The Paper Chase--Trees still dying in auto industry's electronic age

The erstwhile Chrysler Corp.'s seemingly incessant television ads touting its computer-engineering capabilities may give some people the impression that developing new vehicles entirely on computer now is the norm. In the automotive industry's new age of electronics, prototypes, blueprints and other types of paper such as invoices and advanced shipping notices all are as dead as the carburetor and the slide rule. All communications now are paperless. E-mail rules.

Yeah, sure. And the last Seinfeld was the best ever.

While no one is trying to diminish Chrysler's considerable accomplishments in computer engineering and supply-chain management, the auto industry's track record in eliminating paper and prototypes in most areas of production and design has been spotty at best.

Despite the promise of huge savings in time and cost, technological and logistical hurdles have been hard to overcome. Plus, automakers have had a tough time getting suppliers to buy into many concepts. Stern OEM edicts and deadlines to develop even simple electronic communication capabilities and incorporate bar code information into their inventory control systems have been ignored for 13 years.

A WAW article in August 1985 described how electronically linking suppliers with OEMs would vastly improve the materials flow pipeline and optimize just-in-time supply strategies.

Administrative computer communication is just for starters, the article predicted. "It will be quickly followed - some pilot programs are already under way - with automatic electronic financial transactions between automakers and their suppliers, and later by the wholesale linking of automaker/supplier computer-aided design (CAD) systems and shop-floor computers. That way, suppliers and automakers will be linked electronically from the beginning to the end of design and production-build cycles.

"I honestly believe we will be virtually paperless by 1988," predicted the managing director of the Automotive Industry Action Group (AIAG) a then-new trade organization responsible for establishing industry-wide electronic communication standards.

Another interesting tidbit from the 13-year-old story:

"Ford also is working to bring indirect materials suppliers on line, and has an extremely ambitious program to develop a single worldwide engineering data base for all Ford engineering, which would include all CAD graphics and could be accessible globally."

Well, Ford - along with everyone else - still is struggling to get the lower rungs of its supply base "on line," and it's still several years away from having that worldwide engineering data base, which now is part of a program called C3P.

To be fair, there have been some significant accomplishments in the interim. Raymond J. Mitzel, an executive at AIAG on loan from Chrysler, says some basic transaction information such as purchase orders and releases for production parts from Tier 1 suppliers to automakers have been completely electronic since as early as 1990. But other goals of the paper purge, including electronically transmitting sophisticated types of information such as computer-aided design/manufacturing/engineering (CAD/CAM/CAE) data - and even properly using bar codes - have not yet been achieved throughout the supply chain. Most Tier 1 suppliers also still are not electronically linked with their Tier 2 and 3 suppliers.

Here's why:

Automakers and suppliers use many different types of CAD/CAM/CAE (computer-aided design, manufacturing and engineering) systems and the difficulty of easily - and accurately - translating the information from one system to another was underestimated. Staring at a paper "blueprint" can still be refreshingly simple for busy engineers, especially those involved with production issues on the factory floor. A surprisingly large number of antiquated two-dimensional computer drafting systems still are being used throughout the auto industry.

In a survey of automotive engineers conducted last year by WAW, 81% of supplier engineers and 63% of automaker engineers said crude two-dimensional drawings were still being used to develop numerous components. And 86% of engineers at suppliers and 70% at OEMs said automakers still want paper printouts even if suppliers can provide all information electronically.

"We use common 3D files to package and actually cut production tooling, but it helps to have 2D paper copies with critical dimensions in my desk for quick reference," said a design engineer from Chrysler. "It takes time to pull up on a screen."

"Ever try to print a 3D drawing in the perspective EVERYONE understands and wants?" groused another engineer.

Even the best-looking digital prototypes are sometimes hard to understand when displayed on a computer screen, especially in group settings. Again, sometimes it's just easier for engineers to look at paper drawings. Moreover, new technology and materials are making it much faster and less expensive to build many types of physical prototypes. Eliminating them is not always the best solution.

Suppliers often have trouble gaining access to digital prototypes of new vehicles and components.

Inexpensive and secure electronic data transmission methods for CAD/CAM/CAE files still are in the development stage.

Bar codes, another key element in gathering and tracking information electronically, are attached to shipments but are not being used for their intended purpose, despite serious efforts at U.S. EMs.

Automakers first got serious about improving productivity by eliminating paper in the 1980s. Dire-sounding directives issued by GM in 1985 demanded that small and middle-sized suppliers communicate electronically with GM as well as its largest suppliers in order to make new just-in-time inventory procedures work smoothly. Use of mail for administrative-type data communications would be eliminated, GM said. (News of these directives inspired the original WAW story.)

Other automakers worked on similar initiatives. The moves were coordinated by the AIAG, which was formed in 1981 to improve the U.S. auto industry through the development of specific production-oriented standards. That same year, Chrysler demanded that its direct material suppliers attach bar-coded labels on all components delivered to the automaker's factories.

Seventeen years later, most Tier 1s are on track, but Tier 2 and Tier 3 suppliers still aren't trading information electronically with OEMs or Tier 1s, says AIAG's Mr. Mitzel.

Moreover, many suppliers that do have EDI capability aren't incorporating it into their overall manufacturing and inventory management-information systems. Instead, they are doing what Nancy Malo, AIAG program manager for EDI, calls "rip and read." They receive information electronically with one system, then they make a paper printout and hand it over to someone else to key-punch into another system.

It's like the executive who receives an e-mail, prints it out, writes a hand-written response and then hands it off to his secretary to type out an e-mail response. Not very efficient.

Implementation of bar-coding systems has been even more disappointing. Supplier shipments are arriving now at factory loading bays with bar code labels, but in too many cases they're little more than decoration. Shippers and receivers aren't scanning them to generate electronic shipping and receiving notifications or other inventory tracking data.

"A supplier will put a bar code shipping label on because the OEM customer asks him to do it," says Mr. Mitzel. "But the supplier is not using that barcode in his process to reap the benefits we intended."

"It's the same thing as EDI," adds Ms. Malo.

"Suppliers were told to scan bar codes back in '87. They put the bar code on, but by '96 and '97, suppliers really weren't scanning them and utilizing them that way," she adds.

But automakers, hungry to wring more cost out of their respective supply chains, finally are starting to crack the whip. Inspired in 1996 by an AIAG pilot study that showed North American automakers and their suppliers could cut costs by $71 per car simply by improving communication throughout the automotive supply chain, OEMs issued new edicts and deadlines.

They are demanding Tier 1 suppliers and their sub-suppliers be able to transmit materials release information, shipping requirements and other transaction data to the lowest tiers and back by no later than the middle of next year.

The AIAG says materials-release information now takes four to six weeks to reach the bottom of the supply chain. This generates excess cost in the form of just-in-case inventories, premium freight charges and unplanned production changeovers.

If all tiers use EDI, AIAG says that time could be chopped from a week or more per tier to just one day per tier, simply through getting the supply chain participants to use standard, electronic data interchange capability and altering their internal business processes.

It's hard to believe until you see how easily time can be stretched out. For instance, at

R-R Spring, a privately owned 34-employee manufacturer of springs for a sub-supplier of Johnson Controls Inc., the owner had to personally approve all transactions. Information could sit on his desk for a week before being approved.

Implementing EDI and taking the owner out of the transaction loop reduced R-R Spring's lead time by two weeks. R-R Spring's owner now is a big proponent of EDI, and says the capability has helped him win new business.

Meanwhile, there's also hope on the other electronic communication fronts. AIAG is developing international translation standards for CAD/CAM/CAE data under its AutoSTEP program and a secure, low-cost Internet pipeline called the Automotive Network eXchange Service (ANX) for transmitting it.

The AutoSTEP pilot is making it possible to translate solid geometry models among different OEMs, suppliers and systems. During the next several years, the capability to exchange even more complex data among disparate systems, including computer models of sheetmetal dies and engineering analysis, should be possible.

AIAG executive Frank J. Bay admits current STEP translations aren't perfect, but they are far superior to those translated with older-style Initial Graphics Exchange Specification (IGES) translators.

Likewise, the ANX promises to provide for the first time a low-cost electronic pipeline for auto industry telecommunications that can replace expensive proprietary, dedicated lines currently used for electronic communications that will expand the capability of small and medium-size suppliers on the lower tiers to transmit all kinds of data to OEMs and Tier 1 suppliers. A pilot ANX program is being finished now and could be launched as early as this summer.

How long will it take the industry to fully adopt and take advantage of all this new technology is anyone's guess. Hopefully it will take place in something less than 17 years.