Examining the Automotive Electronics Supply Chain Industry

The automotive electronics industry segment is worth close to $180 Billion annually, plus another $35 Billion for infotainment, and this is a segment with current and projected double-digit growth.  Eighty million cars are sold worldwide and they average around $2,700 of electronics content.  What’s more content is developing rapidly.  Our desire to bring our connected life into the car is one driver, another is the development of piloted or driverless cars, this with safety, engine and energy management and lighting that included LED and laser, and it’s clear to see this is one of the more exciting and rapidly developing areas of the electronics manufacturing industry.

For many years the car industry has been the more conservative, focused appropriately on reliability and moving slowly to introduce new products.  Now things are changing and these two areas of supply chain colliding - the conservative car industry with its seven-year design cycles must collaborate with the consumer market, with its seven-month product life.

These worlds are different and require different techniques and disciplines.  The strategy of some companies like Mercedes and Audi is to partner with consumer electronics giants like Google and Infineon to create new product initiatives.  They are also opening design centers in high tech areas like Silicon Valley to be close to potential partners and to work more closely with the fast moving consumer electronics supply chain.

In an interview conducted at this year’s Consumer Electronics Show (CES), where automotive was the clear star, Robert Bosch GmbH Board Member, Werner Struth talked about the red world of the consumer market and the blue world of car manufacturing.  He feels that these two supply chains are different but need to work in harmony and that a company like Robert Bosch GmbH Board has a role to play in bringing them together.  He also cautions against underestimating the speed at which the car industry can develop and adapt.

Clearly much about the two supply chains is different, but once you get below the surface much is actually very similar.  The electronics manufacturing industry has learnt a good deal over the years from the car industry, after all it was the Japanese car giants that brought us lean manufacturing and much of what we currently refer to as the digital factory, the smart factory or even Industry 4.0 has come from the automotive industry.  Mass customization and configure or build to order (CTO and BTO) is part and parcel of car manufacturing and automation and robotics are trends that run concurrently in both electronics and car assembly.

Perhaps the key differences come in research and development (R&D) and more importantly new product introduction (NPI) where the consumer market (red) is naturally less considered and rigorous than the more conservative (blue) car industry.

The key to the successful merging of these two sectors is their ability to manage both complex supply chains well, regardless of differing speeds or differing variables.  Managing technology is one thing, and ideas like firewalls to keep email and video data away from mission critical data like engine management, driver assist makes perfect sense, but in manufacturing the world will have to harmonize, and to do so they will need intense collaborations, genuinely progressive manufacturing excellence driving quality and repeatability, and perhaps most important accurate and available manufacturing data with complete supply chain visibility and traceability.

Project this all forward a few years to where we are all relaxing in our vehicle listening to music or watching a movie or perhaps answering emails while our car is driving us safely to our next meeting through a smart city, where the traffic lights and other control systems guide us via satellite positioning, where Google updates us on traffic via the web, and where safety systems keep a look out for stray dogs or errant children running into the road.  The car is now so much more than a mere mode of transport, it is probably the most powerful computing product in our lives, with multiple connections to our surrounding via the Internet of Things (IoT) and huge amounts of data are being pulled and pushed to cloud storage networks.  The value of the electronics is likely beyond the value of the remainder of the car and our expectation of its ability to keep up with content, application and software trends is parallel to that of our expectations of our smartphone.  Our car has become our most prized consumer electronics device.

At this point the supply chains for electronics need to be seamless, they may even be singular with car manufacturers and electronics companies merging to form new companies.  Google introduced Android Auto this year and have been using driverless cars for sometime.  How long before they become a brand or co-brand player in the car industry?

Doubtless the car is changing fast, as is the supply chain in the electronics industry that surrounds it.  What remains the same is the relentless drive for safety, reliability and quality.  This can only be achieved with a fanatical approach to manufacturing excellence at the highest level where data and traceability are at the core, enabling a fast, flexible and agile electronics supply chain.

With Industry 4.0 traceability ‘Comes of Age’

Not so long ago, traceability was predominantly a function required only by certain quality sensitive manufacturers, particularly those within the automotive, medical, military and aerospace sectors. Principally in these market segments, production was, and indeed still is, impossible without strict adherence to legal requirements (RoHS, WEEE, Congressional Tread Act, etc.) and with it the necessity for scrupulous measures and processes that track and record each manufacturing step to achieve compliance.

No doubt there have always been a myriad of processes applied by various manufacturers even outside of those segments that helped track material flow within a production to aid planning and offer relatively simple traceability capability. Often these processes, however, required time-consuming administrative tasks or very simple automated solutions. In principle these measures were introduced to manage costly product recalls – in order to be able to react after an issue had been identified. In practice, however, compared to today’s more sophisticated solutions, these were relatively primitive, labor and time intensive standalone systems, which required a large amount of data storage capacity and space and consequently did not provide fast and efficient traceability solution.

When the economic downturn hit in the early part of the century, the entire electronics manufacturing industry, from capital equipment producer to software and materials provider, focused on developing and offering the most cost effective solutions that offered speed, precision and flexibility. Strong pressure from customers to reduce costs across the supply chain triggered a shift within the automotive industry, resulting in a trend to move production facilities from West to East to low-cost countries such as China. And still today, cost of production is one of the key drivers of the automotive electronics industry. But there’s even more complexity now…

Globalisation, miniaturisation as well as the trend to outsource parts or all of the production process, have created a whole new set of challenges. Today manufacturing often takes place in ‘foreign’ countries. Consequently, different laws, different cultures, and different reputations, govern quality control and the result thereof. Traceability has become a vital function for brand protection through active fault-recognition in order to avoid costly recalls. Coupled with the proliferation of counterfeiting, traceability solutions have certainly moved up the requirement list for many automotive electronics manufacturers today. Although still often viewed as a separate function required only for specific customers and products, many recognised early on that implementation of compliance, test and control systems beyond any legal requirement could also offer a competitive advantage.

Today, test and control solutions have quickly developed into advanced and intelligent automated systems that check each component and every manufacturing process to ensure required quality and the prevention of faults. No longer is traceability a separate function and end-goal, but a bi-product of an efficient control-system. Manufacturing Execution Systems (MES) connect to Enterprise Resource planning systems (ERP) and offer factory-wide qualitative and cost reducing advantages through improved inventory management, material flow, quality control, order processing & tracking as well as database management, etc.

With Industry 4.0, a new concept of organising and controlling the complete value chain over the entire product lifecycle, we are now making our first steps towards the fourth industrial revolution. Cyber Physical Systems (CPS), will now be required to seamlessly connect people, objects and currently still autonomic systems to create dynamic, real-time optimised and self-organising, cross company value-chains. In tomorrow’s manufacturing plants all products, automotive electronic components, materials and processes will be intelligent and form the basis of the so-called Smart Factory.

Every component will be individually identifiable and can be located up and down the value chain. History, current status, as well as alternative and more efficient production paths can be easily and directly recognised and adapted.

Particularly with today’s complex manufacturing processes that are spread globally, a worldwide trace for automotive electronics component and process needs to be ensured in order to guarantee safety and quality in the smallest detail. Information regarding origin, storage, state and location of materials, components and products will be instantly retrievable.

In reality of course it won’t be easy to achieve, as the different systems used by suppliers, producers, clients, right through to even recyclers will need to be compatible in order to be able to seamlessly communicate with one another. What is required is highly specialised software support and a radical rethink with regard to traditional control processes. Concepts such as ‘the internet of things’ (the interconnection of uniquely identifiable objects and devices within the existing Internet infrastructure), are already viewed and being developed as drivers for a forward looking production and further developments in this area offer exciting and infinite possibilities.

Looking back at the automotive electronics market and industry over the last 10 years, progress has certainly been fast and continues to gain speed, particularly in this immaterial virtual sphere, where people, machines, processes etc., seamlessly and invisibly need to communicate with each other and continuously have to adapt to past, present and future events. Traceability will come of age by effectively no longer being a mere requirement for certain automotive electronics manufacturers, but a resulting by-product of the entire production control process.