To stay competitive, automotive manufacturers need to manage information freely across global boundaries. And when it comes to the supply chain, they need to be able to exchange information across multiple business software systems with ease, gaining visibility into key business processes to improve decision-making and control at every level of the supply chain. Rakesh Kumar, global industry product director manufacturing industry, Microsoft Business Solutions takes a look at why manufacturers are now looking to a new generation of ‘out of the box’ Enterprise Resource Planning (ERP) solutions to create the dynamic supply chain collaboration that powers nimble and efficient operations.
Automotive manufacturers aim to produce quality products at the lowest possible cost and still exceed customer expectations. Achieving this consistently and cost-effectively relies on a deep understanding of the supply chain, especially when it comes to managing the complexities of formulating and producing product to custom specifications.
The business complexities for manufacturers are significant. Maintaining market share in the increasingly competitive landscape requires that orders are processed more quickly – increasing execution and delivery reliability rates – while giving customers better information on order status and managing compliance with legal and regulatory requirements. This requires tremendous agility and a truly dynamic operating environment that’s capable of assimilating real-time information flows across supply chain touch points with ease.
But when it comes to joining the supply chain management ‘dots’, automotive manufacturers face serious technical challenges in terms of process and data flows – especially when it comes to integrating the ‘spaghetti soup’ of systems controlling customer, supplier and production functions.
To resolve this, manufacturers are taking a fresh look at enterprise resource planning (ERP) as a means to gaining that all important ‘single version of the truth’ and equally crucial seamless connectivity to customers and suppliers.
Background to ERP
In the past ERP has received a mixed reception. When the first commercial ERP software packages arrived in the 1990s, promising to integrate all data and related organisational processes into a unified single information system, ERP was regarded as an unwieldy, inflexible, costly and complex monolith unsuited to supply chain management.
But manufacturers have been missing out on a critical IT opportunity, because ERP has changed.
Today’s next generation ‘out of the box’ supply chain management specific ERP solutions, such as Microsoft Dynamics AX, have evolved into scalable end-to-end platforms that effectively streamline and automate business processes across the supply chain.
Industry specific functionalities
Previously business software vendors tried to fit a single ERP solution around the needs of diverse industry verticals including vehicle manufacture. Often the software used did not support the appropriate terminology or the industry specific complexities in manufacturing operations. A manufacturer of cars, for example, would have substantially different requirements to one manufacturing semi-conductors. This caused significant user dissatisfaction.
Now ERP offerings, like Microsoft Dynamics, provide a core set of industry specific functionalities that meet the requirements of the automotive industry and developers use independent software vendors (ISVs) who can extend these solutions further by providing more granular requirements to help customers in specialised fields. This ensures that solutions meet the requirements of customers more easily and add significant value to the business itself.
Alongside delivering that all important data unity within the enterprise – connecting inventory, production, purchasing and sales management, for example – today’s ERP solutions utilise customisable Web services to make it simple to connect with suppliers, logistics providers and customers, and enable seamless real-time data exchange and process sharing.
Easy to deploy and featuring easy-to-use intuitive tools that can be accessed across the manufacturing operation, from the shop floor upwards, today’s ERP solutions are said to make ‘joined up’ streamlined supply chain management an achievable reality.
And it’s this unique ability to integrate external business processes and support application-to-application connectivity across multiple systems in a cost-effective manner that now makes it possible for automotive manufacturers to respond quickly to changing customer and supplier demands. For example, ERP can support ‘available-to-promise’ decision-making scenarios, providing delivery alternatives in the event of unexpected disruptions.
Supply chain optimisation
Supply chain optimisation is also possible. Powerful inventory management tools help to improve forecasting and planning, so supply and inventory levels can be fine-tuned to customer demand. While access to real-time data gives users faster access to the tasks and critical business intelligence information – like key performance indicators – needed to optimise the supply chain. Finally, ERP makes it easy to simplify government and corporate compliance commitments by defining custom business rules and workflows based on risk scenarios.
Today’s ERP solutions provide the vital backbone on which effective, cost-efficient and dynamic supply chain collaboration can take place. Alongside unleashing demand-driven production, manufacturers can respond faster to change, incorporate new customers and suppliers with ease, and adapt their operation ‘on the fly’ as business needs change.
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