Industry 4.0 a Reality in Mexico's Latest OEM Plant

Q: Why did the company choose San Jose Chiapa, Puebla for its plant and supply chain over more industrialized areas?

A: We did a lot of research before establishing facilities in Mexico. San Jose Chiapa, Puebla offered us the freedom to build our plant how we wanted. We visited several industrial parks in the country but none offered us the same possibilities to work according to the Audi Production System. This location is also excellent for logistics, with a direct connection to the Atlantic and the Pacific through rail infrastructure. The existing supplier network was another advantage. Most importantly, the people in Puebla are well-educated.

Producing premium quality cars with is not a big challenge for us. The Audi Production System has set global standards that have allowed us to efficiently build our operations in Mexico. The real challenge we found when we arrived in San Jose Chiapa was that there was little infrastructure. It was hard for our people to build something from scratch in this environment but they knew why this project was important and how it would benefit Audi. We received lots of support from our colleagues at Volkswagen in Puebla city and the Mexican authorities put the right infrastructure in place for us to establish the newest smart factory in the Audi production network.

Q: How has Volkswagen’s presence in Mexico helped Audi in its early development stages

? A: In the 53 years Volkswagen has been in Mexico, the industry has evolved significantly. We are using many of the same suppliers as our colleagues and Volkswagen has attracted even more companies to the region thanks to our new manufacturing presence. The supplier network includes around 180 companies, including those with whom we continue to negotiate. In fact, 100 of these companies were already located in Mexico and 64 of them built new plants specifically to support our operations.

Audi is the only premium brand manufacturing in the country and competition between suppliers is essential because it helps OEMs maintain the highest quality standards and to remain cost-competitive in their manufacturing operations. 

Q: What do you see as the main opportunity for Mexico to develop its local supplier network?

A: If all suppliers were already equipped with the latest IT systems, the entire value chain would be more competitive. This is part of the idea behind Industry 4.0 and a challenge all around the world. Materials and components need to spend as little time traveling as possible so communication and supplier integration is crucial. We need intelligent systems to know where components are and how we can shorten our logistics and manufacturing cycles.

Q: How is Audi innovating to incorporate Industry 4.0 practices in its new plant?

A: It can be hard to translate technology from theory to practice but our plant in Mexico is an example of how Industry 4.0 can be integrated right from the construction of the plant itself. We built our facility in San Jose Chiapa in record time and before we moved all our manufacturing equipment to our body shop, we modeled the facility on a computer.

We projected that same model onto the production floor with a laser, so our team knew where each machine should be and how to secure it to the floor. We projected the arrangement of 670 robots plus a number of connecting conveyor belts for our body shop and every interconnection between machines was already digitally mapped beforehand. In the end, instead of isolated work modules, we had a completely interconnected construction and later manufacturing system.

Production is monitored through our control center and vehicles are traced with radio frequency identification (RFID) antennas. All manufactured cars are traced during each step of the process; the computer knows the model and color of the car, its features and its destination. The system displays which machines are operating and information on any piece of equipment in the factory, all in real time. This means we can monitor every car in the plant from any Audi site in the world. Our logistics, manufacturing and IT experts work together in the control center to determine how the plant is running and where potential improvements can be made. Some of our suppliers already send their components with RFID tags, so we can be sure that everything is on its way and gets to the right place at the right time. The information we gather from the control center is also available to our suppliers, so we can perfectly manage just-in-sequence operations with our partners.

Q: What is the ratio between automation and talent in Audi’s Mexican operations?

A: Each stage in the plant has a different level of automation. The body shop is 87 percent automated. Final assembly is mostly handled with manual labor and we always make sure we maintain the highest levels of comfort and ergonomics to support our people.

Q: How did Audi’s expectations regarding local talent compare to what the company found in Mexico?

A: It was clear we needed to bring people from Germany to train our local workforce and implement Audi’s technology in Mexico. It was also clear we needed to train people from Mexico in Germany so they could learn everything about the Audi Production System.

Around 750 Mexican experts received training at our headquarters in Ingolstadt and other sites in Europe. Additionally, we secured an agreement with the local government to build a training center in San Jose Chiapa. Once the training center was ready we had over 200,000 applicants, which speaks volumes about the interest in working at Audi México.

We had to develop a strict selection program to choose the best people for our operations. More than 5,000 local employees are directly working at Audi México. Many of our staff members from Germany and other European countries are now returning home, opening further opportunities for locals to build their careers within Audi.

Q: How have Audi’s advances shaped the company’s goals for 2017?

A: We have incorporated the latest manufacturing technology into our production site in Mexico, including a new welding process to fuse steel and aluminum. Our operations have advanced as planned. We started our production on Sep. 30, 2016 with vehicles destined for the European market. As the level of individualization in Europe is very high, this was a challenging task. All features and equipment available resulted in high complexity right from the start of production.

We successfully managed the project and delivered the planned volume for the market launch on time. Our next target for 2017 was to produce vehicles for Mexico, the US and Canada. So far, we have received excellent feedback regarding the quality of our products. The launch in Mexico took place in February 2017 and for the US in April. In addition to the Q5, we are also manufacturing the SQ5 and will soon start with the hybrid variant of our Audi Q5 in Puebla. Altogether, we expect to produce 150,000 vehicles per year.

Q: Why does Audi not publish its production numbers monthly as all other members of AMIA do?

A: We are part of Audi AG in Germany and as a publicly traded company we have to follow market regulations. This means making all information available worldwide at the same time. Audi AG publishes global production figures in its quarterly reports. However, we can say that production and export figures show a healthy operation in our new plant in Mexico.