Greasing the wheels of the automotive supply chain

By Stefan Issing, global automotive industry director at IFS.

When it comes to manufacturing's next revolution – the much-discussed Internet of Things and Industry 4.0 – the automotive industry is firmly in the driving seat. A trailblazer across key manufacturing trends, the automotive industry is accelerating the move towards a world in which raw materials and machines communicate with each other within an Internet of Things for smart, flexible, resource-friendly production.

As with any key trend aimed at supporting globalization and changing customer needs, transparency and flexibility in the supply chain is the name of the game. Supply chain efficiency is key to thriving in the international and highly competitive automotive landscape.

But Industry 4.0 and other emerging industry trends are creating a host of opportunities and challenges, which directly impact the supply chain:

  • Market mobility. Many organisations are moving their manufacturing processes to Asia and Eastern Europe, opting to keep their prototyping operations in Europe. The result: a challenge to integrate the supply chain and achieve fast, effective communication across different countries, cultures, and languages.
  • Diverse suppliers. Collaboration is key for companies with high demands on a tight supply chain. Smaller suppliers need to be able to communicate with larger suppliers and OEMs, but often don't have their own enterprise resource planning system (ERP) in place, causing problems for achieving visibility up and down the supply chain.
  • Multi-mode manufacturing. Today, a manufacturer's suppliers are not only producing simple components, but entire modules and systems, posing a challenge for companies that need to plan across complex engineering processes.
  • Overseas supply chain. The growing emphasis on global sourcing is opening up a host of regional considerations – from differences in customs and public authorities, to the movement of shipping containers. Globally operating companies are look for new ways to guarantee the overseas supply chain.

Automotive manufacturing is evolving quickly, but business software is proving it's more than capable of addressing the new supply chain demands.

Moving into top gear with ERP

It's now possible to meet the global requirements of OEMs and suppliers with a single solution. International automotive companies are benefiting from enterprise resource planning (ERP) solutions which provide supply chain efficiency and cost reductions across manufacturing and distribution.

But it's important to tread carefully, as not all ERP systems were created equal.

What to look for in an ERP solution

Companies should look for ERP partners with a long and proven track record in the automotive space. Solutions must be tailored for the automotive industry, providing a single application for partner-to-partner knowledge share at a global level across multiple currencies and legislations.

Crucially, the solution must be agile enough to scale up for very large implementations and down for subsidiaries, remote offices and smaller divisions. As companies shift towards new manufacturing processes, they need to employ an ERP system with multi-mode manufacturing support. New and complex engineering processes need to be integrated seamlessly, without the need to pay for costly one-off customizations of the ERP system.

But complexity doesn't stop at the manufacturing level. To handle complex inter-company relationships, companies need integrated supply chain functionality. Automotive companies should look for an ERP system that can be easily opened to customers and suppliers through electronic data interchange (EDI) and B2B web portals. In this way, companies can improve visibility across the supply chain, allowing suppliers and customers to access information in a secure way – and making it easy to involve and update smaller suppliers without their own ERP system.

With companies increasingly operating overseas, multi-language support and individual labelling allow site development all over the world, while functionality like multi-site MRP and Planning Networks ensure the supply of each division, independent of location and size. It's now possible to use a solution to support the handling of customer demands and forecasts. This means being able to react as early as possible to plan internal and external procurement or stock transfer between different sites.

Fueling automotive innovation

Thanks to globalisation and emerging trends – from multi-mode manufacturing to the Internet of Things and Industry 4.0 – the pressure on the supply chain has never been greater.

That's why today's supply chain depends upon highly integrated and specially designed ERP software. After all, visibility and efficiency in the supply chain is what fuels innovation.

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