The collaboration between manufacturer and production facility requires transparency and clear communication — both professionally and personally. This includes establishing efficient structures and integrating all stakeholders relevant to the respective project. Therefore, program management lays the groundwork for new projects across different departments.

WHY A MANUFACTURING PROJECT NEEDS PROFESSIONAL PROGRAM MANAGEMENT

by Claus Breitfuss, Program Manager

Successfully initiating and executing a series production project at a contract manufacturer requires more than just excellence in manufacturing. In the context of automotive production, program management plays a crucial role by connecting the various company departments involved and facilitating seamless cooperation between all parties.

There are several reasons why a car manufacturer might choose to outsource the production of a particular vehicle project to a contract manufacturer. In some cases, the manufacturer will take on the role of a general contractor, overseeing the development, supply chain management, and production. Alternatively, the manufacturer may opt for a more decentralized approach, utilizing split production to cater to specific market demands. This entails manufacturing a certain volume for markets where demand is high or during periods of production surges. Finally, there are circumstances in which it is sensible to outsource the phase-out production of a vehicle type that is still in demand and is approaching the end of its product life cycle.

Following the commission of the project, the assigned program managers will assist with contract drafting and working out the technical implementation. This approach offers a clear benefit for both customers and manufacturers by securing a streamlined exchange of information and ensuring that all parties are aligned with the program's requirements and objectives.

Also, logistics is a critical component of a program. It is essential to find the right balance to minimize the amount of capital stored in inventories while maintaining a high level of security in the event of supply chain disruptions.

Magna, a multi-OEM serial manufacturer, can rely on a great amount of experience and an existing global supplier network. This facilitates program management and shortens preparation time, allowing the manufacturer to enter the market more quickly while reducing non-recurring costs.

In certain instances, professional program management can demonstrate potential avenues for collaboration to manufacturers while safeguarding the product and maintaining the confidentiality of proprietary information. It can serve as a liaison between manufacturers, fostering synergies as a neutral third party.

Overall, there are many reasons why experienced program management can have a positive impact on a vehicle project’s general success, procedure, and quality. For more in-depth information about this topic, read our expanded article here.

A vehicle consists of many assemblies and components. Depending on the level of value creation agreed upon between the automaker and the contract manufacturer, the predominant number of components are not manufactured by the production facility itself but are purchased. To ensure efficient, reliable, and cost-effective production, procurement plays a central role.

STRATEGIC PROCUREMENT: NOT JUST A MATTER OF PRICE

by Arno Campostrini, Senior Director of Purchasing

A contract manufacturer in the automotive industry faces competition not only from other contract manufacturers but also from the vehicle manufacturer’s own production facilities. Outsourcing vehicle production to an external partner occurs only when clear advantages are present, such as when external production is more profitable. Purchasing strategies are a critical element in ensuring this profitability.

New projects often require entirely new sourcing considerations. For instance, sustainability concerns and managing CO₂ footprints are becoming increasingly crucial factors in purchasing decisions. These requirements are now expected not only by vehicle manufacturers but also by suppliers and sub-suppliers. Furthermore, new projects often necessitate collaboration with new types of suppliers, particularly as the industry shifts from combustion engines to e-mobility.

Purchasing strategies are not only initiated when specific components need to be sourced but are already integrated into the SE (simultaneous engineering) team, which is also referred to as the "cloverleaf." This team consists of members from Engineering, Supplier Quality Assurance, Logistics, and Purchasing. For each component, the team assesses whether redesign and development are necessary or if it would be more cost-effective to use an off-the-shelf part, thereby reducing development and tooling expenses.

Even a contract manufacturer with strong purchasing strategies is limited in dealing with challenges that stem from external, global factors, such as political issues. Nevertheless, the purchasing department will conduct comprehensive cost analyses and benchmark comparisons to verify whether the supplier’s price increases are reasonable and justified.

Ultimately, achieving the best outcome requires the use of all available tools from the very beginning of the project and throughout the entire production process. Making an attractive offer to the vehicle manufacturer is a collaborative effort that involves multiple departments working together. If you are interested in exploring this topic more thoroughly, read our more expansive article here.

The supply chain has been established, and the suppliers have been chosen. However, to ensure high-quality of the final product, the supplied parts and components also must consistently meet high-quality standards. The prerequisites for this standard are created during the preparation phase. Ensuring supplier quality must be guaranteed throughout the entire duration of the project..

TRUST AND CONTROL: SUPPLIER QUALITY ASSURANCE

by Karl Mauerhofer, Supplier Quality Assurance (SQA)

Supplier quality assurance (SQA) is essential, whether it's within the vehicle manufacturer's own plants or in automotive production with a contract manufacturer. This is important not only for product quality but also for maintaining a smooth and efficient production process. In the case of contract manufacturing, the complexity increases due to the involvement of multiple manufacturers and numerous suppliers, making the requirements even more stringent.

Zero-defect delivery is particularly critical in modern automotive production. While purchasing focuses on identifying the best and most cost-effective suppliers – factoring in total costs such as logistics and environmental impacts – SQA's role is to assess whether a supplier can reliably produce and deliver the required quantity and quality of components. To accomplish this, an initial evaluation of the supplier is conducted at the start of the project. Software engineering also plays an increasingly significant role in supplier quality assurance, especially for control units, where clear specifications exist, but only a limited number of large suppliers can meet them.

Once a supplier is selected, the contract manufacturer works closely with the supplier to finalize the details. As part of the SQA process, the supplier’s manufacturing procedures are thoroughly examined. In some cases, this might involve modifying certain design aspects of critical parts or tools, but these changes can only be made in collaboration with the development department. This is why SQA is considered an essential member of the development team from the outset.

However, challenges can arise, such as when lifecycle tests reveal that technical adjustments to components are necessary, requiring changes to the tools. In such cases, an experienced contract manufacturer holds a significant advantage over one with less experience in quality or SQA services. A seasoned manufacturer values long-term, close collaboration with suppliers rather than simply applying pressure. If a supplier or their subcontractor faces difficulties, they work together on-site to find a solution. Open communication is key in these situations, as overcoming challenges during the start-up phase demands a joint effort. If collaboration should fail against all efforts, last-minute supplier changes are possible, but very difficult, as there are no readily available systems or tools from other partners. Additionally, changing suppliers requires a long preparation time and a repetition of all relevant tests.

Besides design specifications defined at the beginning of the project, delivered parts must pass durability tests, which include assessments of mechanical durability, ease of assembly and disassembly, and resistance to environmental conditions. During ongoing automotive production, every part is automatically checked when it is installed on the production line. Employees promptly report any defects or issues, and an inspection follows to determine if other parts from the same shipment have similar problems. If defects are found in multiple parts, the entire delivery is sorted, and the supplier is issued a claim to investigate the issue.

If the supplier does not resolve the problem and confirms that the issue has been fixed, all further deliveries will undergo sorting. Any additional costs incurred for these measures are passed on to the supplier if the defect is found to be their responsibility. Therefore, it is in the supplier’s best interest to deliver defect-free components. If these issues occur repeatedly and escalate, SQA will audit the supplier to ensure corrective actions are taken and improvements are made.

In summary, Magna SQA employees play a critical role in ensuring that the supplier quality process is continuously maintained, ensuring that all parts meet the required standards. For more information about how a contract manufacturer secures impeccable quality standards, read our full article here.

Maintaining high quality from the beginning and throughout the entire manufacturing project requires a comprehensive quality management system that encompasses all areas of the production facility. The goal is not only to achieve an objectively flawless final product but also to ensure a subjectively high-quality impression, which plays a crucial role in the market acceptance of the finished vehicle./span>

NO SLIP-UPS ALLOWED: QUALITY IS PLANNABLE 

by Christoph Simon, Senior Director of Quality Management Europe & Asia

State-of-the-art quality management is an essential requirement for any successful contract manufacturer in the automotive industry. Therefore, it is necessary for any service provider or supplier to have a certified quality management system. To achieve such a system, the IATF (International Automotive Taskforce) has established standardized requirements for quality management systems. A company can only obtain IATF 16949 certification if it can demonstrate a comprehensive quality management system that encompasses all business processes.

The primary focus of this system is ensuring the high and consistent quality of the final product. For the contract manufacturer, this means not only meeting the quality criteria set by the client during the production process but also creating a product that satisfies the end customer in terms of quality. However, quality assurance begins long before the production line, starting during the project phase of a series production order.

At the beginning of any project, relevant quality assurance standards and criteria are determined in close collaboration with the vehicle manufacturer. A multi-OEM manufacturer like Magna greatly benefits from working with numerous vehicle manufacturers rather than just one, as it can integrate the best practices from its partners into its own internal standards. By the time serial production begins, all necessary alignments have been thoroughly completed. However, customers can still request modifications, which may lead to process updates as part of change management.

As a “Complete Vehicle Solutions Provider” combining product development and manufacturing under one roof, Magna enjoys the advantage of short distances, which results in faster feedback loops. For instance, aspects such as ease of manufacturability are incorporated during product development, leading to risk-optimized manufacturing processes.

In addition, well-educated and trained employees are not only more motivated but also more capable of achieving better quality. At Magna, there are two main aspects to this. First, the high ratio of skilled workers in production. Second, training each employee in their specific tasks is a key priority for robust quality management.

However, quality assessment by end customers is changing faster and can be vastly different from the quality standards from a technical viewpoint. It is particularly evident that the success of certain manufacturer’s products seems unaffected even when classic criteria are given slightly larger tolerances. Still, some vehicle manufacturers and their customers demand the highest level of “craftsmanship,” with no room for negligence on the part of the contract manufacturer. Even if end customer expectations are shifting to some degree, product quality remains central to a vehicle's success. While end customers may not be able to assess every aspect themselves, perceived quality plays a crucial role in classifying a vehicle in the automotive market. Although the contract manufacturer cannot control every aspect of the vehicle's acceptance, it can ensure it makes the best possible contribution to customer satisfaction since it is also important for the contract manufacturer that the vehicle is well received in the market.

Ultimately, test procedures and methods must be tailored for each new vehicle type that enters production. With the increasing complexity of vehicle systems, the volume of data the contract manufacturer must process keeps growing. It is becoming increasingly vital to extract and interpret information from this data in ways that provide insights into the vehicle’s functionality – and this aspect will continue to be of increasing importance in the future. For more details about the topic refer to our full article here.

Sustainable manufacturing is a cornerstone of automotive production, encompassing a broad range of environmental, social, and governance (ESG) goals. Over the past two decades, ESG considerations have evolved from secondary tasks to central elements of corporate strategy, driven by the United Nations' Sustainable Development Goals (SDGs). As the automotive industry shifts towards reducing CO₂ emissions and enhancing resource efficiency, sustainable practices in manufacturing and supply chains are crucial for long-term environmental and economic benefits.

GREEN AND RESPONSIBLE: SUSTAINABLE CAR PRODUCTION 

by Gernot Emmert, Manufacturing Engineering

The term "sustainability" is often most associated with initiatives aimed at improving energy efficiency to minimize CO₂ emissions. However, a truly sustainable automotive production process covers a much broader range of concerns. The concept of ESG (Environmental, Social, and Governance) – which addresses environmental, sustainability, and social issues – began gaining traction around two decades ago. Since 2004, the United Nations has defined these areas and aligned them with the Sustainable Development Goals (SDGs). These goals have since become integral objectives for businesses, even as important as any other business targets. Magna, for instance, has identified seven out of the 17 SDG goals that are relevant for green automotive production:

• SDG 3 (Good Health and Well-being)
This includes initiatives such as providing health services to employees, offering medical check-ups, maintaining an occupational health center, promoting ergonomic programs, preventing burnout, offering flexible working hours, and more.

• SDG 4 (Quality Education)
Training and development opportunities, apprenticeships, collaboration with educational and research institutions, improvements to work-life balance, and even the provision of company daycare centers are essential components of sustainable corporate management.

• SDG 5 (Gender Equality) & SDG 10 (Reduced Inequalities)
Magna adheres to a strict employee charter and a binding code of conduct and ethics for all employees, which is reinforced through training. This charter ensures market-aligned salaries and equal opportunities for all employees, regardless of gender, origin, religion, or other characteristics.

• SDG 9 (Industry, Innovation, and Infrastructure), SDG 12 (Responsible Consumption and Production) & SDG 13 (Climate Action)
These SDGs also play a crucial role in influencing business decisions about sustainable manufacturing and corporate governance. You can read more about the company's sustainability initiatives here.

Today, the core objective of sustainable business operations is to eliminate emissions, particularly carbon dioxide equivalents (CO₂e) emissions. This has triggered significant transformations, making resource efficiency a key ongoing theme in green automotive production. On one hand, resource efficiency helps reduce negative environmental impacts, while on the other, it directly affects the economic efficiency and profitability of the company. Achieving resource efficiency is not confined to production processes alone – it must be implemented throughout the entire supply chain.

However, taking a broader perspective reveals that focusing solely on CO₂ emissions is insufficient. Numerous other pollutants need to be considered, both in terms of vehicle operation and component production. It is more beneficial to look beyond individual vehicles and recognize the bigger picture that must be addressed through the transformation of automotive technology.

As a contract manufacturer, Magna operates with a customer-centric approach, always acting in the interests of vehicle manufacturers. These manufacturers also benefit from sustainable production practices. By implementing sustainable manufacturing processes, customers can meet their corporate goals related to environmental compatibility and social responsibility. Additionally, improved energy management and reduced energy intensity lead to lower production costs.

The journey toward decarbonizing mobility, and consequently vehicle production, will undoubtedly continue. Even if this goal may not be fully realized in the near future, it remains a long-term objective for the industry. For more information about challenges and future trends of sustainable automotive manufacturing, read our full article here.

A particularly important area within the efforts for sustainable automobile manufacturing is logistics. Every transport causes emissions and consumes energy. This applies not only to inbound logistics, i.e., the supply deliveries, but also to the delivery of the final products (outbound) and the internal transports within the facility.

SAVING MEANS CONSERVING: ENVIRONMENTALLY FRIENDLY LOGISTICS 

by Alfons Dachs-Wiesinger, Logistics Network

Sustainability is becoming an increasingly vital focus in the automotive production industry. If an automobile manufacturer aims to genuinely position itself as environmentally responsible, it is not sufficient to only address vehicle emissions during their operation. The production process itself must also be climate conscious. In this regard, sustainable logistics play a crucial role throughout the entire supply chain.

Generally, the carbon footprint of a product or individual is categorized into different phases, known as scopes. For vehicle manufacturing,

• Scope 1 pertains to the direct CO₂ emissions generated during the vehicle’s production. These emissions are the result of energy consumption during the manufacturing process.
• Scope 2 relates to the energy production process.
• Scope 3 accounts for energy use both before and after the actual production of the vehicle, including energy consumed in sourcing and manufacturing raw materials and components, as well as transporting both parts and the final product. Indirect energy consumption inside and outside the plant is also considered.

The ideal scenario in sustainable logistics is one where transportation does not occur at all. The key concept here is a transport-optimized delivery schedule aimed at minimizing the number of transports. The next step is to convert any unavoidable transport to low-CO₂ or CO₂-free transport methods. The combination of road and rail transport can significantly contribute to this goal.

To assess and calculate the total CO₂ impact of transportation, a certified calculation model is utilized. Magna uses a module from its own integrated transportation management system (iTMS). This system stores all necessary consignment data and other relevant parameters required to evaluate the CO₂ emissions from transport, such as the size and weight of goods, types of transport used, and distances covered. Using this data, the CO₂ emissions from transport can be calculated and assessed. This system can also be leveraged to identify areas where transportation logistics can be made more efficient. Close collaboration with suppliers is crucial in planning and executing these processes. In most cases, suppliers are eager to cooperate because the benefits of an integrated transportation management system are easy to communicate.

However, increasing complexity presents a significant challenge in transforming logistics within the automotive industry to be more ecologically sustainable. The necessary blend of different strategies for various tasks results in even greater complexity. Additionally, an evaluation is required to determine which transportation technologies will prevail and which will eventually decline or even vanish, depending on the political climate and which technologies are supported by infrastructure improvements.

Furthermore, digitalization will continue to play a growing role in sustainable logistics—not only to address the challenges posed by rising complexity but also to facilitate further integration of data flows. This will be essential for improving cooperation and ensuring greater security in logistics across company boundaries. For a more detailed look at sustainable logistics, read our expansive article here.