Operations & Supply Chain Management

Contract Manufacturing of Vehicles
Group 6 Sec-E Salil Wadhawan Vandana Rathore Tanya Arora Talha Ahsan

Contract Manufacturing
‡ What is contract manufacturing? Eg: Apple- Foxconn Samsung- display panels for sony lcd¶s ‡ 1. 2. 3. 4. 5. Cause of contract mfg: co¶s are most efficient in producing better quality parts, speciality products Overfull production capacity of the plant Less cost Quick market entry Concentrate on design r&d

About The case
‡ BMW announced the launch of X3 a luxury SUV ‡ After this the German automaker said that contracting the manufacturing of the car to Magna Steyr. ‡ In Austria for 7 yrs

Reasons
‡ Market competitive pressures had forced it to design a 2nd medium sized suv and fast ‡ BMW plants were running at full capacity due to demand of X5 suv. ‡ BMW need for speed was ably handled by Magna Steyr as the production took off the same yr and the suv sales touched 114000 units in 2006.

Contract Mfg in India
‡ Sub contracting vehicles assembly is inconceivable, huge vacuum in the country¶s auto industry. ‡ Few players are there but re inexperienced to handle it. ‡ When foreign OEM (original equipment mfg seek to enter the indian market they are not that much confident abt Indian auto contract mfg.

Challenges for CM
‡ Groundwork needed: CM must demonstrate world class production practices in assembly lines across multiple platforms. ‡ Must be able to win large deals from OEM¶s ‡ Give them value propositions across volume of commercial vehicles and passenger cars. ‡ Skilled and trained workforce

Indian market
‡ Boom in yr 2007 car sales but underutilization of the plants ‡ 8 out f 12 carmakers in India produce less than 60,000 units ‡ Eg:Fiat India=1,715, Gm India=36,879, honda=59,152 ‡ Why these co¶s require contract mfg ‡ Eg:ford had a loss of rs 640 cr till 2005 6 yrs after commencing in India

About Magna in India
‡ Set up engineering centre in Pune in 1999 ‡ Plans to open 2nd one in Delhi ‡ Talks with Indian OEMs tht wish to go global eg: Tata Motors, Mahindra & Mahindra. ‡ Help them with smaller volumes so that tey don¶t have to establish plants in Western Europe or North America.

Magnomics
‡ Magna¶s vehicle assembly arm holds learning's for the Indian auto industry which lacks a contract mfg system. ‡ Deals on wheels: bagged BMW mini contract, it alone translates to annual production of 40,000 cars from 2010 onwards. ‡ It has other projects of GM & Chrysler also ‡ Lesson: Mfg efficiencies depend on the no. d deals, time frame of the contract & volumes within. ‡ Workforce: developing a flexible workforce earlier it had 4500 employees now 12,000. Manage internal resources. ‡ Quality: Maintain control over quality standards. In India recently they have focused on world class production & technology standards. ‡ Risk Factors: Risk in long term contracts. What if a product fails? Must asses the viability of contact mfg it may damage the brand image of OEM

Viable Contract Mfg
‡ Production of engines atleast 50,000 units a yr ‡ Assembly: atleast 20,000 units a yr ‡ A plant to service ³low-volume´ models in quick time ‡ Additional automated facilities such as paint shop & weld shop ‡ Vehicle prototyping, Simulation & testing

examples
‡ New Venture Ltd was established back in 1991 in Southern California and has since been helping companies in the United States manufacture overseas in China. ‡ Harley Davidson suppliers, official Porsche accessories suppliers. ‡ Electroplating - Process in which a layer of a metal is deposited on metallic or non-metallic electrode by electrolysis in an electrolytic cell. Most commonly used for chrome plating. ‡ Anodizing - An electrolytic passivation process used to increase the thickness of the natural oxide layer on the surface of metal parts. Anodizing increases corrosion resistance and wear resistance, and provides better adhesion for paint primers and glues than bare metal. Most commonly used on aluminum, not very useful on steel.

‡

Powder Coating - The coating is typically applied electrostatically and is then cured under heat. It is usually used to create a hard finish on metals that is tougher than conventional paint. Popular applications include aluminum extrusions, and automobile and bicycle parts. Spray Coating - A painting technique where a device sprays a coating (paint, ink, varnish, etc.) through the air onto a surface. It is typically used for covering large surfaces with an even coating of liquid.

‡ LED Lights - A light-emitting diode (LED) is a semiconductor light source. Advantages include lower energy consumption, compact size, less heat emission, shock resistance, color variability, and longer lifetime.

Indian CM
‡ Bharat Forge, Sundaram Fasteners, Wheels India, Amtek Auto, Motherson Sumi, Rico Auto and Subros. ‡ These companies are in the process of making a mark on the global arena, and some have already acquired assets abroad.

Bharat Forge
‡ ‡ ‡ ‡ Carl Dan ±German Federal Forge ±USA Scottish Stampings Ltd ±scotland The company is based in Pune, India and has nine manufacturing plants in India, Germany, Sweden, United States [1], Scotland, United Kingdom and mainland China. ‡ leading global 'Full Service Supplier' of forged and machined - engine & chassis components. It is the largest exporter of auto components from India and leading chassis component manufacturer in the world. ‡ . Every second heavy truck manufactured in USA runs on a "Made by Bharat Forge, India" front axle beam.

‡ Crankshafts Connecting Rods Camshafts Front Axles STR Knuckles ‡ OEMs-renault,chrysler,BMW,VW,AUDI

The Samvardhana Motherson Group
‡ The Group has invested in technologies that provide manufacturing support, including compressors, paint coating equipment, auxiliary equipment for injection molding machines, sales, installation and servicing of industrial robots and automotive manufacturing engineering services.

‡ SMR is one of the largest manufacturers of external rearview mirrors for passenger cars in the world. Sunroofs ‡ Sunroofs for Chrysler Maybach

Karmann
‡ till 2009 the largest independent motor vehicle manufacturing company in Germany. ‡ design to production and assembly of components, for various automobile manufacturers; including Chrysler, Porsche, and Volkswagen Group.

‡ Karmann is best known today for its work on convertibles / cabriolets. It provides roofcomponents for many current cabriolet automobiles, such as the Mercedes-Benz CLK, the Renault Mégane CC, and the Volkswagen New Beetle Cabriolet.

Gruppo Bertone
‡ Gruppo Bertone is an Italian automobile company, which has specialized in car styling, coachbuilding and manufacturing. ‡ Bertone has styled cars for Abarth, Alfa Romeo, Citroën, Ferrari, Fiat, Iso Rivolta, Lancia, Lamborghini, Mercedes Benz and Volvo Cars. ‡ producing special windscreens

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