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Interview with Boston Consulting Group

Vehicle Production of the Future: The Product Waits for the Worker

| Author/ Editor: Tina Rumpelt / Alexander Stark

What will vehicle production look like in the future? The management consultancy firm Boston Consulting Group investigated the future of vehicle production in a study and a simulation - based on real production data. Daniel Küpper and Christoph Sieben explain the effects in this interview.

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Daniel Küpper (right), Partner and Managing Director at the Boston Consulting Group, Christoph Sieben, Project Leader, also at the Boston Consulting Group.
Daniel Küpper (right), Partner and Managing Director at the Boston Consulting Group, Christoph Sieben, Project Leader, also at the Boston Consulting Group.
(Source: Boston Consulting Group)

Mr. Sieben, Mr. Küpper, assembly line versus flexible cell production - why did you address this topic?

Daniel Küpper: The variety of products in the automotive industry is increasing - driven by a multitude of global trends: Customers are increasingly demanding individualized products, the electrification of vehicles, local legal regulations or shorter innovation cycles are just a few examples. With the development towards autonomous driving, the complexity will once again increase disproportionately, as this will open up completely new design possibilities for the vehicle interior.

Christoph Sieben: Due to the growing number of variants with strongly varying tasks, individual employees can no longer be fully utilized at their own pace. This results in inefficiencies. This is why it is important to develop concepts that meet future requirements - such as flexible cell production.

What makes modular production cells so attractive for automobile manufacturers?

Christoph Sieben: The high degree of flexibility and the resulting efficiency. Due to the flexible connection of the individual cells with intelligent AGVs, it is possible to activate only those work steps that are required for this product variant. The modular design with cells allows a flexible response to volume fluctuations and additional variants. Additional cells - for capacity adjustments or new models - can be added without changing or disrupting operation.

Daniel Küpper: In flexible cell assembly, it is no longer the well-paid employee who has to wait for the product, but the product waits for the employee. Depending on the current degree of optimization of the line, an increase in employee utilization of more than ten percent can be achieved across the entire assembly area.

Today, automotive manufacturers are coping quite well with complexity and high variance by creating variants in in-house pre-assemblies as well as by Tier 1. Why isn't this enough for the future?

Daniel Küpper: Over many years, OEMs have learned to deal with the inherent disadvantages of line production in the best possible way such as sequencing right from the supplier. This, however, results in costs that should not be underestimated and also restricts flexibility. When sequencing starts at the supplier, the manufacturer is limited to suppliers within a certain radius of the OEM plant and cannot take advantage of factor cost advantages offered by other suppliers. Flexible cell production significantly reduces sequencing requirements, which increases flexibility and can help reduce costs. All in all: The complexity of production increases with the number of variants. This means that all the disadvantages of rigid line production are becoming more apparent. Technical and organizational measures to compensate for these disadvantages reach their limits and require a fundamentally more flexible production concept.

Will the traditional assembly line become obsolete sooner or later?

Christoph Sieben: No. A sensitivity analysis carried out by us shows that the advantages of the conventional conveyor belt outweigh the advantages with a strongly increasing number of units. But with the growing degree of product variance flexible cell production moves into focus. Hybrid solutions actually show the best results in terms of efficiency and worker utilization across wide areas of our analysis.

Where do you still see potential for optimizing the conventional assembly line?

Daniel Küpper: OEMs are real specialists when it comes to optimizing their existing assembly lines. A lot has happened in the past. Certainly, the use of data analyses and algorithms or artificial intelligence can realize further previously untapped potential,. Especially the areas of production planning and assembly line balancing offer opportunities for further optimization. Altogether, we believe that the overall system must be optimized holistically in order to accomplish a real leap. New layout concepts such as flexible cell production should also be taken into consideration.

In your opinion, how urgently does the automotive industry need to adopt flexible, modular assembly concepts?

Daniel Küpper: Any OEM planning a new assembly line in the near future should at least consider the principle of flexible cell production. Some OEMs such as Audi have already realized this and are tackling this issue.

Industry 4.0, IoT, Big Data, 5G - this topics are much talked about. Are these technologies mature enough for a flexible assembly concept to work on a larger scale?

Christoph Sieben: The individual technologies required to implement flexible cell production are already available on the market. Intelligent DTSs that find their own way; connectivity devices that make data from all systems available on the shop floor; a manufacturing service bus that links all systems involved to one another et cetera. The technology within the cells does not change fundamentally, even though cell production offers greater automation potential. Standard processes such as bolting, which are carried out sequentially on the conveyor belt at various stations, can now be carried out in bulk at special bolting stations which can be approached several times by a product.

Daniel Küpper: The great challenge of flexible cell production is to control the individual components in the overall system efficiently and robustly. This requires a comprehensive control algorithm that continuously controls and optimizes the overall system in a target-oriented manner. Most OEMs still shy away from this, as this control has to be individually tailored to the manufacturer and developed accordingly.

Does a Flexi system also have to have "rigid" stations in order to unburden logistics, for instance? For example, for the installation of the upholstering, which require large-volume, heavy parts (e.g. complete drive trains) must be consistently provided "just in sequence".

Daniel Küpper: The great advantage of flexible cell production is that it can be designed very freely. The higher the permitted degree of freedom - for instance the number of processes one employee can handle - the higher the efficiency gain will be. But of course, this also has economic limits: Systems that require a great deal of investment cannot be installed indefinitely. This is where bottlenecks must be ruled out in advance by means of simulations and systems installed in line with requirements. Logistics follows the concept of assembly and does not obstruct station design.

Porsche uses an FTS-based line in Taycan assembly, Audi operates with flexible assembly cells in electric motor production. Are those ideal "playing fields" for flexible assembly concepts?

Christoph Sieben: In fact, these are perfect examples for flexible assembly concepts. Especially when volume figures are unclear, the production start-up can be designed flexibly and adapted by the number of installed cells. With the production of electric motors, Audi has taken a major step in the direction of greater flexibility and is certainly a pioneer in this field. Taycan assembly also takes advantage of AGVs and replaces the assembly line. However, the assembly process continues to be carried out in the classic flow production process.

According to your simulation, 84 stations are required instead of an assembly line with 75 workstations with a similarly flexible solution. What does a comparison of the required areas look like?

Daniel Küpper: In this special simulation, we assume that there is only one employee on each cell - compared to an assembly line with mostly two employees per station. This method merely quantifies the effects of the conversion to cell production and does not distort the result through "organizational tricks". Even when the work effort is reduced, the number of cells only increases slightly and thus also the space required. In projects for industrial customers, we can even reduce the assembly area in comparison to the conveyor belt, taking into account space efficiency as a key KPI. This also dependents very much on the product and volume. Eventually, the different optimization targets have to be compared.

Are the technologies mature enough to ensure that a flexible assembly concept on large scale will work?

Christoph Sieben: Yes. The required technologies are all already available on the market: intelligent DTSs that find their own way; connectivity devices that ensure that the data from all systems are available on the shop floor; a manufacturing service bus that connects all the systems involved with each other et cetera.

Daniel Küpper: The great challenge of flexible cell production is to control the individual components in the overall system efficiently and robustly. This requires a comprehensive control algorithm that continuously controls and optimizes the overall system in a target-oriented manner. Most OEMs still shy away from this, as this control has to be individually tailored to the manufacturer and developed accordingly.

What new, additional requirements does a Flexi line place on logistics in assembly?

Christoph Sieben: Compared to conventional assembly line production, where a lot of material can be provided in large and small load carriers on the line, the space requirement increases. Depending on the defined work step, the individual cells must be supplied with the corresponding components. The separation effort increases. Large and medium-sized components are separated in the logistics area and made available on order picking trolleys - depending on the number and size of the components also on several trolleys that are delivered at varying intervals. Small and standard parts are provided on mobile shelves. The delivery takes place via intelligent AGVs. The control of logistics must be fully integrated into the overall control of the assembly line. Logistics becomes an integral part of production.

So how do investment costs, including logistics, compare?

Christoph Sieben: Apart from investment costs, current costs must also be included in the financial analysis. In the concepts that we developed for our customers, we saw an increasing need for investment in fully flexible variants. The development costs currently still required for the control software or costs for special equipment, which can be installed on several cells as required, should be mentioned here. There are opposing effects on current expenses: The significant reduction in the number of assembly employees has had a strong positive effect on running costs. This is offset by an increase in personnel logistics expenses. In Germany, in particular, an increase in wage costs for assembly workers is to be expected, as the necessary flexibility requires a higher level of qualification.

Daniel Küpper: Flexible cell production has a clear advantage over the line, especially in the case of follow-up and expansion investments. Volume or type changes significantly reduce investment requirements and switching efforts; long downtimes due to conversions or fitting measures are eliminated.

With 97 employees in 84 flexible stations (assembly line: 120 employees), you achieve 98 percent utilization of the workers in your model calculation. What do the employees themselves and the trade unions say about such a high workload?

Daniel Küpper: If we speak of a load factor of 98 percent, all factual and above all personal distribution times are already taken into account. The employee is not additionally restricted in any way, but the planned value-adding time is better utilized. The work in flexible cell production is actually rather attractive for workers, since there are possibilities to adapt cells to individual needs, also ergonomically.

What prerequisites and factors must be ensured in order to operate a modular, flexible assembly system economically?

Daniel Küpper: A fully flexible cell production can only assert its advantages if the product environment requires flexibility. In addition, product variance, volume and many other variables have an influence profitability. Therefore, we always carry out an individual analysis including a detailed simulation as a first step for our customers to determine which concept - fully flexible, hybrid, assembly line - is most economical for their specific application.

Christoph Sieben: During operation, the concept is based on a robust control and optimization algorithm that guarantees trouble-free operation and can react quickly to unforeseen conditions. The control system is the nerve center of flexible cell production and must therefore be designed with appropriate care.

As the vehicles wait for the workers - and not the workers for the vehicle as is the case on the conveyor belt - the throughput time increases according to your calculations; the throughput numbers increase significantly. Don't these factors cancel out the personnel cost benefits?

Christoph Sieben: The increase in lead time and inventory is an acceptable compromise to maximize pure efficiency gains. Here, too, the optimization targets to be defined in advance determine the optimal layout. Ultimately, the setup that delivers the best overall result under consideration of trade-offs and individual boundary conditions has to be realized.

Vehicle assembly 2035 - what will it look like?

Christoph Sieben: It will be hardly recognizable. With regard to production technology, we live in a very exciting, disruptive time. Artificial intelligence, multi-material 3D printing and smart robotics will enable highly efficient, fully flexible manufacturing concepts in which the employee will mainly take over control functions.

Daniel Küpper: This development is boosted by the implementation of some central enabling technologies: such as 5G, IoT/edge computing and automation technology, as well as blockchain applications in sub-areas such as the interface to suppliers.

The questions were asked by Tina Rumpelt.

About Christoph Sieben and Daniel Küpper

Daniel Küpper (right) is Partner and Managing Director at the Boston Consulting Group (BCG). He leads the company's global Manufacturing & Supply Chain team and the Innovation Center for Operations - a global network of model factories. Christoph Sieben is Project Leader at the Boston Consulting Group. He is an integral member of the manufacturing team, specializing in digitization/production optimization and responsible for making production more flexible using new production concepts.

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