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ERP Selection for Midmarket Automotive CompaniesWhen automotive suppliers look for new ERP software, they need more than just a solution intended solely for manufacturers. From the essential industry expertise of the ERP provider to industry specific functions and investment considerations—learn what you need to know when selecting an ERP solution for the automotive field.
Turbo charging with abas ERP for automotive and supply
Software for an industry in flux
The structural transformation in the automotive branch presents a double challenge for the supply industry: The economic framework of the market is changing rapidly, while new technologies require enormous investments in research and development and in the digitalization of production—a challenge that can only be mastered with innovative strategies and ERP-supported optimization of all business processes. Take in consideration a specific ERP for Automotive and Supply companies.
The new automotive era: Risk and opportunity
Globalization, sinking margins, highly efficient logistics, and real-time communication: Many suppliers still aren't equipped to meet the growing demands of OEMs. Competitive pressures are rising too: Industry newcomers are passing on the right, as digitalization has redefined the rules of the game and lowered the barriers of entry for branch rookies like Google, Apple, Uber or Tesla. Automotive experts forecast that the new automotive playing field will be determined by 2025. Up to 30 percent of midmarket businesses are threatened with closure due to insolvency and acquisition resulting from the approaching consolidation of the supply industry.
But of course this shift doesn't only bring risks, but also excellent chances and opportunities to stand out: The demand for components will increase to an estimated 850 billion euros (897 billion USD) in the next 10 years—an attractive growth market both for traditional suppliers and new players!
And the winner is …?
Who will manage to turn these disruptive changes into a motor for their own success? What separates excellent suppliers from good suppliers? Speed, technological expertise, innovation, quality, visibility, strategic concepts? All of the above. But the common foundation for all of these success factors is a high performance IT infrastructure with significant "horsepower" under the hood. Farsighted automotive companies are tuning their ERP systems and switching from passengers to drivers of change. Take in consideration a specific ERP for Automotive and Supply companies.
If I had asked people what they wanted, they would have said faster horses.
Process champions control their workflows from front to back:
Smart product development
Despite shorter innovation cycles and growing costs, suppliers are developing tomorrow's profitable products—provided the ERP solution integrates a highly efficient Product Lifecycle Management for maximum planning security from prototype to series production.
Automated procurement management
ERP for Automotive and Supply companies with proactive materials planning ensure requirement-appropriate and cost-efficient procurement—all resources are at the right place, at the right time, and for the right price.
In the factory of the future, machines and workpieces will communicate with each other and autonomously determine subsequent processing steps. The ERP-system-controlled production planning reviews and distributes capacities and ensures optimal machine capacities and short run times.
Whether container management, packaging, shipping, or quality assurance: ERP systems for the supply industry ensure the high performance logistics required by OEMs are met including tracking and seamless documentation—as well as special processes such as String of Pearls or NLK. Take in consideration a specific ERP for Automotive and Supply companies.
Strategic business control
The growing data quantities are not only collected, but converted to valuable information with the click of a button. Centralized data in connection with BI tools provide complete cost control and sound pricing. Cockpits and early warning systems indicate deviations to plans and enable quick reactions.
The modern automotive industry is networking intelligently and systematically, both internally between business departments and locations, as well as with suppliers and customers. "Real time" is the highest maxim for the ERP systems. Mobile Apps enable flexible access to data—on the go at customers or in the warehouse. EDI (Electronic Data Interchange) accelerates information flow and open software interfaces connect all necessary external systems.
Forward-looking suppliers are stepping on the gas. Now.
An industry specific ERP for Automotive and Supply companies helps suppliers react to manufacturer wishes and market changes quickly and with agility while counteracting cost inflation with workflow efficiency—excellent conditions to pass the competition and profit from the automotive transformation! Get into the passing lane!
The most important ERP functions for Automotive & Supply include:
- Integration of the standardized EDI processes in accordance with VDA, ODETTE, EDIFACT or ANSI X12
- Blanket order management
- Delivery schedule management with sequencing
- Delivery schedule monitor provides an overview of critical delivery schedules and their procurement situations
- Price history
- Efficient shipping planning
- ESP processing and administration of consignment warehouses in accordance with VDA 4913
- Container management / Packaging material management
- Electronic credit notes, electronic payment advice notes, electronic invoices
- Electronic forecast delivery schedule purchase orders, electronic packing slips
- ERP for Automotive and supply dashboards and BI evaluations of the automotive specific processes (BI = Business Intelligence)
abas Hidden Champions: Clarion Technologies
Clarion Technologies is an injection molding company that creates products and parts for home appliances, consumer products and automotive industries. Their services include everything from ideation and design through assembly. Clarion uses abas ERP to streamline their manufacturing and warehouse processes, including innovative mobile apps. Find out more in this video.
Select an ERP for automotive and supply industry: More security in decision processes
Is your ERP system dated or unprepared for the challenges of digital revolution? Which criteria play a role when selecting a new software solution for automotive suppliers? Many midmarket businesses feel overwhelmed by the diversity of available systems. Furthermore, the automotive industry has extremely rigorous, and in part highly specialized, requirements for the implemented IT solutions. Regardless of how large the feature catalog is—a classic production software is rarely sufficient for suppliers.
Light construction specialist, drive train manufacturer, or electronics supplier; local champion or global player: Depending on the company structure, production type, and product portfolio, the requirement specifications might vary slightly, but the are 10 "must haves" for ERP for Automotive and Supply companies.
High performance logistics
OEMs place high demands on the logistics processes of their suppliers, because seamless material flow is their top priority, to avoid expensive extra tours or contractual penalties. For this reason the ERP system must support the necessary workflows (Just-in-Time / Just-in-Sequence) as well as OEM-specific logistics concepts (String of Pearls / NLK).
OEMs' quality assurance starts with their suppliers: Seamless test documentation and integrated lot and serial number management enable uncomplicated tracking of all parts through the ERP system.
Greater degree of automation
ERP systems for suppliers need to look as far ahead as they can and relieve material procurements, scheduling, and production with automated processes. Complex routines are standardized by clearly defined workflows and not only reduce manual efforts but also the potential for errors. Take in consideration a specific ERP for Automotive and Supply companies.
Automotive operations are under pressure to continuously question their business models and make strategic decisions quicker. Only with a transparent data model, role-based cockpit, and integrated BI tools can risks and opportunities be identified early—a requirement for success-oriented management in the supplier industry.
Suppliers are not immune to the globalization of the automotive industry: Evermore midmarket operations are relying on cooperations or founding a subsidiary abroad. For this reason the ERP for Automotive and Supply companies should be multisite capable: New teams and subsidiaries can be connected as needed and share a central data set.
The number of national and international regulations is growing almost daily—from privacy to customs processing. Modern ERP systems assist suppliers with automated processes such as revision-proof document archiving and legally mandated sanction list checks.
Suppliers must ensure the smooth exchange of data with customers and suppliers. For this reason the ERP solution should also have external partners who can implement appropriate interfaces and reliable connectors—as well as special tools for production operations such as PDC, APS, PLM or CAD.
Communication in real time
Whether forecast or JIT delivery schedules, invoices, packing slips, or credit notes: The information flow within the supply chain takes place in real time. This is why EDI integration has since become a standard for automotive industry solutions.
In the automotive industry, it's not just common business areas such as purchasing, sales, warehousing, and service that need to be "mobilized". Suppliers also require ERP systems with innovative shop floor applications and scanner solutions.
The road to smart factories leads inexorably to the Cloud: Various partners, machines, and work pieces must be networked using a technological platform that can support the growing data volumes. Accordingly, ERP for Automotive and Supply companies should also be available as a SaaS model.
It all fits, but you're still not sure?
Then consider which software providers you trust to accompany your business down the road to Industry 4.0. Because, only an IT partner who understands the automotive industry can provide tailored solutions for suppliers in their ERP system.