Automotive manufacturing industry in South Africa

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Introduction

The problem background and motivation for this thesis consist of a first-hand ac- count of the problems experienced during the design and implementation of a Body- in-White (BIW) production line. The purpose is to ensure that when the seven-year cycle of this production line is repeated, that the problems that have occurred during the design and implementation phase will be eliminated. The automotive industry is an enormous industry that plays a significant role in global economics. In 2015, more than 90 million light vehicles were sold worldwide, and it is predicted that sales will increase and exceed the 111 million mark by 2020 [63].
According to one of the biggest auditor companies in the world KPMG [64], the automotive market is far from saturated, and growth, especially in emerging markets, will continue for the next few decades. This increase in sales means an ob- vious rise in production activities. Original Equipment Manufacturers (OEMs) with existing production facilities in these emerging markets will have the major strategic advantage of a direct link from the production facilities to the market. A country such as South Africa, which is currently ranked as the second largest emerging mar- ket [64], will play a significant role in both production and sales in the future.
The automotive manufacturing industry in South Africa is a well-established and very important business sector. This industry and its contribution to the South African economy have grown rapidly over the past few decades and PricewaterhouseCoopers 1.1 Automotive manufacturing industry in South Africa The automotive manufacturing industry in South Africa employs a monthly average of 29,715 people, with a further employment of 82,790 people in the automotive com- ponent manufacturing sector [87]. The Automotive Industry Export Council (AIEC) reported in their 2015 Automotive Export Manual that this industry contributed ap- proximately 7.2%, or R3,796.5 billion (ZAR, South African rand) to the total Gross Domestic Product (GDP) [67], confirming the importance of this industry to the South African economy.
To date, there are eight light vehicle and sixteen heavy commercial vehicle manufacturers operating in South Africa. These OEMs are all involved in producing units for the local or export markets, or both. In 2014, 276,873 units were exported from South Africa, earning a total of R115.7 billion. Table 1.1 gives a comprehensive overview of all the major performance indicators achieved in 2014. The impressive economic contribution of this industry in South Africa is not by chance. The units produced in South Africa are of very high quality, especially in the light vehicle manufacturing sector. Since the early 2000s, BMW and Mercedes-Benz have featured often in the top ranks of the prestigious J.D. Power awards [15, 82].
The J.D. Power awards serve as a guide for finding the highest ranked products or services in the USA. All J.D. Power circle ratings are based on the opinions of consumers and customers from a variety of industries who have used or owned the product or service being rated [56]. In 2015, BMW South Africa was awarded the platinum award for the world’s best plant, which is the highest quality award that any production facility can achieve. The high quality output of the local production facilities has ensured that there is a large international market for units from South Africa. It is important that these production facilities produce high-quality units at a reliable rate to ensure their sustainability. However, the problem in South Africa is not the quality, but rather the quantity,

BIW automotive production system: Planning stage

The project’s concept phase, which is the first step in the planning stage, started in South Africa in the midst of a worldwide recession. The sub-prime lending prob- lem in the USA initiated worldwide credit restrictions, which caused sales in the automotive industry to decline [11]. This decline in sales had numerous negative effects on current and new projects. The financial pressure forced additional invest- ment restrictions onto new projects. The integration options for the new project in South Africa were limited because of these restrictions.
During the concept phase, the project team had to achieve a basic three-point strategy: a) the development of a run-out plan for the current product, b) development of an integration plan for the two products, and c) development of a launch plan for the new product. The overall strategy gave the project team their initial direction. By the end of 2008, these three strategies were defined for the South African project. In the first quarter of 2009, as planning moved into its second year, automotive sales plummeted to a thirty year low [11]. The automotive manufacturing industry, which is also the economic backbone of Germany [124], was severely affected by this lack of sales, causing German OEMs to tighten their budgets further as capital dried up [52]. This crisis created an extremely tight budget for the BIW project team. The changes to the BIW production line covered almost 80% of the entire project scope. More than 50% of the required BIW production lines had to be new, whereas complex integration was required for the rest of the production lines. The tight financial budget forced the Germany OEM to search for alternative methods to reduce their investment in the new BIW project.

Contents :

• List of Figures
• List of Tables
• Acronyms
• 1 Introduction
  • 1.1 Automotive manufacturing industry in South Africa
  • 1.2 Automotive production system: How a vehicle is born
  • 1.3 BIW automotive production system: Planning stage
  • 1.4 BIW automotive production system: Installation stage
  • 1.5 BIW automotive production system: Series production stage
  • 1.6 Problem statement and research questions
  • 1.7 Research objectives
  • 1.8 Research design
  • 1.8.1 Estimating NICT
  • 1.8.2 Buffer Allocation Model (BAM) for BIW production line
  • 1.9 Outline of thesis
• 2 Literature review
  • 2.1 Estimation of Net Ideal Cycle Time
  • 2.1.1 Overview
  • 2.1.2 Cycle time in general
  • 2.1.3 Cycle time estimation for BIW
  • 2.1.4 Conclusions
  • 2.2 BIW buffer allocation
  • 2.2.1 Overview
  • 2.2.2 Buffer Allocation Problem
  • 2.2.3 Influence of buffers in the production line
  • 2.2.4 Reduction of WIP in buffer system
  • 2.2.5 Conclusions
  • 2.3 Summary
• 3 Estimating Net Ideal Cycle Time
  • 3.1 Defined throughput distribution of BIW production line
  • 3.1.1 Methodology
  • 3.1.2 Results
  • 3.2 Estimating NICT using Weibull distribution
  • 3.2.1 Methodology
  • 3.2.2 Results
  • 3.3 Conclusions
• 4 Efficient frontier for multi-objective buffer system design
  • 4.1 Buffers in BIW production line
  • 4.2 Experimental setup
  • 4.3 BIW objectives in evaluating buffer configurations
  • 4.3.1 Mean Throughput
  • 4.3.2 Cost
  • 4.3.3 Space
  • 4.3.4 WIP
  • 4.4 Dealing with multiple BIW objectives
  • 4.5 Conclusions
• 5 Evaluating efficient frontier of BIW production line
  • 5.1 Referencing BIW production lines on efficient frontier
  • 5.2 BIW production line
  • 5.2.1 Current and comparative BAM states
  • 5.2.2 Results
  • 5.3 BIW production line
  • 5.3.1 Current and comparative BAM
  • 5.3.2 Results
  • 5.4 Summary
  • 5.5 Conclusions
• 6 Conclusions
  • 6.1 Contribution to new knowledge and significance of research
  • 6.2 Limitations of research
  • 6.3 Research implementation
  • 6.4 Research beneficiaries
  • 6.5 Further research
  • Bibliography

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