Distributed Car Manufacturing and Sustainability

* Article: "More sustainable automotive production through understanding decoupling points in leagile manufacturing" By Paul Nieuwenhuis, and Eleni Katsifou.

URL = http://www.sciencedirect.com/science/article/pii/S0959652615002103

Abstract

"Attempts to link ‘lean’ and ‘green’ have a long history, yet they mostly remain wedded to an eco-efficiency agenda. The question addressed here is to what extent lean can inform more radical change towards greater sustainability in industrial systems. The automobile is one of our least sustainable systems and the main issue is overproduction. Yet, the current automotive business and manufacturing models depend on high levels of production due to the need for economies of scale determined by the chosen production technologies. These technologies center on the internal combustion engine and the all-steel body. This paper shows through a review of the ‘leagile’ literature, that a new understanding of the factors that determine the ‘decoupling point’ between lean and agile processes can be used in order to bring about a radical shift in economies of scale in car production such that lower volume production becomes feasible thereby reducing the need for overproduction and enabling a move towards more sustainable car production and hence consumption. A case study of the Morgan Motor Company is included to illustrate how such an approach could work in practice."

Highlights:

• The literature shows that attempts to link ‘lean’ and ‘green’ emphasise eco-efficiency, not sustainability.
• The need to mass produce cars is one of the key barriers to sustainable automobility.
• An ability to make cars profitably at lower volumes is essential.
• Recent attempts to combine lean and agile value chains are explored.
• Moving the ‘decoupling point’ can build a more sustainable car manufacturing model."

Excerpts

Reducing Carbon

"The Ricardo study shows that the body contains the largest proportion of embedded carbon (30%), followed by the engine (20%), which, by optimising existing technologies, could be reduced by around 50%. However, there is also an increasingly strong case to be made for extending the useful life of the car itself. The analysis by Hawkins et al. (2012) focuses specifically on the difference between what they term ‘conventional’ and electric vehicles. They calculate that the global warming potential benefit of EVs as a result of this amounts to 10–24% with the average European electricity generating mix, assuming a lifespan of 150,000 km. Increasing the lifespan to 200,000 km increases this benefit to 27–29% relative to petrol cars and 17–20% relative to diesel. However, decreasing the lifespan to 100,000 km reduces the benefit to 9–14% against petrol, and no discernable difference with diesel. They suggest, therefore, reducing the impact along the supply chain while also reducing in-use emissions through lower carbon energy generation. Neither study advocates a longer lifespan, but this would seem a more logical conclusion. EVs already are likely to last longer than IC engined vehicles. This is based on historical experience with older EVs, as well as more recent experience in countries like Norway and some specific commercial fleets, which have shown them to be very reliable and long-lived (Nieuwenhuis, 2014). However, will consumers be able to adjust to keeping cars for longer, and will the car industry be able to handle such a transition towards making fewer longer-lasting cars?

...

The crucial question became how lean and agile elements could be combined within a single supply chain and at what point in that supply chain the change from lean to agile should be made – this became known as the ‘decoupling point’. Over time, two types of decoupling point came to be primarily identified: the material decoupling point and the information decoupling point.

In the present study, this discussion is linked with a case study analysis of the rarely studied specialist sports car sector, which has used precisely these principles in order to ensure its survival and may provide pointers for a potential trajectory towards more sustainable lower volume production of more durable cars. This fact is not well understood, as the debate – particularly in an automotive sector context – has been dominated by models of mass production (cf. Moyano-Fuentes et al., 2012 for a recent example). This is understandable, as Toyota provided the original model for the lean paradigm. However, it is found here that by moving the material decoupling point further up the value chain than is customary in mass car production, beyond the boundaries of the firm in fact, the low volume specialist car industry has dramatically reduced its minimum economies of scale, thereby making this sector viable at a scale far below the production volumes at which conventional mass car producers would be viable. The weakness of the existing ‘leagile’ literature is that it provides little detail as to what elements determine the location of the material decoupling point. The core argument here is the suggestion that high capital investment processes in the value chain provide barriers to the free movement of the material decoupling point, but that these can also provide a focus for where the decoupling point can most profitably be located. Empirical evidence is provided by a case study of the Morgan Motor Company." (http://www.sciencedirect.com/science/article/pii/S0959652615002103)