassis, drive-train, electrical/electronic, trim/hardware and interior - became the basic development template relatively early on and for the most part survives as the engineering edict to this day. A standard vehicle's innate complexity grown enormously also because of the growth in scale and constant development work of the highly intra-competitive contributing supplier base, with their specialist expertise drawn from other learning from diverse indirect fields and the need to maintain their own profit margins by continually rising above what often becomes commodity parts supply, as competitors ever seek out lower cost manufacturing sites.

Thus product design became effectively propelled by both specific auto-maker and specific supplier, though the former took and still takes the leading role given its closeness to the end user.

So was born the conventional operational structure of Automotive Engineering phased sub-activities of today: Research and Development, Engineering Feasibility and Project Engineering,

Research and Development -
This arena typically concerns itself with the exploration of both 'whole car' and 'systems' and typically involves the creation of a fundamental advancement or step-change toward whole vehicle and / or systems. Perhaps the most obvious historical advancement was the change from 6V to 12V electrical systems for cars, with the future promising 48V given the ever greater 'electrification content' of Hybrids and EV vehicles. Good examples of 'whole car' engineering projects that contrast the polar opposites of global mobility needs of the world have been the necessary simplicity and conventionality of of TATA's original basic Nano for the Indian masses, to the technical leap of mass-produced carbon-fibre and so visionary tour-de-force that is BMW's i3 citycar.

However, to reiterate, it should be remembered that whilst major auto-makers do indeed have very capable research and development professionals working upon general engineering strategy and the prime question of the integrated standard supplier part versus that of the adapted or wholly dedicated component – governed by user visibility or performance needs - there is still often reliance upon their supplier counterparts to gain alternative insights and solutions.

Having been through decades of conventional systems advancement and refinement, today we witness the expected revolutionary impact of an increasingly 'intelligent' 4/5/6G wireless environment which underpins these early days of the IoT (Internet of Things). And critically the much publicised threat of Info-Tech companies' own mobility ambitions. All of which has in a short period altered the theoretical landscape of the competitive terrain substantially.

As such auto-makers have sought to strengthen their own Research and Development capabilities. which ranges from the creation of new exploratory laboratories around California's now far wider Silicon Valley by the likes of Ford, GM, Toyota, Honda and Hyundai, seeking to poach the leading lights of this field, and so undermine Google et al's progress, through to the acquisition of other expert technology firms, such as that of Nokia's locational services division bought by Audi-Mercedes-BMW syndicate in Germany and renamed 'HERE'.

Engineering Feasibility -
This concerns itself with the task of analysing the feasibility of incorporating such next-phase developmental changes into the high volumes of mass production, at once again both the 'whole vehicle' and 'sub-systems' level.

This area works in parallel with both the Market Concept team within the Design area and Manufacturing Engineering department to assess the cost and performance aspects of any new product proposition.

It is the role of Engineering Feasibility to deliver the product performance and cost targets set out within any a new business case, the business case itself typically developed by a Product Strategy section typically closely aligned to the executive function / board of directors.

[NB Product Strategy typically operates independently of the Marketing, Design and Engineering functions to avoid the negative effects of overt departmental strength and so bias. This central department not shown on the graphic so as to retain pictorial clarity].

Those targets were historically centred around cost and weight (as part of a 'Value Engineering' mindset), but with the arrival of 'QFD' (Quality Functional Deployment) pertaining to user requirements and brand attributes, the demands upon Engineering Feasibility likewise grew, making is task more prosaic and determinant of the product outcome. In effect it sets the technical and quality envelope, allowing for greater control of the balancing equation between cost-saving, quality assurance or improvement and component, systems and whole car performance.

However, periodically Engineering Feasibility may take on vitally important role beyond its standard activities, so as to extract and exploit the 'added-value' potential that lies within a firm's current value-chain. Such was an instance with PSA's creation of the 1007 'tall-boy' city car and the re-born DS brand.

On sale between 2004 and 2009, the 1007 sought to bravely alter people's perceptions as to how a more functional city-car could look. The vehicle effectively comprised of a conventional front-end mated to a short 'box-body' cabin, with two very useful large sliding doors. Given Europe's typically small city streets, parking limitations and an ageing population, seeking convenience, PSA sought to explore via the use of inexpensive 'carry-over' modules what could notionally form a new sub-class of city-car; in essence a kind of small-footprint, yet volumetrically large; a European Kei car. Although somewhat more successful in the more experimental and brand loyal French domestic market, the vehicle was seen as a 'granny car' in other European markets and so failed to gain popularity.

To create its then new 'premium' sub-brand, introduced with a seemingly all new car, the DS3 model was born. To again reduced financial risk of the venture and to maximise unit margins it avoided the overtly heavy CapEx costs previously associated with an all brand and vehicle. Thus PSA again rightly chose a 'pick and mix' approach from its own inventory of components (colloquially known as the 'parts bin'). Use of readily available and easily adaptable vehicle systems reduced development time and provided for large cost savings on already part-amortised 'invisible' items. These gained most notably on the jigsaw of body structure items, drive-train and under-body elsewhere, such as petrol tank. Savings here meant that a higher portion of the development budget was put towards the very 'visible' look and feel of the new car, given the importance of its fashion story at launch )as opposed to a lesser technology story) to the new brand's identified audience of the aspirationally 'cool'. Hence DS unit margins, and so PSA's bottom line, were boosted thanks to what was effectively the introduction of a retro-new sub-brand and set of new skin-panel clothes. Even higher per unit margins made on special editions such as the 'Orla Kiely' variant.

Whilst it must be recognised that no new car is truly all-new – given the level of 'carry-over' content from a previous generation or sibling vehicle – today's highly aware, info-tainment informed consumer means that the launch of a supposedly new car based on old mechanicals can be a decidedly fraught 'hit or miss' exercise. Much depends upon the needs, wants, and desires of those identified sizeable market segment opportunities, relative to specific demo-psycho-graphics.

PSA however well understood the purchase mentality of its target market groups, was secure in its domestic market strength, and understood the European wide potential for a more affordable seemingly 'hi-design' personal car which was well positioned in a different lower price bracket to the overtly retro BMW Mini and FIAT 500. PSA deployed the use of a retro brand, yet disavowed its true DS past with use on a far smaller car with modern styling, also marketing short limited edition run 'specials' and mimicking the personalisation programme of Mini and 500 so as to create what to the market appeared a complimentary product category.

Project Development -
This is the complex and costly process of taking forward a new or much altered vehicle proposal from the earlier phase of 'Feasibility Engineering' and 'Market Concept' (ie 95% workable engineering and style package) toward the finished article that rolls off the production line. Herein large teams of engineers are dedicated to the 5 previously mentioned systems areas (Engine-Drivetrain, Chassis, Electrical and Electronic, Trim and Hardware and Interior).

It is the task of the Programme Director and his management team to ensure the vehicle accords as closely as possible to the ideals laid-out by Product Strategy and any substantive dedicated Quality function within the bounds of functional targets and critically the cost and performance targets.

These teams work upon the base level new generation vehicle, with its mechanical variants and different trim-levels for the whole vehicle. Similarly, in smaller numbers given the lesser work-load, teams will work upon on a mid-life-cycle 'face-lift' exercise for vehicles currently available to the market, so as to maintain buyer interest as the vehicle ages versus often newer competitors.

[NB Obviously the longer a vehicle remains relevant and popular the better the auto-maker's ability to amortise development costs and grow specific model type profitability].

As such it is the “bread and butter” of the Engineering section. Typically installing proven component technology via firstly use of a 'package clash' software which ensures that the practicable 3-D (X,Y,Z co-ordinated) positioning of all components. Thereafter the process of extensive theoretical and physical testing. Both via computer modelling software packages (eg stress analysis, thermodynamics, aerodynamics, etc), and using physical pre-production prototypes (or 'mules'). These initially in laboratory testing for 'shake-down' upon a '4-poster test-bed' (able to mimic the various drive-cycles, sometimes to destruction) and a substantial programme of real-world testing in a wide range of temperature and terrain conditions.

[ NB the sophistication of CAE (computer aided engineering) and intelligent planning of 'carry over' parts, has done much to reduce the New Product Development time-table over the last 25 years; from initial design sketch through to exacting component specification to whole car testing analysis].

Ultimately it is the demands and pressures of legislation, competitors, the market-place and critically profitability – for investor interest – that have expanded the demands from, and so capabilities of, the Engineering function; and will continue to do so.

Interestingly, previously companies in others engineering sectors such as Civil Engineering have sought to offer their CAE services to both new automotive entrepreneurs and established players; the architecture firm of Arup just one example. Yet precisely because of the auto-sector's very demanding computer modelling requirements – far in excess of a bridge or building – whilst proprietary previous generation hardware and software has been adopted by outsiders (in aero, naval, civil, retail, fmcg etc) (as with Dessault Systems CATIA) it has typically been automotive engineering clients that have continually demanded, and paid for, expanded CAE's capabilities.

Thus it is obvious that auto-makers should continue to seek revenue generating 'added-value' within this prime discipline.

Product Recycling and Systems Sustainability -
This is a catch-all title which encompasses, to date, the 25 years of corporate consciousness since the Kyoto Accord was held. Ever since Japan and Germany have effectively set the pace regards the issues of recycling and sustainability, this initiated with a wholesale approach to the topic of vehicle 'end-of-life'.

Firstly by the re-organisation of the vehicle scrappage process, away from the previous simple but inefficient action resulting in the 'crushed cube' and toward a considered dismantling and collection of a vehicle's different materials: metallic, plastic and mineral.

Secondly, recognising the politically conveyed national ecological onus from government, themselves keen to take the global lead and ultimately capture and release the inherent value of recyclable materials. From the mid 1990s on the national champion auto-makers in Japan and Germany undertook a concerted effort to specify vehicle content as:

a) reduced use of any pollutant materials,
b) increased use of direct, and more easily recycled, materials and
c) critically to engineer into their products ever more components with recycled content.

The ideal to come as close as possible in creating the “CO2 neutral” vehicle at manufacture.

These efforts created the beginnings of powerful automotive recycling eco-systems, capturing what was previously lost material value, and providing for an improved nation-based model which itself reduced the carbon footprint of transported scrap materials. This considered process has since then been increasingly adopted across EU states, and increasingly seen in North America.

Likewise, it was the Japanese and Germans who led the way in establishing increasingly sustainable facilities. Starting with the major issue of factory-based emissions of waste and pollution, and driving attitudinal and practical change throughout the production process.

Not only by challenging their own conventions - from the Paint Shop's use of water-based colours, to rain-water capture for ablutions - both new and retro-fitted, but by also requiring suppliers to demonstrate their pledge toward best practice for the employee and public good.

It is recognised that up-front costs of such eco-conscious measures can be reduced through sound logical planning, and that with ever newer solutions being made available, in many instances dedicated projects will start to deliver net financial advantage via reduced running costs - for near perpetuity – often within the budgeted break-even time-scale of the overall facility.
An ambition by the forever visionary Japanese is to be able deploy this learning across society at large. Toyota and its peers have very much been at the heart of the social fabric of Japan for many decades, the company having effectively taken-on the mantle of social agent when it built the beginnings of what became Toyota City in 1938, crystallising that responsibility in 1998.

Famous for its “100 Year Plan”, the company has periodically re-conceptualised the ideals of a conceptual future city based upon the roll-out of feasible technologies, many of which are derived from or married with those used on their automobiles. Morphing inter-operabilityof vehicle and domestic energy systems best known, with potential for the car to likewise be used as a powerful domestic computing platform.

This corporate mentality toward 'holistically integrated living systems' also being researched by other automotive social agents, Volkswagen and Hyundai viewed as second and third.