Modern Methods for the new market

For three days senior operations managers from OEMs and Tier One suppliers converged on the fascinating Porsche plant in Leipzig for the AMS Europe 2006 Conference. As ever, the presentations from both companies and suppliers highlighted the trends that are driving the automotive industry. These also provided insightful snapshots of strategies adopted by the most successful companies to remain profitable in the 21st century. The topics were no surprise, with flexibility, modularity and digital production figuring high on the list of tools to fight the challenges of globalisation.

Among the highlights of the conference were the candid presentations from leading European carmakers into their past problems, current projects and future aims. They ranged from Porsche’s production woes in the early Nineties to Toyota’s supply chain integration and included Renault’s ambitious ‘Commitment 2009’ project and BMW’s latest plant design for flow orientation project.

Revival and survival at Porsche

The tale of Porsche’s resurgence over the past 15 years has been told and analysed many times but the personal view of Eberhard Weiblen, Managing Director of Porsche Consulting, added a whole new perspective to the dramatic turnaround. Instigating and managing change, particularly in a company that is ailing, is a task fraught with pitfalls, but that was the challenge faced by Porsche simply to survive. Those days seem a long way off when you consider that Porsche posted pre-tax profits of more than e270m in the last six months reported, producing in excess of 41,000 Cayenne, Boxster, 911 and Carrera GTs.
But it was all so different when current CEO Dr Wendelin Wiedeking joined at the beginning of the Nineties. Annual sales had slumped to well under 20,000 and, to be frank, the organisation and the production were a mess.

“To earn money from the type of car that Porsche manufactures it is essential to have efficient processes and organisation,” Weiblen said. “The question we asked ourselves is ‘was the organisation as good as the products?’ We wanted to be as agile as our cars are on the road, and quite clearly we were not.” The management team at the time was not able to lead the company out of the crisis until Dr Wiedeking joined the team with new ideas and a clear plan how to bring the company back on track.

Standards and strategy

Problems within the company were predominantly homemade. Porsche produced too few cars too expensively and the models that it did produce had very little commonality, no standardisation. “All the vehicles were entirely different, there were no standard parts contributing to a difficult cost situation,” Weiblen confirmed. “We quickly revised the model policy, began a global sales campaign – widening our global reach to 100 companies from a base of 40, and began reducing our costs.

“Before you start cutting costs you need to clearly define the corporate strategy, the divisional strategy and the product strategy – what to produce and in what quantities. Given that information I can develop a production strategy where I can define manufacturing depth, percentages of products produced by suppliers and in-house, all this has to be done in an integrated manner.”

Predictably, Porsche began its cost-savings within the production area, as that was where the greatest problems were. At its worst, production mirrored that of a lot of OEMs with material stocks dwarfing requirements and lots of waste in almost every single process. “We have returned to doing things as simply as possible, both in terms of our processes and our products,” Weiblen told the delegates. “We try to optimise things to such a degree that we don’t need IT.

Toyota Role Model

“To us Toyota is still the big role model, so we travelled to Toyota with the entire management team to study how it operated along with their suppliers. However, we soon realised that we would not be able to implement this ourselves so we employed a Japanese consultant who taught us the principles. But there is more to the process than being shown and so we needed to learn for ourselves. It was important that the management team at Porsche and particularly Wiedeking led the process.”

Visualising what the production line should look like and conveying that idea in a simple manner to all constituents was an important consideration. Eventually, the carmaker decided on a simple fishbone model, with all the individual programmes running from a central backbone.

“Today we have hardly any stock at the production line, which means that we can produce various models on one line from a Boxster to 911 Turbo,” Weiblen continued. “What was important was not only to have a lean and agile production, but a lean and agile company, and we are still working on this process.”

The initial team comprised a core of five people working with Wiedeking, and that has now grown into a professional organisation, Porsche Consulting. The 40-member team does nothing apart from look for improvements, run workshops and deal with process optimisation.

Improvement programme

Another important step was to establish a methodology for improvement and at the same time look at the qualifications of the entire workforce – from the operators to the senior management team. Performance pay was also linked to the employee’s improvement programme, a decision which ensured that continuous improvement became part of everyone’s core job function. To measure the success against set targets at the end of each year the Porsche management team gets together to develop the targets for the coming year, and members specify exactly how they want to improve. This plan, according to Weiblen is rigidly adhered to, and checked at the following year’s meeting.

“If you follow these basic steps, which are not from a manual but from our experience, you really do have a good chance of improving your company,” Weiblen says. “I can say that in the past all the previous endeavours contained major inherent mistakes. First of all we were not ready for the new market; there was no overarching concept, just individual fires that were started and we were not consistent enough in our approach.”

Weiblen pointed to four key factors of success : – experience, professionalism, positive reinforcement and joined-up planning. “If you are working to keep your company lean, fit and flexible, first of all, it is important that you have gathered that experience yourself, not just talked about it,” he said. “Secondly, it is important that you should be as professional in the improvement as you are in producing vehicles. And thirdly, you need positive examples. Fourthly, these improvement processes need to be incorporated into the targets of the managers to create a certain pressure to work on them. Invest in the qualification of your employees to ensure that they understand the system, the basic idea of value creation and waste so that it becomes part of the culture of the company. The focus of lean is on systematic implementation.”

Toyota Europe

The integration of the supply chain into lean manufacturing was the theme of Pierre Gambardella’s presentation. As General Manager of the Production Control division in Toyota Motor Manufacturing in France, he provided a telling insight to the stringent logistical requirements of plants operating under the Toyota Production System (TPS).

The Toyota plant at Valenciennes produces the second generation Yaris, which is shipped to 20 European countries. Customisation includes 10 colours, two body styles and three types of engine. The plant itself was designed in a star configuration to allow maximum logistic access to the line and minimise the distances travelled – it also benefits from a significantly reduced footprint. As you would expect from a plant run under TPS, line side inventory is minimal with very tight synchronisation between logistics and production sequences to ensure proper delivery of parts and materials to the line sites.

European procurement

In Europe Toyota has a strategy of local sourcing with 85 per cent of the purchased value coming from European countries – that equates to 200 suppliers from across Western, Central and Eastern Europe, including Turkey. “The question of supply chain integrated into lean manufacturing facilities is how to procure continuously without stock stagnation of parts and materials from the plant’s suppliers in Europe,” Gambardella explained. “We want to do that in the quality and the volume exactly as required for our production floor. The concepts used to solve this equation are common to all Toyota plants in Europe.”

Gambardella explained that Toyota applies four key concepts to its lean supply chain integration – smoothing, high frequency, milk rounds and communications. “Heijunka, or smoothing, is applied to all operations from collection at suppliers to delivery on the assembly line, but then how can smoothness be compatible with erratic market demand?” Gambardella asked. “In fact, because the variety and fluctuations of the demand is erratic, we can make the planning of sales alter in order to convert them into regular and reproducible patterns without jeopardising customer expectation. With this method the production plan is smoothened out in exactly the opposite way.

“Applied to our collection at suppliers, thanks to the smoothened plant, we reproduce, every day, the same regular picking and the same transportation schedule over the period of production. Therefore, the transportation needs and the surface used are predictable and the costs can be better achieved. Also, we can better detect an abnormal situation if it occurs and we can concentrate on resources to resolve it as quick as possible.”

Continuous flow (Subhead) The second concept in use is high frequency which facilitates the just-in-time continuous flow of parts to the line with the advantage of regular volume and minimum space usage at the plant. Of course, high frequency by itself has an important cost. In order to optimise high frequency logistics on parts flow in Europe or passing through logistics platforms, Toyota uses six cross docks. These are used for sorting, grouping, dispatching and adjusting delivery frequency. There is no stock stagnation, the goods are not in the warehouse, they are just passing through.

Then comes the milk round whereby several suppliers are connected through one single logistics route converging on one of the cross docks. This enables the plant to operate high frequency and small quantities delivered regularly while at the same time optimising cubic efficiency. Routes are calculated monthly on a stable production basis, defining exact peaking volume with exact collection slots at suppliers every day.

Finally, the fourth concept used can be summarised under communication between the plant, suppliers and transportation; standard order quantities are confirmed daily through the web EDI. In case of abnormal situations, suppliers or transporters are requested to notify any risk of short shipment.

BMW Leipzig

When you build and layout a new factory most of the attention focuses on the machinery and line configuration, but when BMW designed its Leipzig facility, material flow was a prime concern. “We are committed to being flexible,” Nikolaus Bauer, Director of Logistics and IT at BMW Leipzig told delegates. “We can operate between 60 and 140 hours per shift and that is quite an innovative step in Germany. We can even alter our facility or our structure so much that we can double the square metres in our factory without changing the material flow. And, of course, this vision means that you have to have a very flexible and modular expansion philosophy.”

The factory uses the popular central core or star configuration with the body shop, paint shop and assembly line all coming off the central core of the administration building. The assembly building incorporates the typical finger structure – with three spurs coming from the main line. All non-essential activities have been removed from the core assembly and located in supply centres; one in the east for interior systems and one in the south for chassis or drivetrain systems.

“First, we decided to design the material flow,” Bauer explained. “The conclusion that we came to was to limit the complexity of the operation where we pre-assemble our car. We have a high rate of direct supply and clearly defined processes and we have a material flow that is really orientated towards what we really need.”

Access and delivery

With more and more of the car’s work content going out to the suppliers to ensure smooth operation, it was necessary to have a really optimal delivery process for all material and assemblies. One advantage of the finger layout chosen is that you have the ability to bring material right to the point on the line that it is needed. Currently, there are 22 access gates on the line but that will soon rise to 40; a key element of the plant’s lean logistics.

“All the fixed points are on one line, and between all the fixed points, the line goes in a right angle that makes the fixed points themselves independent of potential additional work content or additional car contents,” Bauer explained. “You can have these car contents in longer or shorter fingers.”

The strategic reason for this layout was to make the assembly process very flexible and to take everything off the assembly line that might be an obstacle for flexible assembly. “What we have is an assembly with a really low complexity, but with a high stability,” Bauer said. “It is partly due to having almost no complexity and almost no fluctuation in this assembly process. All the fluctuation is taken out and made in the supply centre.”

Overhead flexibility

In the supply centre BMW has internal and external suppliers, supplying doors, door assemblies, the cockpit module, front-end module, the seat module, the roof module and the powertrain. All the modular suppliers bring their modules into the assembly hall on a standard electrical overhead conveyor system and this system takes the module directly to the point of use.

“It is important to note that in the assembly and in the supply centres, all the overhead space above 9m is free and dedicated to further lines that we may need with this electric overhead conveyor system,” Bauer said. “That makes even an electric overhead conveyor system very flexible because you introduce a new lift and some metres of line and it is at a new place.

“This electronic overhead conveyor system is a ring structure so there is no IT equipment necessary to bring these modules into the next sequence. The suppliers produce their material already in sequence because they are ordered to do so, bringing it on the overhead conveyor and from then on there is no sequence control necessary because of this ring structure.”

Beyond the supply centre BMW operates three standard supply channels. One is direct delivery to the assembly hall by truck. The second path for supply is the modules from the supply centre that come in on an electric overhead conveyor directly to the point of fit into the assembly hall. Thirdly, all the normal warehouse material – about 15-20 per cent of the total material but 60-80 per cent of the part numbers – comes through in an automated vehicle. These standard supply processes operate the whole plant.

“The third process that I mentioned is the warehouse process where the AGVs transport the goods from the stores to the different areas of fit,” Bauer said. “This process is very simple again. It’s more or less an electric Kanban system. The line runner scans the material needed and it sees this because we have a two-box system. Whenever one box is empty it scans this box and the SAP system that we have in our factory orders the material. At several stations in the stores, the parts are handed over to the AGVs which then bring the material from the stations in the supply centre to everywhere it is needed in the assembly.

“The main thing with these gates is, in terms of flexibility, you can move them along the façade wherever the process makes them necessary because the façade is designed in a very modular way,” Bauer explained. “Overnight you can take a gate and relocate it at another point and then you have your next process in place.”

Control and automation – Fraunhofer IITB

Much has been written about the collapsing structure of the manufacturing IT pyramid. What was traditionally a control-MES-ERP situation has been compacted by the increasing intelligence in plant floor devices and programmes, and the downward creep of enterprise solutions such as SAP. However, that situation is far from ideal for companies attempting to optimise plant performance in real-time. Programmes such as Activplant and Cimmetry already exist, but institutes such as the Fraunhofer Institute for Information and Data Processing (IITB) have been striving for a true agent-based production monitoring and control system. Dr Olaf Sauer, from the Fraunhofer Institute, spoke about the work that Fraunhofer is undertaking with DaimlerChrysler on ProVis.Agent.

In today’s automotive plants we find heterogeneous software systems for different types of tasks both for factory planning and the manufacturing operations. IT systems used for factory planning are summarised as ‘digital factory tools’. On the operating level, software systems are not yet integrated and thus they support separate tasks such as production order control, production monitoring, sequence planning, vehicle identification, quality management, maintenance management, material control and others.

Production monitoring and control systems (PMC) play a central role in the classical automation field. The main function of these systems is to gather signals produced by plants and programmable logic controllers (PLCs), combine them to control relevant contexts, visualise them and provide facilities to operate them. While visualisation and operation of process signals and contexts are classic functions of so-called SCADA systems, the main work of real time signal processing and interfacing to production plants is done by PMCs. Today, these PMCs are usually implemented as object orientated systems, interfacing with their environment by standardised protocols such as OPC.

Fraunhofer IITB has almost 30 years’ experience in developing novel PMCs, especially in the fields of automotive plants and steel production. In 2005 DaimlerChrysler Bremen ordered a new generation of PMC for the coming C-type car, starting its production at the beginning of 2007.

ProVis.Agent has been implemented and is currently in the test phase. It will be delivered to DaimlerChrysler this month and will go into operation with the start up of new facilities for the new C-class model.

Digital manufacturing

Joachin Bauer of Delmia, spoke about the importance of strengthening the early planning phases prior to the start of production. Aided by an integrated approach between design and manufacturing, and by early use of simulation technology, he claimed it is possible to drastically reduce ramp up costs. “The challenge for companies with good ideas is to bring them through the design phase to production and make them a success,” he said, “not only a technical success but an economic success.”

His thoughts were echoed in the compelling presentation from David Jenkinson, Manager of Body Assembly Systems at Lotus Engineering, who spoke about the integration of digital assembly situations around the design environment.

Within the design process at Lotus a whole multitude of programmes are encountered – ICEM Style, Catia, Unigraphics, as well as all the CAE programmes and even the dynamic analysis. But historically, manufacturing has been a poor relation to the design activity. Designs have always been passed to manufacturing who has then had to find a way of making that vehicle. “But as we have gradually introduced those processes into the design process, we have made them more efficient and we have learnt things about that manufacturing process much earlier,” said Jenkinson. “We really wanted to reduce our product delivery time. We needed to improve the efficiencies of our processes and we had to improve the quality of the product because our customers demanded it, but most of all we had to have a cost effective process,” Jenkinson added.

Design simulation

The design process that Lotus used at that time was a standard configuration – styling, design, CAE, dimensional management, process planning and feasibility – and, although the company was using some digital simulation, this was being used as a validation tool rather than influencing the design. “We decided that the first improvement that we should make was to bring that simulation into the design process,” Jenkinson continued.

To allow this simulation to collaborate with the Catia design tools that Lotus uses, the company opted for Delmia, which enabled it to speed up the process by which information was being fed back to the design team. So it really became an integrated part of that design.

“The value added for us was very important. We now had an integrated system that was within Catia, had eliminated all the translation time, current and live data was being used and, because we weren’t losing any time with translation, our responses were so much quicker. Our communications were much more accurate and the clarity of communications through the dynamic visualisation really helped to speed things up,” Jenkinson said. “Because we were doing all this work we had much more confidence in committing to our tooling programmes – as a result our overall product delivery time has been reduced. This also gave us improved process planning because our assembly engineers, who were preparing the family trees and process sequence, could pass them straight to the simulation engineer who could very quickly confirm the feasibility of assembly, time analysis and any ergonomic considerations.”

Lotus has already seen improvements. The time from concept to prototype has been reduced, the actual prototype build duration has been reduced, which means that they get to testing quicker and that has all helped to reduce the product delivery time. Changes due to assembly issues have also been reduced, and an added benefit is the reduction in the number of confirmation prototypes for manufacturing.

“We feel that we have done the right thing by bringing all that simulation into the design environment, but we still seem to have a mismatch between our process planning and the simulation activities,” Jenkinson said. “This part of the process is working well but the process planning and the simulation are still not linked, it is still not a seamless activity. The simulation is working straight off the CAD model, but the process planning is still being done manually.

“When we looked at that part of the programme, our outline process planning, our detailed process planning sheets, things such as plant layout with AutoCAD, we saw that, while the simulation was already part of Catia, the presentations and reports were sometimes produced in Word or Excel. There was great scope for error in transposing this information, so we realised that we had to combine this planning within the CAD environment. We looked at various systems, but having learnt from using Delmia and making sure that it was integrated within Catia, we did a line trial with DPE, which is a process engineering package that is part of the Delmia suite.”

It saves Lotus a lot of time and ensures that the engineers are engineering and not just copying data. As a value-added proposition they now have a totally integrated manufacturing and design system that will help them reduce time to market, and further reduce costs. “Because we have to spend our money wisely, it is going to build on our current investments and I believe that it is going to help us to survive,” Jenkinson concluded.

Startup as you mean to go on

In a similar vein, Reiner Manger, Sales Manager of Dextus, spoke about how Dextus, a company formed two years ago to bring the Schneider production know-how to the customer base, can use virtual validation to improve start-up efficiency.

Control and automation design is usually disconnected from mechanical design and process engineering, with only a limited communications channel between the two functions. The first time that the two components come together is after the commissioning of the system when the power is first applied to the installation. “If you have a mechanical and a control standard they are both developed and maintained by separate teams in a separate environment,” Manger said. “So there are a lot of challenges and a lot of potential to do things better.”

The process begins with the traditional 3D models that process engineers and mechanical designers have created for the new or amended production line. “We see these not only as mechatronic devices but also as reusable devices because they represent your product standard,” Manger continued.

“These devices have geometrical properties and kinematic profiles, and what we do is apply another property to these objects that we call internal logic – the behaviour of the object inside the simulation of a production cell. It is how this object behaves [in relation to] information coming from a PLC, and which information it provides to other components in the production cell,” he explained.

With this added information the device now becomes a so-called smart device and is saved into a database where it can be reused. It is from these smart devices that the Dextus programme can build the production cell; not very different from what is traditionally seen in robotic simulation or other 3D simulation systems. “What is different is that Dextus takes this information, these objects, from the database and connects this system through a control simulator to your PLC or automation systems,” Manger added. “It means that you are now able to prove and test automation equipment against a 3D model of your production system before it is installed on the shop floor.”

Another use for the programme is in the creation or storage of logic for PLCs in this structure which can then be deployed into PLCs and then again connect the PLCs into production model and test it. So you are not only able to perform virtual start-up, but you can bring mechanical and control standards together into one database and then deploy it on different projects.


The theme of flexibility was taken up by a presentation from model-based production software developer, inos and robotic company, Kuka. Lambis Tassakos, President and founder of inos automation software, spoke about how you can drive production innovation using intelligent sensor actuator interaction. “Having a model, your system knows roughly what is expected of it,” he said. “The motivation to start the company was that everyone wanted to make production lines cheaper and with better quality. [They wanted them to be] faster to realise the application and move to higher volumes, as well as being highly flexible and reusable. Even with those demands you have to make them very robust and easy to design, implement and maintain, as well as being very reliable. As engineers we know that you cannot do that with one system, so you have to make a trade-off and this means that you need to be able to organise your production in a scaleable way. A system-scaleable architecture should be able to give your plant the ability to do that. You can get a matching price performance, you know for a given plant how you can compromise between cost, quality and functionality, and if you have a scaleable architecture to support that you are gaining an optimised result,” Tassakos said.

To achieve this he explained the need for a model of the plant, which sets the parameters for its performance. A model, he elaborated, is nothing more than a simplified version of reality. Trying to model modern production lines still follows Stachowiak’s general model theory, developed 33 years ago, that a model is represented by three features: mapping, reduction and pragmatism. “With this in mind, we are trying to model modern production lines that are a formal representation of individual production steps, so you have a mathematical description, a functional description and you have the model parameters.”

The mathematical descriptions are quantitative statements of such things as cycle time, production volume and quality that are the basis for quantitative control against measured values through metrology. The functional description sets the base for robust realisation of the production and supports clear interfacing along various production stages. And the model parameters cover such areas as flexibility of production functionality.

“We believe that the model-based, interdisciplinary approach drives innovation,” affirmed Tassakos.

Cost-saving technology

From a robot manufacturer’s perspective, Ottmar Müller, Key Account Manager, at Kuka Robot Group, spoke of his company’s belief that, in the future, new technologies will be required to realise the cost savings. He focused on three innovations, namely: robots co-operating with other robots and safe robots; robots working with intelligence with their environment and operator; and finally using robot systems as manipulators so as to combine work with humans and robots.

Müller introduced the concept of RoboTeam, whereby robots work in co-operation, sharing the loads of handling large components that enable optimisation of positioning the workpiece. “The technology consciously avoids inflexible control blocks and uses the intelligent networking of standard controllers instead,” Müller explained. “Conventional PLC functions are shifted directly to the team and processed there autonomously, allowing workspaces to be managed within the group. Individual programme steps of the different robot controls in a production process are autonomously organised with the group and synchronised.”

A major benefit of this strategy, according to Müller, is that it enables the positioning of a workpiece for further processing without the need for clamping fixtures.

“By using just one operator panel, the entire robot group can be controlled via a standard Ethernet card. What you will see in future is that the robot is going to take over more and more handling tasks. The robot can position the part while other robots operate on them. So as parts or assemblies become heavier and more complicated why shouldn’t various robots handle the part together?”

Painting technology

Without doubt the most complex element of automotive manufacturing is the paintshop. At the Magna Steyr production site in Graz, Austria, the company manufactures cars for Saab, DaimlerChrysler – both Chrysler and Mercedes – and BMW, all of which flow through two paint halls. Hall 83, reserved exclusively for BMW products, has a capacity for 24 jobs an hour, while the larger Hall 8, which handles the rest of the facility’s paint work, has a capacity for 32 jobs an hour.

The list of models produced there is diverse, ranging from the Saab 9-3 Convertible to the massive Jeep Commander. In total, seven platforms are manufactured, with a total of 15 derivatives for the four different customers. This makes the process complex and at times unpredictable. This complex manufacturing environment is compounded by the fact that in the paintshop every customer gets the process required to meet their individual requirements.

To maintain a measure of control Dr Wolfgang Zitz, General Manager, Paintshop, at Magna Steyr, explained that the company commonises as much as possible and then separate where necessary: “The advantages of this complexity are a good usage rate: with a lot of customers you can fill the paint shops easier than with a single customer. We gain synergies from the different customers. The most important is networking: the exchange of knowhow and information about the current state of the art. So dealing with different customers we can see what each customer does and decide where we see advantages and disadvantages within the painting processes of our customers. We also get to understand what is being developed without having to do our own research.”

Production variation

The major disadvantage of the complexity is the almost permanent variability in production numbers: “Nearly every week we have to change our cycle times because the volume of one car goes up and another goes down,” Zitz continued. “Due to the high number of different materials, we do have certain low-runner materials that deliver processes that are often sub-optimal. If you look at the pre-treatment line or the E-coat line, you cannot fix the nozzles for one body, you always have to find a compromise between the different body styles; if you consider the Chrysler Wedge, a full size mini van, compared to a Saab convertible, there are big differences.

“We also sometimes have problems with the ergonomics because of the different weights and sizes of the bodies – we are not able to optimise the ergonomics for every model. Another problem is manpower balancing. Because of the different workloads per car, if the volumes are changing you always have to balance your manpower. That all leads to the ultimate challenge which is cost, cost, cost, because behind each of those challenges is a lot of money to overcome it.”

Complete analysis

The current challenges facing paint manufacturers are broadly in line with those facing the rest of the industry – quality, cost, increasing complexity and the rapid model changes. All this, according to Stefan Lilienkamp, Managing Director, PPG-Helios, requires the best possible integration and use of resources, and an avoidance of the type of island solutions that have become too common in some paint shop environments. “It requires a complete analysis of the entire value stream incorporating body-in-white, paint shop and assembly,” he told the delegates. “Lots of our customers have to make the best of what they already have; the equipment is there. So how do we improve what they have?”

According to Lilienkamp too many conferences feature speeches offering opinions on equipment innovation – items such as low-cost robots, cartridge systems or push out systems. Unfortunately, these require very high investment, so the question he asked was ‘where are the savings?’ The same is true with innovative materials and material technologies that are available on the market. With the replacement of phosphate materials, UV resistant E-coat, primer-less systems, low bake systems and UV cure systems, again the question is, where are the savings?

“The answer to this question is really simple. I see a barrier here,” Lilienkamp explained. “The barrier that is coming from the equipment and product side is missing a very import part – the process. We invest money in the equipment and think that the product should follow it: we invest a lot of money in the product portfolio and think that the equipment should follow it, but we are forgetting the process innovation. And I am not talking about continuous improvement; I am talking about a real dramatic process improvement – real challenging improvements.

“Unfortunately, when you follow up the investments that have been undertaken on equipment and product innovations, they have some unseen or hidden costs, as well as the fact that the scope and timing of innovations only allows for island solutions. We think about how to modify primer booths, or the primer process in general, but we forget that the paintshop is part of a very complex, unstable process within a complete manufacturing environment. The macro trends stop long-term process revolutions and, also, we forget to deal with the critical underlying assumptions – what does our final customer really want from us? What does he really value?”

Integrated approach

Lilienkamp believes that paint material supply needs to be integrated with process management. “As a paint supplier we are not a material supplier but a solution provider,” he says. “That starts at the welding shop and ends up with the final customer in terms of its repair systems. We think that it is not enough just to sell paint and process solutions but we need to actively move into paint process outsourcing to help solve some of the issues with the paint shop, both with materials and process innovation.”

He continued by explaining that the integration of automotive paint shops with body-in-white and final assembly is crucial to define further areas of cost savings and process innovation.

So the key message was that to really achieve dramatic cost savings in the paint shop, it is not enough to examine process and material improvements. “When you look at figures you can get one or two euro savings per car, which is nice; it’s important,” he continued. “The question is how can we really excel? And for that we need process revolution based on an attitude of ‘why not?’. The answer is by challenging everything that we traditionally think in a paint shop. Integrated outsourcing can open the door to process improvements because a third party allows us to question existing ideas or barriers. You cannot do this within your own organisation or you will be challenging how you have done business for the past ten years.”

Location, location, location

As the property experts will tell you, location can be everything, but what makes a great location for a manufacturing facility? Marcus Lötzsch, President & CEO, Saxony Development Corporation, explained that it was economic viability, a flexible workforce and the desire of regional authorities to make things happen. Saxony has over 100 years of history in automotive manufacturing, including being the birthplace of Audi, and today can boast modern, high-tech manufacturing facilities representing Porsche, BMW, Audi and many Tier One suppliers.

But like industry itself, Lötzsch admits that the region is facing intense pressure from other low-cost manufacturing locations – both from the new East European states and further east in Asia. “We are working hard on how we tackle the challenges that are laying ahead of us from other regions,” he says. “We have heard at this conference that Europe is not competitive but that European operations are. I do not agree with that. I think that parts of Europe are very competitive. This is especially true of Saxony and eastern Germany.”

BMW in Leipzig

One company that recently made the move to the region is BMW. After weighing up all the criteria, Leipzig was the location selected by BMW for its new facility to manufacture the 3-Series – a search that not only covered Germany but many of the East European countries. Economic viability and flexibility coupled with the location, and the availability of qualified staff, were all cited among the reasons for the choice. But probably top of the list was the ability of the regional government to react quickly to facilitate a rapid implementation.
The workforce itself, unlike the restrictive West German collective bargaining system, is extremely flexible. Company-specific and individual bargaining agreements allow for flexible working hour models. Average work weeks of 42 hours, overtime worked with a +/- 200 hour time account in operation, and Saturday as a normal working day, are all among the flexible initiatives. Not only is the workforce flexible but it is also highly qualified, with over 12 per cent having achieved a university degree.

Another boon is that the region is also a technology hub for micro-electronics, IT, biotechnology and mechanical engineering and adds to its attraction. This allows cross-sector knowledge sharing in electronic disciplines – photonics, polytronics and adaptronics.

Saxony does not stand alone in the region but co-operates closely with neighbouring German states, as well as collaborating with the bordering countries of the Czech Republic and Poland to form a giant economic region at the heart of Europe.

Delegates visited three of Europe’s most innovative manufacturing facilities – the Porsche plant manufactures the Carrera GT – and illustrated the most modern aspects of vehicle making and plant design on a purpose built greenfield site.

VW’s ‘transparent’ factory in nearby Dresden, which has been designed specifically to produce the Phaeton, displayed a production concept that combined classical industrial automobile production processes and craftsmanship with production and assembly processes.

And BMW’s 3 Series plant in Leipzig showcased the “BMW Formula for Work”. Using this formula, the plant can be used, depending on production volume and customer demand, for between 60 and 140 hours a week. The plant will satisfy demand for new capacities, starting with production of the BMW 3-Series. To round off AMS Europe 2006, delegates had the opportunity to ride in the powerful Cayenne Turbo around the Porsche facility’s three-mile test track and on the demanding and highly ‘technical’ off-road course.


“We already have a lot of contact with our plants across the world but we really wanted to see what was going on in Europe for ourselves. What really struck me from the conference was grasping the concept that a plant is reborn several times during its life as models change. That reinforces the feeling that plants need to be extremely flexible and modular – something that we have believed for a long time. But this sentiment was really hammered home in some of the presentations and that is the key thought I will be taking home with me” – Greg Williams, Engineering Coordinator, Honda of America Manufacturing

“The chance to talk with vehicle manufacturers and key suppliers is very important, as was the chance to visit the Leipzig factories of BMW and Porsche; it is not often that you get the opportunity to benchmark yourself against two such prestigious plants. It is good to see how our opposition do things – whether it is good or bad. At Bentley we need to remain true to our brand and quality so it was interesting to see how BMW has increased volume while working with the brand. There is so much complexity in our production so flexibility is something that we need to get a handle on” – Karl Simmons, Project Leader, Bentley

“I came here expecting to discover new and emerging trends – and I did – especially flexibility in manufacturing. And it was hard to pass the opportunity to visit the Porsche and BMW factories. At the research centre of Fiat we are facing several challenges. We are working on two new vehicles and are looking for low weight and lower cost. To achieve this we need to look at new materials and technology. I was very interested in methods of validating new processes in advance of the start of production in a flexible way that avoids duplication of investment” – Edoardo Rabino, Vice President, Centro Ricerche, Fiat

“We went to the conference because we wanted to talk to international top executives in order to find out how they perceived eastern Germany on an international level. This should help us to understand the investment strategies of international companies and to see where we can do more work for promoting eastern Germany as an investment location. A second reason is directly connected to this. The AMS conference offers an excellent opportunity for networking with international representatives from different companies. Last, but not least, we want to be up to date with the latest developments concerning the automotive industry and therefore a third reason to go there were the presentations. We are very glad to have attended the AMS conference again. All our expectations have been fulfilled. We did not only learn a lot from the presentations but also profited from the excellent networking possibilities with international top executives” – Pamela Amalia Kellert, Manager, Automotive, IIC – Industrial Investment Council

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