Low volume manufacturing strategies for the automotive industry : a global and emerging economy perspective

Abstract

Low volume manufacturing has become increasingly important for the automotive industry. Globalization trends have led automakers and their suppliers to operate in developing regions of the world were economies of scale can not always be achieved. Niche markets for the performance/sport cars and some luxury sedans have been gaining economic importance, further fueling the need for developing more economic efficient low volume manufacturing operations. While low volume manufacturing has been the subject of much research, this has largely focused on flow optimization, inventory reduction and logistics improvements. Less attention has been paid to the subject of process technology choices. Identifying and employing optimal processing technology for low volume applications can reduce costs significantly. This thesis presents technical cost modeling as an effective methodology for examining low volume manufacturing cases and identifies typical areas of concern for low volume producers. General strategies for reducing the cost penalties associated with low volume production are also presented. Four cases are analyzed; Argentine engine valve manufacturing, Thai steering wheel manufacturing, automobile radiator manufacturing, and sheet metal stamping. These cases exemplify three of the most common issues affecting low volume manufacturing; the selection of optimal alternative manufacturing technologies, tooling related issues such as the optimal investment levels and the choice of tooling technologies, and the choice of automation levels. Results show that alternative process technologies may address low volume problems associated with long set-up times, poor equipment and tooling utilization and high tooling investment. The use of alternative tools which are less expensive, but have a shorter life are also potential solutions. Automation level optimization can be used to target the required output levels as well as affect the labor capital balance.