Product Development in the Automotive Industry
In many areas, product development has changed in recent years in terms of speed, processes, and methods. While product development cycles are becoming shorter and shorter, the number of product variations is increasing.
“The term product life cycle describes the classic life cycle of a product from its creation to the subsequent growth phase, further on through the maturity and saturation phase to the degeneration phase.” – Alexander Mittermeier
This development also applies to the automotive industry. The reasons for this are multifaceted and have already been investigated for several decades. Though some people questioned this development, such as Barry L. Bayus in 1994, the trend nowadays is clear and unquestionable. With stronger competition than ever before, huge information-technological support for development, ever faster and further development of technological inventions and growing customer demand for customer-specific and individual solutions, the automotive industry has no choice but to speed up their product development cycle.
Unsurprisingly, shorter development cycles combined with a greater number of product variations inevitably lead to higher financial pressure in the development process. This is countered by modularization. Modular kits simultaneously allow optimization of costs and a large number of product variations with maximum choice for the customer.
Product development process
The basis for the successful development of a product is the product development cycle. This includes all core processes and phases, beginning with pre-development up to mass production.
As this is a key factor in the successful planning and control of product development, it plays an important role in times of increasingly shorter product life cycles and customer-centric design.
Which method is supposedly the best in this context is discussed controversially. Even though more and more agile methods (originally coming from software development) and lean approaches (coming from production) have been used in recent years, the classic PDP is often still used in automotive projects.
The aim of the PDP is not only to manage development but also to network internal and external resources and thus to integrate development partners and system suppliers.
Even though each OEM (Original Equipment Manufacturing) has its own specific PDP, they share similarities and basic features and can usually be divided into the following phases:
- Pre-PDP (pre-development)
- Product definition
- Concept development and validation
- Mass production development
- Mass production preparation
- Mass production run-up
- Mass production
Essentially, this cycle is divided into the main phases and milestones known as “quality gates”, which serve as synchronization points.
Phases of the development process
The Pre-PDP aims to concretize the product idea and integrate pre-development topics. For the first time, the feasibility and the specifications of the requirements are roughly estimated and the product is evaluated against the competition and the target markets. In addition, the project management and the first rough scheduling, resource and budget planning begins.
During the product definition phase, the individual departments determine the requirements for the product. There are initial design drafts as well as competition analyses and concept development. The final result of the product definition is a design of the complete vehicle including a rough concept of the package, safety, production technology, and aerodynamic values. This defines the technical objectives and the economic framework.
Concept development and validation
The most important part of concept development and validation is the design and creation of the digital prototype as well as the detailed planning with the clearance of the specification sheet. In addition to the simulation, first tests with the aggregate carriers are carried out. After the design has been selected, it is now refined until the mass production development can begin. The result of this phase is the construction of a demonstrator or prototype. This involves the addition of development-related services such as procurement, logistics, and quality management as well as production, both internally and from production partners.
Parallel to mass production development, the construction of prototypes, the design of the mass production vehicles as well as the start of testing are running. Interfaces involved are the various development areas, procurement, production, logistics, quality, and sales. Ongoing processes concern functional safety, FEMA (Failure Mode and Effects Analysis) or tolerance management. As a result of this phase, all suppliers have been selected so that the launch management can commence.
In order to prepare for series production, pre-series stages are used to gradually approach mass production. Initially, this will stabilize the internal production and logistics processes with the first series and near-series vehicles and production facilities. Then the same process is applied to the entire supply chain until a final series product is achieved.
Mass production ramp-up and series production
With the start of series production, the actual development activity for the product is complete. Any newly emerging topics are taken over by the series support. The transition to them already starts step by step during the release processes in the pre-series. In this last phase of the PDP, the development scope is reduced, which means that core processes are once again handled increasingly by the OEM itself. The focus is now on enabling suppliers in regard to their delivery reliability and quality.
-Phases of the development process –
The importance and role of suppliers in PDC
In 2018, over 80% of the value-added in the automotive industry was external from the OEM. This applies to all phases of the product life cycle and thus to the PDP. Suppliers act as development partners as well as system and component suppliers but are also in charge of controlling various operative processes, such as project, change, and quality management. They are therefore increasingly responsible for developing new technologies and providing them to the OEM. Despite considerable cost pressure, they are increasingly driving innovation and have to make considerable investments.
What is particularly necessary is a relationship based on trust, which goes beyond the purely economic aspects of the cooperation. This cooperation is based on the continuous give and take on both sides and thus the benefit for all parties. While the investment in innovative products results in potential new orders for the supplier, the advantage for the OEM is, apart from risk-sharing, access to new technologies and solutions as well as a stable and competitive supply chain. As explained above, customers involve their suppliers in different phases of the life cycle of their products.
Depending on the phase of the PDP, suppliers play a different role. If the first suppliers are already involved in drawing up the specifications during the pre-development phase and even before the tender for the development scope is issued, this cooperation is increasingly intensified after the development partners have been nominated. The first contact with suppliers is usually established through the development department itself, and then functional areas such as purchasing, logistics, production, and quality are added. Depending on the phase, the suppliers take on different tasks. While in the early phase, suppliers make design proposals or even take full responsibility for design, construction, and development, in a later phase, they provide support in marketing the product and managing product quality after-sales. The integration of suppliers into the overall product development process and the use of their skills and expertise in a wide range of areas can bring great benefits to the customer. These benefits include shortened product development cycles, lower costs, and higher quality end products.
As can be seen, there is a lot of effort in each phase of the process in the cooperation between the different departments of the OEM but also across the entire supply chain. These are mostly not very digitalized and require a considerable manual effort in terms of coordination, system maintenance, data and information procurement. This becomes more complex the more parties are involved. The efficient and transparent communication of changes across all levels of the supply chain often plays a decisive role but is usually only insufficiently implementable.
With the topic of autonomous procedures, the number of safety-critical requirements is increasing. These must be communicated in a way that is traceable at all times and all changes must be logged in a revision-proof manner.
Cesonia as an open application technology platform enables secure, efficient and data-driven collaboration across company boundaries. As a non-cloud based platform, it is based on a decentralized peer-to-peer network and allows end-to-end encrypted data exchange as well as full traceability of all activities thanks to blockchain integration. A uniform user interface also supports a “single point of truth” and provides functions for collaboration and coordination. This helps to increase performance and protects valuable intellectual property.
Thank you for reading and don’t miss out on our blog post about Challenges of the automotive supplier industry.
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