3 Must-Haves for OEMs During Peak Production Season

Posted by Nick Ostdick on Jul 7, 2016 9:00:00 AM

3_must-have_tools_OEM.jpgAs we approach the midpoint of summer, OEMs kick production into high gear to meet demand for component parts and ensure on-time deliverability to customers across the globe. With spring and fall being the busiest time of year for auto retailers and dealers, OEMs and other third-party manufacturers ramp up production during the summer to meet upcoming demand from consumers.  

It’s pretty simple logic: the more parts in production, the greater the need for efficient, streamlined processes to ensure the proper quantity of parts arrive at the right place and at the right time to facilitate production schedules.

It can be a hectic few months, a peak production season fraught with the potential for disruptions and bottlenecks as the increases in planned production programs can often usher in increases in the likelihood of order modifications or changes, material shortages, production facility capacity miscalculations, and other constraints or restrictions that can result in major production or supply breakdowns.

While OEMs are always on the hunt for software solutions and strategies to engender lean, cost-effective production and supply networks, this need is only enhanced by the significant increases in demand and planning during the peak production periods. Solutions which engender end-to-end (E2E) visibility, agility, and transparency take center stage more so than at any other point during the year as OEMs are tasked with meeting customer demand in the most efficient, financially viable ways possible.

With this in mind, here are 3 must-haves for automotive OEMs during the peak production season.

1). Inventory Management

We discussed the importance of inventory management strategy and optimized inventory management solutions in previous posts, but the principles and concepts of these strategies cannot be understated when it comes to massaging production and supply variables to ensure efficient movement of products and information across all touch points of the value chain. Lead times, production schedules, order changes, variant-rich manufacturing cycles, and other variables can leave OEMs struggling to navigate the complexities in global demand and supply management on a regular basis, much less during seasonal spikes.

Inventory management - or inventory optimization (IO) - is essential in creating an enhanced level of visibility and transparency into supply and production capabilities. Through inventory management, companies can leverage the abilities to:

  • Ensure order accuracy and deliverability.
  • Safeguard against inventory over and understock.
  • Create effective yard and dock management strategies for the right materials at the right time for planned production programs.
  • Utilize BOM managementPFEP (Plan for Every Part), and EPEI (Every Part Every Interval) strategies to create a responsive, agile production network capable of adapting to modifications or changes in order without creating disruptions to the overall supply chain.

2). Optimized Production and Assembly

Just as implementing a robust inventory management strategy is a key driver in evaluating an OEM's overall part and material holdings, an optimized production and assembly platform is essential to operating a lean and efficient production program capable of meeting benchmarks set during the demand capacity planning process and responding to changes to constraints during the production stage.

This is where concepts such as production control come into play as a core strategy to leverage as OEMs increase production programs during the busy season. For example, take upstream areas like paint and body shop, which can act as something of an internal supplier to the finished product.  Achieving the desired sequence of production depends largely on the turbulence and possibility for disruption via the relation between upstream and downstream areas, and creating a streamlined production process between two touch points in the manufacturing stream is crucial in maintaining a productive, cost-efficient supply network.

Optimized production and assembly strategies and solutions is a bridge between upstream and downstream areas and creates a synergy of production processes that fosters efficient movement of products and helps simulate actual conditions enabling E2E visibility.  This is necessary to adhere to production and delivery timetables and meet increases in demand without putting additional strain on production facilities or creating an atmosphere where disruptions in manufacturing processes have the potential to cripple or damage multiple points in the value stream.

3). Enhanced Quality Control

As we’ve seen recently throughout the automotive industry, product recalls and other large-scale reclamations of component parts have become more and more common. While the reasons for this certainly extend beyond the mere planned production aspect of the value stream, OEMs need to leverage enhanced quality control (QC) strategies and touch points to ensure the parts and products produced not only are delivered on schedule but also adhere to a concrete standard or benchmark of functionality and operation.

Not only does the lack of QC standards engender the possibility of damaging an OEM's reputation should a recall or product advisory occur, but this situation can also prove costly in terms of materials, manpower, and other resources necessary to reclaim parts or products, uncover the defect, and create a new production program capable of meeting demand and customer needs for the part or product in question.

There’s an old saying used by carpenters or those in the construction industry: Measure twice and cut once. OEMs and Suppliers who adopt this philosophy and continue to focus on and emphasize the importance of following detailed QC practices during peak summer production will drastically reduce the possibility of product recalls and ensure better management of their products and overall standing in the automotive manufacturing industry.

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Topics: Supply Chain Planning, Production Control, Demand Capacity Planning, Planned Production Programs