A business case for Service Orientation by Audi

Audi S5 - make reuse work

Audi S5

For me it is great to see the benefits of principles like reuse outside of IT. In this post i’ll share another example. Recently I read an article (in Dutch) on the success of Audi. Audi managed to keep up it’s sales even during 2009 (Annual Report 2009 PDF Alert 16MB!). Audi delivered 949,729 (compared to 1,003,469 in 2008) cars to customers worldwide in 2009. Sales were thus only 5.4 percent down on the record level of 2008 (source).

Besides innovation it is said in the Dutch magazine Management Team that reuse is one of the driving forces. It is great to have another example of how the principles behind Service Orientation not only deliver value in IT but also – or probably mainly – for the business when applied e.g. in other engineering disciplines.

Reusable building blocks

Audi has limited the number of modules engineer are allowed to use to construct a new model. There are two main lines, based on how the engine is placed:

Limiting the number of construction modules for engines, gearboxes, air conditioning results in several benefits:

  • Lower costs per car compared to it’s competitors.
  • Serve a larger number of niche markets compared to the competition.
  • Shortened time-to-market.
  • At production lines both employees and robots can work on several models. This enables Audi to produce the models that are in demand, while at the same time keeping a high utilization rate.

Audi claims to save 20% per manufactured car, and to save 30% on the development of new models. The economies of scale are further leveraged because of the reuse of components in the Volkswagen Group.

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