AUTOMOTIVE DEVELOPMENT PROCESS - INTRODUCTION

In the previous article, an important question was raised: what’s the best way for new entrants to approach the significant task of establishing a functional vehicle production environment? In terms of minimizing the initial financial, organizational, and structural hurdles, cooperating with a automotive development and manufacturing partner via contract manufacturing can be a sensible approach. However,  cooperation with such a partner requires both parties to clearly split the development work among themselves.

This article will explain how the optimal work split between a development and manufacturing partner and a new entrant can be established, what roles both partners play, the responsibilities they have, and how potential differences can be identified and subsequently avoided.

SETTING THE FRAMEWORK FOR AN AUTOMOTIVE DEVELOPMENT PROCESS

The process of ensuring a successful cooperation between new entrant and  development and manufacturing partner usually starts well before the two parties meet.
Firstly, a new player in the automotive market needs to ensure that a  potential partner can provide the services necessary for realizing their vision (more on this topic in the article  “Finding the Perfect Partner to Outsource Your Car Production”).

To ensure a seamless automotive development process from the outset, it is important to determine the requirements in advance. These specifications are summarized in a product requirements document (PRD) and include the following key questions:

• What is the current status of the project?
• What are the requirements of the project and product?
• Is the business plan mature and does it cover all aspects required to ensure a sustainable, long-term business?
• Which risks and constraints does the new entrant expect,
  and how do they plan to address them?
• How do they plan to realize the project from an organizational perspective?

In many projects with new entrants, these points are discussed together with the potential industrialization partner. They are then converted into technical specifications highlighting their intended roadmap for the industrialization process. This is necessary to establish a baseline for both parties from which they can further specify the key questions.

THE GENERAL WORK SPLIT BETWEEN NEW ENTRANT AND DEVELOPMENT AND MANUFACTURING PARTNER

Determining the exact work split between the two parties is largely dependent on the requirements of the new entrant and to what degree their chosen partner can fulfill them.
Although the fine details are Important, both parties’ roles can still de defined on a high level:

The Development and Manufacturing Partner

As the development and manufacturing partner already possesses in-depth experience and the infrastructure necessary for industrializing a vehicle, they will also cover the technical aspects of the vehicle’s concept, development, and production phases. Additionally, as an established player within the market, the partner will provide an environment containing all necessary external partners for converting the new entrant’s idea into a functioning vehicle:

• Program Management
  Program Management covers a wide range of areas and resources required for the implementation and management of vehicle projects. Usually, the development and manufacturing partner will be responsible for project scheduling and coordination, change management, as well as the implementation of methods, processes, and standards.
  
  
• Product Development (incl. Prototyping)
  Complete vehicle development, prototyping, and testing can also be part of the responsibilities of the production partner. In close consultation with the new entrant, key deliverables and scheduling are determined, and the vehicle is developed. However, it is important to note that Magna is currently the only player in the market that can act as a one-stop shop for new entrants.
  
  
• Serial Production
  After the developed prototype meets functional, safety, and quality standards, key challenges of the SOP1 are addressed, scheduling is performed, and all development targets are fulfilled. The partner also carries out the production phase of the vehicle.
  
  
• Purchasing, SQA2, Logistics
  This could be considered as one of the “grayer” areas in terms of responsibilities. In general, organizing the necessary machinery and tools for vehicle production is the manufacturer’s responsibility. On the other hand, the new entrant usually handles the supply network for the vehicle itself (i.e., the vehicle parts). Ultimately, the exact areas of responsibility depend on the specific mode of cooperation the two partners agree upon.
  
  
• Quality
  In terms of quality management, the manufacturing partner is responsible for ensuring that the product and service quality are world class. Qualified employees create and implement requirements and provide the necessary conditions in systems and processes to reach high quality targets.
  
  
• Information Technology
  The technological infrastructure and the applications are key factors regarding engineering, production, and business process efficiency3. The manufacturing partner is responsible for providing this technological infrastructure and the applications that run beneath it. It is crucial to ensure a seamless interface between the customer’s and the manufacturer’s IT systems.

Although the production partner assumes operational management in these processes, the new entrant is also deeply involved in them. At some point in their journey, the new entrant may become an OEM in the vehicle market. Therefore, keeping up with the technical aspects enables them to make sensible decisions during the project.