The automotive manufacturing and supply industry is in a state of flux, with OEM and parts specialists struggling to survive in a global environment that’s increasingly become more competitive. Online access may have increased the reach of these companies, but it has also put strain on their ability to keep up with demand and scale their operations.
While large enterprises continue to expand burgeoning product lines, and in the process, swallow up smaller players, the goal for any company of any size hasn’t changed.
Efficiency is still the name of the game. Whether you are an SME looking to scale operations, or a large corporation pushing innovation after innovation, efficient operations are still the key to maximizing profitability.
It’s no surprise then that Enterprise Resource Planning (ERP) systems are booming in the automotive sector. Manufacturers and suppliers justify their ERP acquisitions based on the following factors:
- Initial investment
- Continuing operating costs
- Return on investment
For many companies, these criteria provide a good launchpad for acquiring an ERP product. But there are also many additional factors that can help guide your choice.
ERP solutions specifically designed for automotive manufacturing companies are loaded with a broad set of tools, each one capable of improving your organization’s operations. At the same time, however, making sense of what features yield the most value can be difficult.
So let’s look at a few ERP solution features that are most helpful to automotive manufacturers and suppliers:
1. Complete Auditability
The ability to trace parts and components is incredibly helpful in ensuring that your automotive manufacturing company’s operations are smooth and efficient. It also allows you to comply with strict government regulations and standards.
Being able to track each product and each part sold also allows you to provide top-notch after-the-sale support, identifying and addressing problems (if any) as soon as they appear. You want a solution that can systematically track individual parts and packages that pass through the manufacturing and supply chain.
Fortunately, ERP systems are increasingly getting smarter at doing this, providing comprehensive historical information on your supply chain activity, production processes, usage, and inspection among others. Basically, ERP systems that offer complete traceability will tell you everything that happens between manufacturing and actual deployment of the finished product.
2. Integration with Manufacturing Processes
Manufacturing support is not exactly a new feature in an ERP system, and neither is it the sexiest. It is, however, critical for helping automotive companies synchronize their manufacturing and inventory processes.
The benefits of a manufacturing module in your ERP system include:
- Inventory management designed to reduce costs
- Inventory reports to track business-critical information
- Goal setting by streamlining the production process
- Expedited production cycles
3. Mobile Compatibility
Manufacturing firms in the automotive sector are looking for ways to improve worker productivity and efficiency by providing staff members the ability to access business information through their mobile devices.
This trend is not lost in the automotive ERP space, and this makes it even more important to choose an ERP solution that allows your organization to access the database and business process dashboards remotely. An ERP system with full-fledged mobile functionality allow teams to access software functions from any device, whether it’s a desktop, a smartphone, or tablet. Ideally, ERP products accessible on mobile should come with their proprietary apps. This lets teams communicate and collaborate with each other through the platform whenever they need to do so.
Remote mobile access may seem like a gimmick to the casual observer, but it has the potential to make a world of difference in terms of speeding up operations. Just imagine giving your employees on the plant floor as well as salesmen in the field up-to-the-second data in your organization, from transportation services, shipment and inventory status, and product pricing.
According to consultant Adam Cheatham, mobile ERP offers “an opportunity to eliminate gaps and streamline processes in real time,” adding that something as simple as signing off on contracts through your phone “can eliminate a lot of paper steps.”
4. Financial Modules
Regulatory requirements for companies in the automotive sector can be particularly tough. With so much riding on your financial filings, you cannot afford to miss a payment or make even the tiniest slip-up on accounting detail.
An ERP system that offers powerful financial modules will help your organization meet its financial responsibilities from financial reports to tax requirements. Ideally, you should get all these features in a single system that handles banking, payments, and accounting functions
But you shouldn’t settle there. They won’t be cheap, but some ERP systems offer real-time information on your overhead and tax contributions, both of which can dramatically enhance your cash flow, reduce costs, and improve profitability thanks to clear, timely, and accurate reports.
5. Supply Chain Monitoring
Production is one area that causes huge headaches for automotive manufacturing firms. This is especially true for companies struggling to keep up with increased product demand.
Great ERP systems need to have the ability to give you real-time data on your entire value chain, from production to shipping. More importantly, the ERP solution must be able to keep this information in an archive for future reference and audits.
Industry-leading ERP solutions can be integrated into your organization’s whole operation, allowing quality management features to synchronize and monitor your supply chain in its entirety. The ability to keep a close eye on demand, product supply, logistics, and distribution in real-time can help your company go from being ordinary to remarkably efficient and successful.
6. Customer Relationship Management Integration
Whether your organization needs to manage invoicing or keep track of the status of your contracts and other obligations, a fully functioning customer relationship management (CRM) module will help put all this information under one proverbial roof. More importantly, a CRM module allows different teams in different departments — like sales, marketing, and customer service support — to access this information, allowing your organization to address the needs, preferences, and purchasing habits of your customers.
7. Fast and Simple Integration
Unfortunately, it’s not unheard for companies to have multi-year deployments of ERP systems. Whether you want to migrate a legacy database into a new ERP solution or upgrade your current ERP system to a more robust version, if you’re not careful you could face a lengthy and expensive runway to a better system.
Although these kinds of deployments will usually take time because of how ERP models need to be effectively integrated with other functions critical to your company, like manufacturing and the supply chain, you shouldn’t have to wait years to begin benefitting from your investment.
Your ERP vendor or consultant must be able to provide a realistic timeframe for an ERP product to be integrated into your company’s business processes, and should structure the launch process in such a way as to turn on the faucet for ROI as quickly as possible.
8. Enhanced Inventory Management
While keeping more of the same products in stock may seem like a good thing for a business, in the automotive parts business having excess inventory translates to incurring unnecessary holding costs. Today’s leading automotive manufacturers are embracing lean manufacturing approaches that require optimizing inventory and keeping goods with a specific purpose.
Fortunately, the best ERP solutions will have modules for optimizing inventory processes, offering auditability features for package and individual tracking. In addition, you should also check for a feature that enables materials requirements planning (MRP), which allows you to plan the arrival of raw materials just in time for the start of manufacturing or production.
A flexible and powerful web-based ERP solution offers several benefits to automotive manufacturers in need of speed, quality, and efficiency in all aspects of the organization. At the end of the day, the core benefit of using an ERP system to maximize profitability and reduce costs.
Whatever decision you make when acquiring an ERP for your automotive company, just remember the following:
- An ERP needs to enhance business visibility: From your production, supply chain, and customer management, your ERP needs to be able to provide timely reports on what’s happening in your organizing from one end to the other.
- An ERP needs to optimize your manufacturing processes: Your ERP system needs to help you focus on optimizing your production systems to lower costs, but without compromising quality.
- ERPs should allow you to scale without problems: Growth and improvement should be the goal for any organization in the automotive parts industry. An ERP should be able to support these goals.
When in doubt, talk to as many ERP vendors as you can. Better yet, hire an ERP consultant to get an objective opinion on the options that match your specific needs and budget.
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