Today, auto manufacturers are under significant pressure to streamline operations.

Gone are the days where the auto companies can proclaim that, what is good for the auto companies is good for America. Also, gone are the days when auto manufacturers could protect their markets from foreign competition through government tariffs. Since the 1980s, American automobile manufacturers have been operating at a 10% profit margin (5% after taxes). To maintain profitability, they have been forced to institute draconian cost reduction techniques. However, the financial arms of the auto manufacturers experienced significant pushback from old-time brand managers, and the speed of the necessary change has been insufficient. Over the past two decades, this has resulted in huge upheavals of top-level management in the American Big 3 manufacturers. It finally culminated in the bailouts in 2008-2010. Perhaps hardest hit was General Motors, who used to take pride in a Triple-A blue chip rating on stock, now forced to borrow money at a much higher rate. The results of the higher cost of money significantly affected the already low profit margin to the point where GM had to take a loan from the government. These upheavals have inspired companies to take advantage of business intelligence for auto manufacturers as they streamline their operations to the point where they can be competitive in the world market once again. The following are some of the areas where auto manufacturers have realized great benefits from business intelligence (BI) analysis. Improvements in Design Most car systems are commodity designs, meaning that the technological innovation is limited, and the careful choice of parts is critical. Even systems that are new to automobiles, such as on-board cell phones and GPS, were very mature in industry before being adapted to automotive use. That means that components can be streamlined through careful choice of cost and availability. For instance, the choice of a particular pair of resistors can be critical. If the values are similar, then the designer can realize as much as a 10% cost savings by making the values the same, and specifying the part to a uniform manufacturer. In addition, designing a part that has several possible suppliers can reduce costs even further. They key is to realize that although a resistor is a very inexpensive part, less than a penny each in quantity, that the volume of radios in automobiles is so high that this small change becomes huge over the entire inventory. How can engineers balance design requirements with pricing and component availability? They can use the statistical techniques available in big data analysis systems. Improvements in Procurement A common saying in automobile manufacturing procurement is that we need to be careful, because we can bankrupt companies with our orders. This is not an exaggeration. A zealous company can be caught between a huge automobile manufacturing order and the financing to supply it and go out of business. This does not benefit either the supplier or the automobile manufacturer, who may have critical supply schedules put into jeopardy. Auto procurement departments must vet potential suppliers as a bank would a potential customer for a business loan. This is a very complicated process, which has been tamed through powerful business intelligence analysis algorithms. Improvements in Manufacturability In decades past, design engineers could design automobile components suitable for manufacturing. In todays modern complex manufacturing environment, an engineer with an entirely new set of skills must apply a second iteration to the original design, in order to make products that can be manufactured cheaply, quickly, and reliably.

These manufacturing engineers depend on advanced BI analysis to determine how to modify designs for maximum quality and manufacturability. Summary The auto industry has made a spectacular turnaround in recent times. They can continue to strengthen their position as they take advantage of modern business intelligence for auto manufacturers to further streamline their process, improve the quality of American automobiles, and meet the competition from foreign suppliers.