The Challenge of Customization in Auto Manufacturing
Technological advances move forward quickly. Nowadays, artificial intelligence (AI) and process automation are common concepts. AI has had already provided the auto industry with solutions. This is especially true for ruling workflows, factory floors robots programming, and components checking.
On the other hand, the automotive industry is a colossal economic sector. Sales reach over 17 million new vehicles sold yearly in the US only. Since automobiles are a primary source of transportation, this industry revenue is huge. However, customization promises to revolutionize the automotive industry and make it even bigger. Automakers are already making high investments in smart car technology. The potential benefits of optimization are vast.
Although there is an astounding development in this area, manufacturers are still working the pieces together. The challenge for industry leaders in the supply chain renovation. This requires internal and external process flexibility that is not always available. Even though customization in auto manufacturing could become the mainstream, which could be a moneymaker strategy, the reality is that making it possible is still a few years away and this is why.
Assembling Cars Is a Complex Process
Auto manufacturing is historically an assembly line-style production. Manufacturers make a good profit out of large volumes of cars or trucks being produced simultaneously. Mass-production of standardized vehicles has worked for years, and marketing masters make most customers find those conventional vehicles a perfect fit for their needs.
Industry giants such as BMW expect to implement customization through the build-to-order (BTO) approach. The total vehicle customization manufacturing process is the main goal for automakers like Tesla. Other companies like Ford Motor have made driverless car technology a primary aim. However, selling some specific features like custom rims from manufacturers is not the same as the full customization of smart-vehicles.
Risking a successfully proved process equation for a promising proposal can be a turndown for many manufacturers. Theories on paper often come with difficulties while implementing, and for the automotive industry, this could mean a billion-dollar loss.
Custom Order Changes the Game
Automakers traditionally use a make-to-stock (MTS) or build-to-stock (BTS) scheme of production. The strategy is based on historical demand data and accurate sales forecasts. The MTS/BTS method mixes production and inventory planning expertise for keeping on a profitable production. The balance between a minimum required stock level inventory and sales are the tricks in this scenario.
This is why customization represents a big challenge for visionary leaders since there is limited data about this method. Regardless of possible predictions, good data is essential for engineers to deploy an efficient transition strategy and move efficiently through the different stages of the transformation process. Automotive strategic planners must resolve the Custom Order process or Engineer to Order (ETO) questions before considering implementing these types of sales strategies.
A Challenge for Sales
Despite customization for smart car features when ordering a car from the factory is already possible, most people do not know this. This option can be a great tool for people reluctant to settle on nearby colors and car features available. This happens because dealerships’ main interest is to sell their assets already in stock and skip to offer this possibility. This is why only 7% of US automotive industry sales come from custom orders and why most American automakers will not fully compromise regarding customization.
On the other hand, offering personalization to segments of the market that are hungry for differentiation, such as exotic performance car buyers can have huge receptiveness. Nevertheless, these are just a small portion of the trades. The sales floor challenge will be offering customization and convincing the audience that this product is worth both the costs and the waiting time.
A False Promise of Mass Customization
As stated earlier, efficiency complications during the manufacturing process are a major concern. Moreover, production time and minimal waste are central points in manufacturing principles. Automakers would be gambling their futures betting for custom-ordered smart models. Facing harder to solve issues could become a breaking point between individual personalized smart cars’ promise and the delivering potential of the manufacturer.
On the other hand, the cleverest approach to offer customization is through modularizing. This way, carmakers aim to reduce costs substantially by fabricating cars from just a few numbers of mix-and-match modules. Nonetheless, this could lead to a situation in which a customer would want an option that is not available as part of the offering. This could end up damaging the carmaker’s brand.
Huge Money Investment
Smart cars and mass customization can be a very attractive proposition for both consumers and producers. However, the logistic costs for switching from the mass-manufacturing system of production to BTO are enormous. Implementing BTO would be challenging in every automotive industry aspect. From design and manufacturing to marketing and distribution, the whole system has to be rebuilt.
Furthermore, uncertain benefits for businesses after making that kind of investment can overcome the promising numerous benefits to customers.
Not Only About Hardware
Industry leaders have to think further ahead. The automobile industry will produce smart customizable vehicles, and those will require connection service. Then value will move from carmakers to service providers. This would be a situation carmakers would not bear. Since the automotive industry lacks the necessary expertise in the field, automakers are studying the chance of merging or collaborating with the field players.
Automotive manufacturers are aware of the rising customization calls. However, industry transformation is not just about a leap of faith. Industry requires an error-free and timesaving production system. BTO is a promising solution for offering high product variety. Demand-driven production increases costs and complexity because it needs individual work.
Although some manufacturers are already testing this model in the search of a cost-effective solution, many concerns regarding the supply chain are still in need of solving. The automotive industry wants to renew itself and find a balance between manufacturers and customer benefits. A modularized and software-driven future for carmakers is an answer they are still reviewing.
Furthermore, the secret to succeeding under transformation times is to focus the energy on the new. It is yet to be seen if this change in the automotive industry exceeds the hard beginning and chaotic middle phases of this process to reach results.
