Agile Manufacturing, CALS, and Automotive Excellence

By Eric M. Ross

After several weeks of continuous car problems and assessing your finances, you finally decide to do it. You’re going to buy a new car. You’ve spent some time thinking about what you want. As the head of an active family with three kids, a mini-van makes sense. Your home in New Hampshire has frequent winter snow, so four-wheel drive is a must. Your oldest boy is playing Tier 1 ice hockey, and a lot of travel is required. Thus, you’d like a TV for rear seat watching and a CB radio in addition to the car phone you need for work. You’d like good mileage, and you have a number of hazy thoughts about performance specifics and features. Although you’ve never been totally satisfied with past new car purchases, the old car just won’t hack another New England winter of heavy hockey travel and daily commuting. Yes, it’s time to visit some dealerships. Past car purchases have always been arduous. Understanding features and options, finding the dealership that can best meet your needs, making mental tradeoffs, settling for less than you wanted, going for test drives, getting tons of sales pressure, negotiating, and putting up with a myriad of slow paperwork are all about as much fun as a root-canal job, but it is time. One dealer has been advertising a new business approach. Maybe it won’t be quite so bad, this time. Maybe. When you drive up, you’re very surprised by the car lot. Only about 15 cars; where are the 200 or so you remember from the last time? You walk into the showroom building. Where are the cars??? The interior is vastly different from what you remember. You look around, and a salesman named Dave approaches. You end up in a room much too large for a car salesman’s office, a room that looks like some sort of video arcade. After settling down in a very complicated looking chair, you start talking business. Dave listens to your “requirements” and types for a minute or so on a keyboard. He gives you some goggles and rotates your seat so that you face a large computer screen, and you’re looking at real three-dimensional images of mini-vans. Several body styles are shown, and after a few minutes you’ve picked out the one that looks best to you. You rotate the image, view the van from all sides, and “zoom in” to look at details. You make a suggestion, Dave types, and the van is modified. You zoom to the inside to check the interior. You look under the hood — routine maintenance looks easy. You look under the chassis: the oil filter is very accessible. You’re impressed. What now?

© 1993, Eric M. Ross

Dave suggests a test drive. He presses some buttons, your chair rotates and moves into an enclosed area surrounded by computer screens, and suddenly you see a dash board and a steering wheel and pedals in position. You actually seem to be in a new mini-van, one decorated as you wished and with all the options you’ve requested. The van appears to be “in” a parking lot that you can see through the windshield and windows. Dave suggests turning the key, and you’re off and driving. You “drive” out of the parking lot and on to a road. You actually “feel” the van’s response to the road. You make some comments about turning radius and acceleration, and Dave, sitting in the passenger seat, does some typing on his keyboard. Following a few more comments about suspension and ride, the van’s driving just the way you’d like. You try the radio and make a suggestion about the sound and ease of using the radio. Dave makes more adjustments ..... After about 30 minutes, you’re driving the “dream” mini-van. It’s just the way you would design it. You stop, your chair rotates, and you and Dave then talk. You’ve ended up picking a lot more car than you intended. You’re thinking about cutting back some features and definitely reducing the paint scheme level until Dave shows you the total price. Although more than you intended to spend, it’s a great deal for the van you’ve “designed.” There’s no negotiation. Dave checks the computer and says that standard delivery in New Hampshire is 4-5 days, but because you’ve requested some very special features, delivery will be in 7-10 days. You write a deposit check, arrange financing at a good rate through the computer, and walk out, somewhat overwhelmed, in just 10 more minutes. Eight days later, you have your new van. It’s exactly like the virtual van you drove, except that it has “that new car smell.” Much to your delight, you discover your owner’s manual. The van illustrated on the cover is yours, down to some unique details of the paint scheme and trim, not just a similar model. Only those options on your van are discussed, including your limited slip differentials and your custom TV. Even the maintenance instructions are tailored to the level of work you planned to do yourself. You’re definitely going to spread the word about this miracle.

* * * * * * Is this scenario far fetched? Absolutely not. It represents but one view of the agile manufacturing or virtual enterprise vision. Most of the technologies necessary are here today. Although the virtual reality needed for the sales system is the flashy part of such a scenario, the real heart of this capability resides in those portions of the enterprise that created the individually customized van, on-demand. Needed to do this is the agility to economically and rapidly produce and deliver any choice, in lots as small as one, from a wide range of product possibilities. This requires an extremely flexible, highly responsive, efficient manufacturing enterprise. A key enabler is interoperable technical information and full integration, something

that is a realistic possibility due to an initiative called CALS. Let’s look at some of the details of these concepts and how they could, and probably will, make this scenario reality. Growing global competitive pressures in many manufacturing sectors have been forcing manufacturers to strive for higher and higher degrees of efficiency (maximum output with minimum resource use) and effectiveness (all finished goods rapidly sold/transferred to the customer). Increasingly sophisticated customer expectations are pushing manufacturers to produce variable product-mixes and to rapidly change products while maintaining top quality and minimal cost. To do so and remain competitive and profitable, manufacturing enterprises must continually improve operations. Improvement has traditionally focused upon individual functions, such as those illustrated in Figure 1, and the processes within these functions.

SpecificationsDevelopment

ProductDesign

ProcessPlanning

ManufacturingEngineering

Purchasing

Manufacturing

ProcessControl

Post ProductionSupport

Owners' ManualsPreparation

Shipping

Marketing

ProductEngineering

Suppliers Customers

Figure 1 — Some Elements of a Manufacturing Enterprise During the past few decades, there has been an increasing emphasis on inter-functional improvement. Interactions among functions and among organizations making up a manufacturing enterprise commonly involve the flow of information and materiel. For example, several firms might progressively convert raw materials into a finished, complex product. The process might begin with a mining or chemical firm and end at a final assembler. The flow of materiel is "relatively" straight forward, and involves only a few functions in an enterprise. Even so, a wealth of cost, lead-time, and quality gains result from improving this materiel flow. Information flow presents a more complex problem. Figure 2 depicts some of the technical information flow that might occur. In the real world, the information and the processes/systems that manage it are typically of many different types. Data may be in manual format (paper, microfilm, etc.) or in electronic format (in computer

memory, on tape or a disk, etc.), and the systems that use or manage the information may be filing cabinets, envelopes that travel with in-process work, various types of computers, and more. Although manual information is usually easy for a human recipient to understand, this information is prone to misrouting, loss, or damage, especially in a large or complex enterprise. Electronic information is amenable to better management but generally can not be readily shared among dissimilar systems, and often has to be reformatted or recreated for use.

These issues have been especially significant in the national defense community in the United States. For example, in the mid-1980s, the U.S. Department of Defense (DoD) had several hundred million engineering drawings in aperture card format, spent billions of dollars annually on technical information, had hundreds of tons of technical (or owner's) manuals for its military equipment, and experienced a broad spectrum of inefficiencies and operational problems due to difficulties in managing and accessing this information.a Often, the computer systems acquired by the military to improve defense equipment creation and support could not exchange information with each other or with systems in industry, resulting in a plethora of “islands of automation.”a Thus, in 1985, the U.S. DoD began an initiative called CALSb to correct these problems and capitalize on the improvement possibilities. The objectives of CALS are to improve costs, timeliness, and quality through information automation and integration. The basics of the concept include 1) one-time data creation with multiple use, 2) use of this information over the full life-cycle of each manufactured product, 3) interoperability to allow interworking (such as concurrent engineering) among functions and processes, 4) user- friendly, system transparent interfacing and access to information (which

appears - to authorized users - to reside in an integrated data base), and 5) access, configuration, and work-flow management. CALS consists of strategies, technologies, approaches, and standards. Most importantly, CALS has a strong, and growing, international commitment.c A fundamental result of CALS is interoperability — interoperability among functions and among organizations. A full CALS environment, as illustrated in Figure 3, provides all enterprise elements with “just-right, just-in-time” information.

SpecificationsDevelopment

ProductDesign

ProcessPlanning

ManufacturingEngineering

(Automated)Purchasing

(Automated)Manufacturing

(Automated)Process Control

Post ProductionSupport

(On-line)Owners' Manuals

(Automated)Shipping

(On-line)Marketing

VirtualINTEGRATED

PRODUCTDATABASE

ProductEngineering

Suppliers Customers

Figure 3 — Integrating the Enterprise with CALS A second area of interaction that has undergone dynamic change during the last few decades involves the business relationships among enterprise members. Prior to World War II, larger firms often pursued “full” vertical integration as a way to gain a competitive edge. In the post war years, many firms found it advantageous to outsource much of what had been produced internally. The advantages were obvious — a firm concentrating on a specialty product line could do a better job and could gain greater economies of scale by producing for many customers. However, the relationships between suppliers and their customers were driven by cost-based competition and often became somewhat adversarial. More recently, companies, especially in the automotive and aerospace industries, have been pursuing cooperative, partnership relationships. Perhaps the most effective partnership implementation is the Japanese keiretsu. The keiretsu concept is too complex a subject to be fully explained here and has aspects, such as financial centers, that go beyond production, materials, and information–flow concern. However, a keiretsu is, at least partially, a vertically integrated set of companies pursuing specific markets.

Each member typically maintains a “horizontal” internal focus and focuses externally on supporting and providing products to keiretsu members further along on the production chain. Basically, a keiretsu will act as a single entity that uses its appropriate components (individual firms) to supply all resources needed to pursue and execute a business opportunity. Thus, a keiretsu is a dedicated, comprehensive, and flexible partnership formed to succeed in a range of market opportunities. The culmination of this trend may be agile manufacturing.d Agile manufacturing is a cooperative approach to achieve rapidity, flexibility, quality, innovation, and efficiency. “Rapidity” includes quick product realization and introduction; production and delivery; and product change, customization, and upgrade. “Flexibility” is the ability to rapidly and economically produce any product, in any lot size, from a range of possibilities. Included may be the flexibility to customize each instance of a high volume product. “Quality” simply means meeting or exceeding customer specifications and expectations. “Innovation” is the capability to be first with the best new product. Finally, “efficiency” helps ensure that product perceived–value exceeds costs. To so perform, a manufacturing enterprise must be optimized for the instant opportunity. It must contain the best resources (equipment, facilities, and people), and indeed its success will be based on the skills, knowledge, and expertise of its people. To be optimized, it may have to reconfigure itself to excel for each specific opportunity. For example, several companies, as illustrated in Figure 4, have decided to work together to pursue some opportunities. Note that the rectangles in the figure represent functions of each

Function

Company

Figure 4 — A Possible Agile Enterprise

firm. For the First business opportunity, the five firms shown in Figure 5 form a virtual company (a temporary, inter-company organization, working as a business entity to pursue a specific business opportunity) using selected functions from each of the various participants. These decisions (the participants, the functional allocations) could have been made at the beginning of the effort or could evolve with the endeavor. Regardless, the result is an instant enterprise of several companies that has formed to maximize rapidity, flexibility, quality, etc. to gain the business success desired. (Note — the arrows in the figure indicate possible information flow, as in Figure 2.)

Figure 5 — Virtual Company 1

At the same time, or perhaps shortly thereafter the first endeavor, another opportunity is identified. The same seven firm agile enterprise chooses to pursue it. Due to technical or other differences in the market or product involved, they form a different virtual company, the one shown in Figure 6. Similarly, an agile enterprise may change participants for different configurations of a basic product line. Thus, underlying agile manufacturing is the reconfigurable enterprise that enables the formation of virtual companies to pursue, and excel at, specific opportunities. Now, why is CALS necessary for agile manufacturing and the opening scenario of this article? In the opening scenario, an agile enterprise provided the capability to rapidly produce individually customized automobiles. Not only must the final assembler have the flexibility to assemble an on– demand configuration, but, even more importantly, component producers must

Figure 6 — Virtual Company 2 be able to quickly respond, when and only when required, to provide the specific items required for a given final product. A key requirement of an agile enterprise is the ability to exchange technical information as shown by the arrows in Figures 5 and 6. Indeed, the 21st Century Manufacturing Enterprise Strategy report, which first documented the agile manufacturing concept, stated:

Agile enterprises are totally integrated organizations. Information flows seamlessly among manufacturing, engineering, marketing, purchasing, finance, inventory, sales, and research departments. Work proceeds concurrently rather than sequentially. . . Information. . . flows seamlessly between agile manufacturers and their suppliers, too, as well as between manufacturers and their customers, who play an active role in product design and development under agile manufacturing.e

Since any environment involving different, and changing, participants is likely to involve dissimilar information systems; strategies, standards, and approaches for interoperability are a must. Thus, CALS. The opening scenario is not futuristic fiction. The technologies, strategies, and approaches needed are available today or are on the visible horizon. A limited version of this scenario could probably be implemented today, and as agile manufacturing, CALS, and virtual reality evolve, so will the viability of this approach to automotive excellence.

Footnotes:

a. See, for example, the discussions on pages 3-4 of, and the references cited in, reference 9. b. This acronym originally represented “Computer-Aided Logistic Support.” The U.S. DoD has changed this name twice since CALS' inception. The term CALS, in some communities, has become de-coupled from the words underlying the acronym. The U.S. CALS Industry Steering Group has started using the term “Commerce At Light Speed.” c. CALS industry groups and government offices have been established in Europe, the U.S., Canada, and the Pacific Rim. Reference 12 is a CALS executive guide, for general industry, produced in the UK. d. Very closely related to agile manufacturing is a concept, that surfaced in the same time frame, known as the virtual corporation or the virtual enterprise. Indeed, the most apparent differences between these concepts are 1) agile manufacturing's more narrow scope (limited to manufacturing), 2) the virtual enterprise's primary focus on organizational factors contrasted with agile manufacturing's focus on enablers, and 3) a difference in the organizational level involvement suggested in the initial presentations of the two concepts (references 3 and 4). The “virtual company” concept is fundamental to agile manufacturing, and the term is used throughout the initial agile manufacturing documentation (reference 4). e. See reference 4, Vol. 1, page 8.

References:

1. Barker, Joel A., Future Edge: Discovering the New Paradigms for Success, William Morrow and Company, Inc., New York, 1992. 2. Burt, David N. and Michael F. Doyle, The American Keiretsu: A strategic Weapon for Global Competitiveness, Business One Irwin, Homewood, IL, 1993. 3. Davidow, William H. and Michael S. Malone, The Virtual Corporation, HarperCollins Publishers, New York, 1992. 4. Goldman, Steven and Kenneth Preiss, Editors, 21st Century Manufacturing Enterprise Strategy, Iacocca Institute, Lehigh University, 1991. 5. Hammer, Michael and James Champy, Reengineering the Corporation: A Manifesto for Business Revolution, HarperCollins Publishers, New York, 1993. 6. Lang, Mark S., Agile Manufacturing presentation at SYNCHRONICITY/93 Conference and Exposition, Pittsburgh, 1993. 7. Merli, Giorgio, Total Manufacturing Management: Production Organization for the 1990s, Productivity Press, Norwalk, CT, 1990.

8. Morris, Daniel and Joel Brandon, Re-engineering Your Business, McGraw-Hill, Inc., New York, 1993. 9. Ross, Eric M., An Introduction to the CALS/CE Initiative and Intergraph's CALS Approach (I/CALS), Intergraph Corporation, Huntsville, AL, 1992. 10. Ross, Eric M., “CALS: A Presentation to Ford Motor Company,” BDM International, Inc., Dearborn, MI, 1989. 11. Ross, Eric M., “CALS: Enabling the New Manufacturing Paradigm,” CALS Journal, Vol. I, No. 4, Saratoga, CA, 1992. 12. Schofield, Norman, David Froome, Michael Naughton, and Joan Smith, The Executive Guide to CALS, United Kingdom CALS Industry Council & United Kingdom Department of Trade and Industry, London, 1993. 13. Sheridan, John H., “Agile Manufacturing: Stepping Beyond Lean Production,” Industry Week, Vol. 242, No. 8, Cleveland, 1993. 14. Wince-Smith, Deborah L., "Remarks: The Strategic Partnership Initiative and Critical Technologies," U.S. Department of Commerce Critical Technologies Workshop, Gaithersburg, MD, 1992.

(A slightly different version of this article, with slightly different graphics, was published in Automotive Manufacturing International ‘94, pages 37 - 42)