World Class Vehicle Launch Timing: General Motors (Part 2 of 6)
The World Class Vehicle Launch series is investigating the launch performance of five leading vehicle assembly firms operating in North America, and examining their past, and future launch strategies. The companies in our analysis include Chrysler, Ford, General Motors, Toyota and Honda. We have collected monthly production data on vehicles (30 launches) launched by these companies in North America between 1992 and 1996. Although there were more than 30 launches during this period, our initial investigation focuses on single product-single plant launches. This article focuses on General Motors. It is important to note that there are many measures of a successful launch. This series analyzes a launch event in only the most basic form: the time it takes a facility to return to capacity in terms of production. This series is not meant to be an exhaustive study on launch performance, but instead it is meant to further the better understanding of the vehicle launch process.
#Toyota #Ford #Honda
By Brett C. Smith
We identified a total of 12 vehicle launches by General Motors during the period investigated. However, only 6 of those launches meet the single product-single plant requirement for this investigation. Our initial discussion will focus on these six launches. We will conclude this review with a brief discussion of the facilities not used in our analysis.
The data for this article was gathered from Ward's Automotive Reports. For each launch, a start of production was determined. Monthly production data was collected for the previous 12-month period, and the following 12 months. To facilitate direct comparison between plants of differing capacities, we compared this data to Harbour & Associates' capacity estimates. Annual capacities for each plant were gathered from Harbour and Automotive News. These estimates were divided by 12 to give a monthly capacity estimate for each plant. They were then divided by actual production to give a monthly performance to capacity measure. Figure 1 compares General Motors' performance to the North American industry average and to World Class, the company with the quickest vehicle launch. From the chart it is apparent that General Motors' facilities experience a deeper production decline at changeover than the industry average, and that they take significantly longer to ramp-up to a normal operating range. It is important to note that General Motors was undergoing significant changes in their manufacturing strategy during this time period. Therefore, the vehicle launches analyzed may be a "worst case scenario" for the company.
To illustrate the loss due to a slow changeover and launch, it is helpful to develop a scenario using the results of this analysis fortified with some general industry data. If it is assumed that the average assembly plant has an annual capacity of 240,000, a slow launch could be lead to a substantial loss. Table 1 shows a numerical comparison of General Motors' new vehicle launches compared to the industry average and a World Class performer. Although the numbers used are for illustrative purposes, and are obviously generalizations, it is a revealing exercise.
If it is assumed that the average profit for a new vehicle is $2,000 (a new vehicle will garner a relatively higher profit margin than an older model of the same vehicle—especially with the higher profit margins from light trucks), this exercise becomes more revealing. Using the data presented, it is possible that General Motors foregoes on average as much as $60 million of profits per launch compared to the industry average and potentially $145 million compared to World Class vehicle launch companies. Even if the suggested profit margin of $2,000 per new vehicle is an overestimate, the data still suggest a significant cost penalty incurred by companies that suffer long changeovers.
For General Motors, we were able to gather information on six plants (the six meet the single product-single plant requirement). Table 2 shows those six plants and launch events. Figure 2 graphically represents each of the facilities' launch performance.
As noted, there were several facilities that underwent launch events, but for various reasons, we were not able to gather appropriate data. Oshawa 2, Hamtramck and Buick City all experienced launches, but each plant had multiple-products in production. Therefore, it was not possible to identify the capacity levels for individual products. A review of the production data for these facilities showed slightly better results than the six plants that were more closely analyzed. Doraville, Wentzville and Linden also experienced launch events: however, the facilities were closed for several months while they were changed from passenger car to light truck production, thus making it impossible to gather meaningful data for the 12 months preceding launch.
Although General Motors fared comparatively poorly in this analysis, it is important to mention several factors that may have contributed to the performance. Several of the platforms were as much as a decade old: We believe it is likely that a facility producing an older platform will need significantly more investment and associated downtime than a facility producing a much newer platform. Also, during the last decade, General Motors has begun what can only be called an "operating system paradigm shift." Although this shift has been costly and necessary, the benefits should be a substantial decrease in launch time for future programs. Finally, cost of investment, a function of the two aforementioned factors, must be considered. The implementation of a new manufacturing system and substantially updated platforms necessitates significant investment in facilities. This investment likely increases the changeover time and also may negatively effect the launch curve.
Clearly, there are signs that General Motors is attacking the launch challenge. The Manufacturing Engineering, Operations and Integration Center (MEOI) has been established to develop, improve and support the company's manufacturing system. MEOI serves two basic functions: (1) the development of common processes and systems for manufacturing operations and engineering, and (2) Manufacturing process technology planning and productionizing.
In the mid 1990s, General Motors empowered a group of engineers to study the company's poor launch performance. From that study came a matrix that has helped the company develop a more comprehensive launch strategy. According to Jerry J. Harvey, executive director of the MEOI Center, the team defined four basic variables for a vehicle launch: (1) The amount of change a vehicle undergoes; (2) the amount of new tooling required; (3) the amount of new process technology at the suppliers, and (4) the amount of change for the people in the plant. All future programs at General Motors are required to take into account these four basic factors, and develop a strategy for change that meets the needs of the product, yet maintains an acceptable balance.
"It is important to remember that a vehicle launch is not only an acceleration at the assembly plant. Most suppliers are also undergoing an acceleration process at the same time. It is important for engineering to interface with the suppliers to assure that their new process technology is in place," says Harvey. "On a specific program, there may be a lot of capital in a body shop that has to be tuned in for a smooth launch.
"From a product design standpoint, we have to concentrate on DFM&A. Finally, we have to be concerned with the level of change at the plant. Are we moving a lot of people around? Are there significant new processes that will require training? All of these factors are critical."
During 1995 and 1996, Saturn accomplished the launch of redesigned products with minimal downtime. Admittedly, the level of change for the redesigned vehicle was not as significant as for other vehicles within General Motors; however, it does represent evidence that progress is being made within the company. According to Mr. Harvey, the MEOI is drawing lessons from the Saturn success story. (Note: the inclusion of Saturn as a seventh facility in the analysis would have presented somewhat better overall results for General Motors. However, based on the uniqueness of Saturn as a separate entity [before the "merger" of Saturn into the Small Car Division], and other concurrent launches [Fairfax, Doraville, and Oklahoma City], the author chose to view the Saturn launch as a separate, but encouraging, event.)
Mr. Harvey says the recent launch of the Oldsmobile Intrigue at the Fairfax plant was an example of a successful launch. (Author's note: there were several weeks of downtime as Fairfax converted from the old Grand Prix to the new model nearly a year prior to the launch of the Intrigue.) "We maintained a 100% line rate during the launch of the Intrigue. At one time during the launch, we had a parts supply hiccup, and we were able to flex between 100% Grand Prix and 100% Intrigue for a brief period without losing any production," Harvey explains.
An important part of the new strategy is the increased use of flexible body shop equipment. General Motors body shops are currently much more flexible than a decade ago. Such flexibility will enable quicker and likely smoother launches in the future. The company is concentrating on developing body shop specifications for similar ranges of vehicles.
With the soon-to-be introduced next generation of the full-size pickup (and full-size sport utility), General Motors is on the verge of what may be the biggest vehicle launch in the history of the North American automobile industry. Mr. Harvey is uniquely positioned to discuss this year's truck launch. He was the plant manager at the Oshawa truck facility in 1987—the last time the company launched a full size pickup.
Interestingly, Harvey does not necessarily see improved technology, or even the reliance on a strict manufacturing process, as the key to this year's launch. Harvey says, "Communication is the key to a successful launch. Teamwork managed by the Vehicle Line Engineer (VLE) will get everybody in the choir singing from the same page." Each VLE is responsible and accountable for program performance and profitability. "There are thousands of trade-offs in a launch program. It is up to the VLE to enable communication among everybody," notes Harvey.
This summer, with the launch of their full-size pickups, General Motors has the opportunity to reassert itself as a manufacturing leader. General Motors will be in the automotive world spotlight, and the new Vehicle Line Executive strategy will be center stage. A smooth changeover will go a long way in erasing the memories of Lordstown and other slow launches.
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