Designing New Cars at DaimlerChrysler with FastCar
The difficult part in designing new cars is deciding how much it costs to make each part and how many of the components to buy from suppliers. The car has to make money and it has to be able to be built in a finite period. Every carmaker in the world is trying to figure out how to use the Internet to streamline the automotive development process, which traditionally can take four to six years and cost billions of dollars for a major project.
There are a huge number of variables during development of a new car. Designers have been known to come up with one “design theme” and then change their minds. Aside from the dimensions and shape of the car, the designers also have to figure out what the engine, chassis, and other crucial ingredients will look like. In the first 20 percent of a project, the firm often will commit 80 percent of the costs.
The automobile industry has enormous scale and complexity. The rule of thumb is that any given car has roughly 12,000 moving parts. Chrysler has 50,000 different components that it draws upon internally. Every screw, bolt, and button has detailed specifications. When other variations are introduced (e.g., 16-inch or 17-inch tires; color of paint), there are billions of permutations for Chrysler vehicles. So, Internet-based collaboration is an enormous undertaking for the automobile industry.
The Chrysler Group of DaimlerChrysler is facing pressure. The group is losing money and the Germans have arrived from the parent company to supervise a turnaround. Part of Chrysler’s answer to the pressure is FastCar, a project introduced in the summer of 2000. Still in the early stages, FastCar is a Web-based system with 200 workstations tied together in Chrysler headquarters.
FastCar allows the company to link the flow of information from at least six major information systems that until now have not been able to communicate seamlessly. Finance has had its own system, engineering had a different one, purchasing another, etc. There were also smaller, largely secret “shadow” systems. Because each arm of Chrysler had spent huge sums of money building information systems that suited its needs, it has never been possible to force them onto one centrally controlled system. Chrysler was literally tied to its legacy systems.
At this time, the various arms of Chrysler are communicating over the Internet only in the FastCar project, which is working on designing a large car for the 2004 model year. The company is not saying much about the new car, but the early design stages are under way, with introduction slotted for the fall of 2003.
The whole point of FastCar is that as designers go through hundreds of variations, other arms of Chrysler can understand what is changing, in real time. In the past, if the designers changed something, engineers would have to catch up later to see what effect that change would have on manufacturing; finance would have to reassess the costs; and quality control would have to reexamine its own issues. By then, the designers could be on to the next iteration.
Now FastCar offers everyone what Chrysler calls a “unified data model” or a “single point of truth” that they can see in three dimensions. FastCar, in effect, puts the Chrysler Development System on the Web, showing everyone each step in designing a new product. FastCar, for example, allows a stamping engineer to watch what is happening so he or she can make sure the company’s stamping plants (where multistory-high presses shape sheets of metal) can actually make the body that designers want.
FastCar allows designers the most time possible until they have to lock down their design. After that, only minor changes can be made without fouling up the manufacturing process. FastCar enables Chrysler to be as flexible as possible for as long as is possible to be able to respond to the latest trends in the marketplace and ever-changing federal regulations. The goal of FastCar is to move from theme selection to design completion to mass manufacturing within two years, roughly half the industry standard.
FastCar targets not only Chrysler’s internal processes, but also will eventually work seamlessly with Covisint, an industry consortium set up with General Motors, Ford Motor, Renault, and Nissan. Covisint is taking on some of the role of a classic business-to-business exchange that aggregates demand on behalf of manufacturers and then engages in auctions and reverse auctions with suppliers. But Covisint’s more important role may turn out to be setting standards and creating tools that allow automakers to move beyond old-fashioned Electronic Data Interchange to handle their own Internet-based communications with suppliers.
Using Covisint’s standards, FastCar hopes to send e-mail messages to suppliers with hyperlinks to three-dimensional renderings of the parts or systems that are changing. Suppliers can use a personal computer or a laptop and do not need expensive workstations.
Suppliers so far have been leery of the automakers’ Internet ambitions. Chrysler has already imposed five percent price cuts on suppliers and is seeking an additional ten percent. The fear among suppliers is that FastCar and similar programs will be used to squeeze their profit margins even more.
FastCar may be able to cut the cost of each automobile by as much as $1500. In addition, such systems should make the automakers much more responsive to fashion trends. To survive, automakers will have to become more like a Calvin Klein or Ralph Lauren design house. Automakers have to be able to get a concept from the design studio to the dealer’s showroom in 18 months and do it for 30 percent to 35 percent less than it presently costs. If the FastCar project succeeds, that type of speed, savings, and flexibility could become standard operating procedure for an industry mired today in lags, costs, and rigidity.