USE OF MIS IN THE

AUTOMOTIVE INDUSTRY
An Executive Consultation Report

DECEMBER 2, 2016
HUSSAM ALI
s1456583

Table of Contents
Introduction ................................................................................................................................ 3
Overview of the industry ........................................................................................................... 3
A Brief Context ....................................................................................................................................... 3
Product Life Cycle .................................................................................................................................. 4
How PLM Can Help Case Studies ....................................................................................................... 5
Difficulties Faced by The Industry ......................................................................................................... 6
Product Data Issues ................................................................................................................................. 7
The Industrial System ................................................................................................................ 7
Emerging Paradigms ................................................................................................................. 7
Globalisation ........................................................................................................................................... 8
Cloud ....................................................................................................................................................... 8
Environmental Requirements and the Internet of Things ....................................................................... 8
Conclusions ................................................................................................................................. 9
References ................................................................................................................................... 9

Introduction
This report will critically asses the automotive industry with the use of case studies of market
leaders to see how Manufacturing Information Systems (MIS) are used in giving companies
the ability to compete against each other, and showing how the use of these is not one of market
advantage anymore but of market survival. Specifically, we will be looking at the use of
Product Life Management (PLM) and within this, Product Data Management (PDM) in these
companies.

Overview of the industry

A Brief Context
The automotive industry is a well know one in households throughout the world with names
such as BMW, Toyota and Mercedes on the lips of every toddler. The top three worldwide
industry leaders are shown in figure 1, ranked by their market share globally. As can be seen,
it is an extremely tight race at the top, and the industry is widely recognised as one with vicious
competition. This competition puts immense pressure on car manufacturers to continually
innovate and grow. Companies cannot gain a strong foothold in the industry without becoming
global and with this comes the need for complex Information systems. Thus, PLM is a vital
resource in the automotive industry.

Figure 1: Global Automotive Market Share 2016 [4]

Furthermore, the industry has seen a slump in the last few years, especially in the developed
world in countries such as America and across the EU and forecasts show much the same.
However, across the developing nations such as brazil, South Africa, China and India, forecasts
are for year on year growth in the market.

Figure 2: Sales Predictions over the next 10 years (Million) in America and
Europe [5]

Figure 3: Sales Predictions over the next 10 years (Millions) in Developing

Countries [5]

In revenue terms, the global automotive industry grew by 39.6% between 2010 and 2015 to
$1.7 trillion [6]. This shows that despite the flat trend in sales in developed countries, the
developing market is carrying the industry forward, and top manufacturers know this very well,
with almost all of them having acquired companies already present in these markets. For
example, Ford is in the market through Chang An Auto and BMW sell its cars through
Brilliance China Automotive. [7]

Product Life Cycle

The automotive product lifecycle is a relatively long one 11.4 years [8] - and this number has
been increasing year on year. This is due to the advancement of technology, cars are
continuously made more and more environmentally friendly and robust, thus last more miles
on the road before the need for them to be retired.
The product life cycle for automotive products is like most other products: shown in figure 4.

Imagine

Define

Realise

Support

Retire

Figure 4: Product Life Cycle. [Adapted from 12]

Simplified in figure 5:

Idea

Development

Manufacture

Maintain

Retire

Figure 4: Product Life Cycle Simplified

In the Ideas phase, the concept of the product is born. This phase focuses heavily on
the consumers needs. Here creativity and innovation is highly sought after. PLM
systems are vital, primarily the Product Data Management (PDM) systems within them.
This gives the designers one place to store all their files, allowing for multiple benefits
such as no overlapping of outdated files.

In the Development phase, the idea is modelled and tested; perhaps with the use of a
prototype. Here we must begin to look at industry regulations, environmental
regulations and potential cost savings.

Manufacturing involves the mass production of the final concept. Companies will do
everything in their power to ensure the product is complete at this stage, as any errors
in the design at this point are incredibly expensive. Such as in 2009, when Toyota had
to recall over 9 models of their cars produced between 2004 and 2010, because of a
fault in the accelerator pedal. This caused the most expensive recall in history $5billion [15].

Maintenance is the service the company provides to the users of the car, such as
warranties and services of their vehicles. This requires the manufacturer to be able to
diagnose the issue with their product and fix it.

The retirement phase of the process is the death of the vehicle. In the automotive
trade, often the manufacturer doesnt do anything. This stage is usually when the
manufacturer simple ceases to provide parts and service that car model. Occasionally,
some companies will take responsibility for the dismantling and recycling of car
components, either for raw materials or to be sold on second hand. However, from a
manufacturer point of view, once its service time has expired the company has little to
do with the unit.

There is a clear correlation between companies that invest the most in the first two stages of
the PLC and the market leaders, with Volkswagen, Toyota and GM investing $15.3b, $9.2b
and $7.2b respectively. Figure one showed these to be the market leaders.

How PLM Can Help Case Studies

1. Mahindra Vehicle Manufacturers
PLM can be used here as a cheaper method to minimise the possibility of design flaws.
Instead of realising the flaws in any design after the creation of a prototype, CAD
integrated into the PLM systems can run kinematic animations and other methods to
reduce time to production and the wasted money in failed prototypes.
An example of this is in India, Mahindra Vehicle Manufacturers leaders of the utility
vehicles sector in India, where they take up half of the market themselves.
In 2007, they adopted Siemens Tecnomatrix solutions due to the range of services they
provide and the ease of integration with their current Siemens systems. With the use of
this digital testing software for what-if analysis of their products, the company has
adopted a First-time right policy. They now have a significant competitive advantage
in their industry due to their faster lead time from concept to product. [16]
2. Ford Motor Company

PLM systems can be valuable during the maintenance part of the product life cycle,
especially with the growing use of electronics in commercial vehicles these days. An
example of this is with Fords Electronic Control Units (ECU).
Ford Motor Company is a market leader in the automotive industry, based in America.
Their total sales in 2015 was $10.8 billion [18].
One problem that Ford were having with their cars was faults with their ECUs due to
the rapid increase in the software complexity found in cars. In Traditional methods, this
would involve the removal and replacement of the ECU. This proved rather expensive
for the company and mechanics could very easily introduce rattle problems to the
vehicle in the process, adding to the damage.
With the Introduction of PLM, mechanics at ford dealerships had access to the original
system software, and thus a simple reboot of the system was enough to fix the problemor even an in the field update to software to eliminate the glitches formed.
The effects of this were drastic saved $100 million saved over next 3 years in warranty
costs. [19]

Difficulties Faced by The Industry

PLM can be used to address many issues in the manufacturing of automobiles:
Complex Bill of Materials (BOM)
Taking the example of Volkswagen: the companys 8 brands produce an average of 24,500
vehicles a day. The typical car will have over 5000 components to it, and if you look at the
different parts between different models such as the Volkswagen polo vs the Audi A5 this
number only multiplies. Some cares are quoted to have more than a trillion data points per
vehicle [9]. Thus, the company requires a system that can hold all this information that can be
readily accessed by anyone that requires it and if changed, everyone sees the updates version,
not an old version. Therefore, Volkswagen use Siemens Tecnomatrix to store and share this
data in its Manufacturing Process Planner [10].
Longer Supply Chains
30 years ago, approximately 80% of the vehicle was made by the manufacturer themselves inhouse. Today, approximately 80% is outsources into the supply chain of the company [11].
Couple this with the increase in complexity of cars, we have a much longer list of suppliers
and thus much more complex logistics. This problem is addressed consistently by PLM;
allowing for quick and rapid investigation and communication with said suppliers again
within a unified system that is always up-to-date. The importance of this feature increases with
importance every year as producers are always looking to become more and more competitive,
thus suppliers frequently change with the price offered. [12] An example of this is when Skoda
Auto a subsidiary of Volkswagen purchased the Tecnomatrix software to streamline their
logistics. The Skoda Auto Logistics CEO said that the software allowed them to track the
logistics production time of each single part, and optimize the ergonomics. Skoda now only
use Siemens technology for all their logistics functions. [13]

Product Data Issues

The nature of the automotive industry involves many schematics, drawings and now 3D CAD
models as technology progresses. Especially as car technology advances, these schematics get
more complex, requiring more drawings etc. Often, paper is not archived correctly, or even if
it is, it still proves time consuming in searching for the drawings corresponding to specific
projects. A study shows that design engineers can spend up to 80% of their time on
administrative work. They often develop new designs that are almost exact copies of the
previous ones.
In 2001, Rolls-Royce stated that it annually created 96 million copies, 20 million printed
drawings and archive more than 30 million drawings. Meaning there is a lot of paper being
used and thus designs are repeated.
The problem with design repetitiveness is the easy at which minor mistakes can be made which
have large impacts on downstream processes resulting in the consumer not getting what they
asked for.
Data can often be found distributed across multiple applications, and errors occur, which must
be fixed costing more time and money. [20]

The Industrial System

It is rather evident that Siemens systems are used widely in automotive PLM. In fact, 29 out
of the top 30 automotive companies worldwide use Siemens Teamcentre or Tecnomatrix for
their PLM needs. The exception being Jaguar LandRover, whom use 3DEXPERIENCE
platform by Dassault Systmes.
The Teamcentre program is a customisable product that is tailored to the consumer needs.
Siemens also does this with its Tecnomatrix software. Whilst Teamcentre manages more the
product life cycle in terms of applying accurate BOM, document and content management and
some design and simulation management; Tecnomatrix prides itself on its use in optimisation
and simulation power: the flagship of the Siemens software that attracts so many customers
towards them. There are numerous examples of using this or a customised version of the
software to optimise manufacturing facilities layout, avoiding problems in component
relationships through assembly modelling, dimension quality analysis and finite element
analysis. [23]
These systems generally use integrated application islands to the various users in the company
(which can have hundreds of engineers) to share data and collaborate on projects. As Siemens
has its own CAD system (Solid Edge), there is no issue of incompatibility and having an
integrated system allows for regulating the use of a unified system. This can have a downside
however when external files use different a different software to create their CAD models.
Siemens is actively mitigating this with the development of its synchronous technology
however, which allows users to edit CAD models regardless of the source that created them.

Emerging Paradigms
Various emerging paradigms have in the past and will continue to have a drastic effect on
the use of MIS (specifically PLM) in the automotive industry. The reason for this comes back
7

to the theme of this analysis: the automotive industry advances so rapidly and is so heavily
competitive that every advantage is taken to gain an edge over the competition. Recent factors
have been listed below.

Globalisation
The larger market offered by globalisation is a huge advantage in driving sales and profit.
However, globalisation also allows for major competitors from these foreign markets to
compete in domestic markets, usually done by them purchasing subsidiaries of local companies
to gain an established link in the market. This acquired consumer based, is deadly with the
cheap labour costs that countries such as China and India can have to offer (which they can
pass on to their customers). Thus, for domestic companies to be competitive at home and away,
they require effective management, efficient manufacturing processes and the ability to
integrate the use of their products manufactured at home with sales in foreign countries. It also
allows for companies to locate the cheapest supplier globally, not just locally, again giving
them competitive advantage. [21]
PLM allows for manufacturers to be able to give up-to-date designs and orders to their factories
across the globe, and this is a major factor in a successful business. As we know form the theory
of diseconomies of scale, as businesses expand, it is easy to lose control and thus incur costs
due to lack of management. In the context of Manufacturing, this could be as simple as
duplication of designs, misplacing or burying of key analysis or miscommunication of orders
all of which cost the company time and money. As mentioned before, PLM is easily
integrated with supply chain management and thus can be used to share data with suppliers
from all around the world.

Cloud
The cloud PLM system allows a global company to have access to one server that is externally
sourced. The uses of this has reaped many rewards for companies including:
Lower start-up costs and relatively low maintenance costs.
Ease of communication with suppliers and distributors, who all can easily access
required parts of the PLM
The provider is responsible for updating systems etc. so little is required by the
automotive user in terms of maintenance.
Throughout the company, engineers can access the work from their personal devices.
The just-in-time model enabled by Cloud Computing for activating and de-activating
IT services is beneficial as it ensures IT capacity whilst reducing running costs.
Hence, any automotive company would greatly benefit from cloud PLM as a solution for
minimising operational costs, communicating with ease with partners and suppliers and
accelerate the production of new ideas and making these ideas into a reality with flexibility
offered to engineers. [22]

Environmental Requirements and the Internet of Things

One majorly emerging paradigm is the pressure on automotive manufacturers to constantly
reduce fuel emissions. With global warming becoming a hot topic, consumers expect the
goods they purchase to have minimal impact on the environment. Furthermore, government
legislation is constantly putting pressure for this also. Thus, the recurring topic of efficient
production lines arises again. With this current event comes the electric car industry, and the
general trend of cars becoming less and less mechanical and integrated with more electrical
8

components one rudimentary example being cruise control. This will only continue, and
technology analysts are already talking about the Internet of Things being applied to all cars
PLM and, perhaps more specifically, PDM will play key roles in the development of more
electrical cars and the internet of things, as discussed already in the Ford Motor group case
study. The development of these features will encourage vendors to enhance their systems to
be able to withstand the sheer quantity of data that is required to be processed.

Conclusions
In conclusion, the automotive industry is heavily dependent on the PLM framework in its
Information Systems. As competition in the industry is as fierce as ever, with access to global
markets bringing both benefits and costs, PLM doesnt give companies a competitive
advantage anymore, it gives them the right to compete at all.
Industry analysis shows that Siemens is the leader in supplying PLM software to the
automotive sector, with systems that both effectively manage the data in a user-friendly manner
as well as ones that optimise processes for companies to reap the rewards of faster idea to
product time, almost eliminating design flaws and allowing companies to bring new
technologies into the market faster.
The paradigm of globalisation means that companies can spread their wings into new markets,
but also that countries with cheaper costs of production can compete around the world too. The
cloud system has enabled companies the flexibility of always having access to data. The shift
in cars from mechanical systems to electrical systems is a sign of the need for PLM to expand
even further to take all the data that will be introduces.
This MIS is critical for the industry as whole, and no company would be able to compete
without it.

References
1. "U.S. Makes Ninety Percent of World's Automobiles".Popular Science.115(5): 84. November
1929. Retrieved6 August2013.

2.

Production statistics Available at: http://www.oica.net/category/production-statistics/

(Accessed: 2 December 2016).

3.

The Editors of Encyclopdia Britannica (2012) Automotive industry, in Encyclopdia

Britannica. Available at: https://global.britannica.com/topic/automotive-industry (Accessed: 2
December 2016).

4.

2016, S. (2016) Automobile market share worldwide: Key manufacturers 2015. Available at:
https://www.statista.com/statistics/316786/global-market-share-of-the-leading-automakers/
(Accessed: 2 December 2016).

5.

Singh, A., Hirsh, E., Jullens, J. and Wilk, R. (2016) 2016 auto industry trends. Available at:
http://www.strategyand.pwc.com/perspectives/2016-auto-industry-trends (Accessed: 2
December 2016).

6.

Nasdaq Automotive manufacturing industry to reach 1.7 Trillion by 2015. Available at:
http://www.marketwired.com/press-release/automotive-manufacturing-industry-to-reach-17trillion-by-2015-1544352.htm (Accessed: 2 December 2016)

7.

Investopedia (2015) What impact will growth in the emerging markets have on automotive
sector?, in Available at: http://www.investopedia.com/ask/answers/041515/what-impact-willgrowth-emerging-markets-have-automotive-sector.asp (Accessed: 2 December 2016).

8.

The average lifecycle of a car in 2014 (no date) Available at: http://rocketinternet.pr.co/69419the-average-lifecycle-of-a-car-in-2014 (Accessed: 2 December 2016).

9.

Gardner (2008) CHANNEL PARTNERS. Available at:

http://www.adandp.media/articles/volkswagens-plm-strategy (Accessed: 2 December 2016)

10. Manufacturing process planner: Siemens PLM software (2016) Available at:
https://www.plm.automation.siemens.com/en_gb/products/tecnomatix/manufacturingplanning/process-design/planner.shtml (Accessed: 2 December 2016).
11. Teresko, J. (2004) The PLM revolution. Available at:
http://www.industryweek.com/companies-amp-executives/plm-revolution (Accessed: 2
December 2016).
12. Stark, J. (2011) Product lifecycle management: 21st century paradigm for product realisation.
2nd edn. New York: Springer-Verlag New York.
13. KODA AUTO case study: Siemens PLM software (2009) Available at:
https://www.plm.automation.siemens.com/en_gb/about_us/success/case_study.cfm?Compon
ent=85177&ComponentTemplate=1481 (Accessed: 2 December 2016).
14. Sedgwick, D. (2016) VW led auto r&d spending in 15. Available at:
http://www.autonews.com/article/20160221/OEM06/302229977/vw-led-auto-r&d-spending-in15 (Accessed: 2 December 2016)
15. DeMeter, B. (2012) 5 of the largest car recalls in history, in Available at:
http://www.investopedia.com/slide-show/car-recalls/ (Accessed: 2 December 2016).
16. Mahindra vehicles case study: Siemens PLM software (2012) Available at:
https://www.plm.automation.siemens.com/en_in/about_us/success/case_study.cfm?Compon
ent=197733&ComponentTemplate=1481 (Accessed: 2 December 2016).
17. Volvo cars case study: Siemens PLM software (2011) Available at:
http://www.plm.automation.siemens.com/en_us/about_us/success/case_study.cfm?Compone
nt=148707&ComponentTemplate=1481 (Accessed: 2 December 2016).
18. Ford Motor News (2015) Available at:
https://media.ford.com/content/dam/fordmedia/North%20America/US/2016/01/28/4qfinancials
.pdf (Accessed: 2 December 2016).
19. Kohut, D. (2008) Ford motor company case study: Siemens PLM software. Available at:
https://www.plm.automation.siemens.com/en_gb/about_us/success/case_study.cfm?Compon
ent=63184&ComponentTemplate=1481 (Accessed: 2 December 2016).
20. Stark, J. (2011) Product Lifecycle management. Springer London.
21. Bist, M. (2010) PML Solutions to Auto Industry Challenges. Available at:
http://www.rapidflowapps.com/PDF_Files/4593PLM%20Solution%20to%20Auto%20Industry
%20Challenges.pdf (Accessed: 2 December 2016).
22. Janardanan, S. (2016) Whats driving cloud computing in the automotive industry? Available
at: http://www.cloudcomputing-news.net/news/2012/jan/30/driving-through-the-clouds-cloudcomputing-in-automotive-industry/ (Accessed: 2 December 2016).

23. Tacnomatrix - Realise Innovation (no date) Available at:

http://1.https://www.plm.automation.siemens.com/en_gb/products/tecnomatix/manufa
cturing-planning/ (Accessed: 2 December 2016).

10

11