NASHVILLE, Tenn. - The auto industry's experiment with modular assembly systems is raising big concerns among automakers about who will control the supply base of the future.
'If the module providers select all the suppliers, then the vehicle manufacturer has in truth a supply chain which is difficult to influence,' said Richard Boorne, vice president of procurement for BMW Manufacturing Corp. 'To some extent, they are back in a similar position to when the push to rationalize suppliers started.'
Boorne was one of several automaker purchasing executives who spoke during a panel discussion at the Automotive News Southeast Conference last week.
BMW has adopted modular techniques in the assembly of the Z3 roadster at its Spartanburg County, S.C., plant. More than 90 percent of the components in the roadster are combined into 19 modules supplied by 18 companies. Boorne also pointed out that the supplier for the roadster's cockpit and interior trim manages 'many more' Tier 1 suppliers in South Carolina than does BMW.
Modular supply philosophy calls on parts makers to build large chunks of a vehicle - a rolling chassis, a cockpit, a front end - and deliver these modules to an assembly plant.
In theory, the modular system allows automakers to shift design, engineering and lower-tier supply-chain management duties to their largest suppliers. Modules become not just assemblages of parts but systems that can be 'optimized' or looked at in their entirety for ways of improving performance and reducing cost and complexity.
Boorne said BMW expects to continue using modular supply because of the benefits it creates for the company and its customers. But he said automakers would take different approaches to modular design and assembly, all tailored to their own specific situations.
Boorne raised these questions, among others:
Are warranty responsibilities fully defined throughout the modular enterprise?
Who will be responsible for aftermarket parts supply in the years following production?
Who takes responsibility for sourcing parts among Tier 2 and Tier 3 suppliers?
Can suggestions for improvement and new ideas be fed quickly and effectively throughout the supply chain?
'In essence, I'm talking about who owns the relationship, which can be critical for future performance,' Boorne said.
Other purchasing executives said they, too, were looking at modular assembly and how it would affect their production systems.
Toyota is discussing the use of modular techniques 'at very high levels,' said Gene Tabor, general manager of purchasing at Toyota Motor Manufacturing North America Inc.
'We're fairly methodical and systematic about evaluating the way we change our processes,' he said. 'We're going to be very, very careful.'
The time for serious study of modular assembly is when a company is investing in a new production facility, said David Offill, vice president of purchasing at Nissan Motor Manufacturing Corp. USA.
For example, the supply of complete chassis systems has been a prominent focus of modular supply systems. But Nissan built an automated framing shop 17 years ago, and 'it wouldn't make sense for us to tear it out,' Offill said.
Modular for modular's sake probably wouldn't be a good idea.
Said Offill: 'If we were to build a new plant, then we'd probably study different process levels.'