Automotive: Keep Pace On The Innovation Speedway - InformationWeek

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9/18/2003
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Automotive: Keep Pace On The Innovation Speedway

Vehicle manufacturers use IT to stay in tune with changing tastes

Take a look on the highway today and you'll see a greater variety of automobiles than ever before. There are sports cars that look like throwbacks to the 1950s, vans with futuristic twists, and trucks that morph from pickup to SUV in a matter of minutes.

"This is a very intense market, and product is everything," says Ralph Szygenda, group VP and CIO of General Motors Corp. "Effectively, this is the fashion industry. There are more products being introduced than ever before."

The push to offer the best selection of the most innovative, highest-quality vehicles at the right price is the result of a U.S. auto market that's been squeezed for several years by foreign competition and demanding customers who want more for less, and more recently by a slumping economy. New-car sales in the United States in 2003 are tracking slightly less than in 2002, when 16.8 million units were sold, about 1.8% less than in 2001, according to the North American Dealers Association. At the same time American automakers are battling market factors here, they're pushing for growth overseas, particularly in Asia and Eastern Europe.

Ralph Szygenda, group VP and CIO of General Motors Corp.

Everything a CIO does must deliver business value, GM's Szygenda says

Photo by Bob Stefko
To stay on track, U.S. automakers and their suppliers rely more than ever on IT to cut costs, improve business processes, and, most important, boost bottom lines. "The auto industry is as competitive as any other industry. Margins are difficult to come by," says Szygenda, InformationWeek's Chief of the Year last year (Dec. 2, 2002). "Everything you do as a CIO has to deliver value to the business."

Specifically, the auto industry has been leveraging IT to improve product development by integrating a variety of enterprise systems, simplifying business processes, and extending IT projects beyond a company's four walls, from suppliers to customers.

Take GM, for example. It has shaved nearly $1 billion from its supply-chain and logistics operations, and extensive work on its supply-chain and production plants has cut assembly time to an average of 26 hours per vehicle, compared to 32 hours in 1998, according to Plunkett Research Ltd. By leveraging new design processes and 3-D virtual-reality modeling software, the company dramatically cut the time it takes to build a car from 40 months to less than 18 months, helping it stay in closer step with consumers' tastes.

Automating product development has been expanding this year to include simulated crash testing. Now GM can electronically design a vehicle and then put that virtual car through a series of simulated crash tests using digital vehicle data to help build safer cars. More than 2,000 digital-vehicle crash scenarios are simulated each month.

In 2003, GM continued to focus on integrating the processes and systems that are central to its supply chain with those that are core to engineering, manufacturing, and procurement. The goal: to electronically move data from the design process through to the procurement of supplies and on to manufacturing. Szygenda refers to this as the virtual factory, and the company is using connectors and middleware, such as SeeBeyond Technology Corp.'s Business Integration Suite, to accomplish this.

GM has for some time been communicating with its suppliers over the Internet, and as many as 17,500 suppliers have for several years been able to access auto designs and engineering information via GM's SupplyPower portal. This year, GM added a capability to the portal that provides smaller suppliers that can't afford investments in heavy-duty CAD/CAM systems with secure Internet access to design and engineering applications.

For its dealers, GM added an online capability that lets them electronically submit financing applications to General Motors Acceptance Corp. on behalf of customers, saving GMAC about $500,000 in processing costs. In addition, GM launched Owner Center, a Web site that lets customers create custom vehicle profiles of the GM cars they own. Customers can also find on the Web site information specific to their vehicles, such as maintenance reminders. "This is like an online diary of what's happening with your car," Szygenda says. Already, more than 418,000 customers are using the Web site.

The other two big U.S. automakers, Ford Motor Co. and DaimlerChrysler AG, also spent much of this year leveraging IT to improve product development, streamline supply chains, and share information among suppliers, dealers, and customers.

DaimlerChrysler uses simulation and graphical-planning tools such as Dassault Systemes' Catia 3-D CAD/ CAM software to digitally design vehicles and test them in a virtual world. For example, the company can digitally create a passenger, watch that passenger enter and exit the vehicle, and gather data that can be used to improve comfort. DaimlerChrysler's also using Linux clusters so Chrysler Group engineers can perform crash simulations 20% faster and at 40% lower costs.

A new eManufacturing Digital Dashboard, accessed via PDAs running on wireless local area networks, gives DaimlerChrysler plant managers immediate access to data on the factory floor. That way, they can make adjustments to just-in-time and other deliveries, anticipate and correct any equipment problems, and proactively improve plant performance.

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