Software solutions are an essential part of business, especially in the automotive industry. Whether you’re an OEM or an aftermarket product manufacturer, the complexity of the process of taking a product, part, or component from idea to the final sale requires robust ERP functionality.
But most automotive manufacturers range somewhere between disappointed and irate over the way their ERP software works. This is a big deal, because ERP problems can cause any automotive manufacturer to grind to a complete halt.
Just ask Volkswagen.
In 2000, Volkswagen turned on an SAP ERP, and ran into immediate problems delivering parts to dealers. As a result, parts deliveries to customers that had taken just a few days took several weeks—and it took Volkswagen weeks to recover.
ERPs matter in the automotive industry, and in every other industry. Being frustrated about your ERP affects your ability to deliver quality products on time and on budget, while making the most profit possible.
Thankfully, behind every frustration there is an insight that reveals what automotive ERP software should do. So we want to look at seven prominent frustrations to see what they can show us about how automotive ERP software can and should work—if you choose the right solution.
Frustration #1: Cost and Schedule Overruns at Setup
One of the major frustrations with the Software as a Service (SaaS) ERP systems that many automotive manufacturers use happens before the system even goes live. That’s because SaaS providers are notorious for cost overruns during the installation process.
Panorama Consulting’s 2015 study found that less than half of ERP installations came in at or under budget. Nearly a quarter of installations went over budget by at least 25%, and one in 10 went over budget by 50% or more.
The news on schedule overruns was even worse. In 2014, three-quarters of installations were behind schedule. That number reflected the reality that schedule overruns are consistently more than 60% each year.
Talk about getting off on the wrong foot. And then think about how much trepidation you would have if you had to contact an ERP for support after a disaster of an installation.
This frustration goes to show that you need to research potential software solution vendors to find out if they can deliver on what they have promised. Interview other customers to see how the installation was handled and whether the company is trustworthy. Bring in a consultant that can help you select the right vendor. This important step can help you choose the right vendor and avoid a horrible installation process.
Frustration #2: One Size Fits None
The prominent ERP SaaS vendors offer a wide array of services and options. These options help them address many of the needs and problems in the marketplace. And that’s great—it means the solution to your problem is out there, if you search hard enough and have the right budget.
The problem is that it’s hard to find an off-the-shelf ERP system that meets all your needs. Some features will be a great fit for your company’s manufacturing process, inventory management, or financials and billing. But others will require a shoehorn or two. And chances are, you’ll probably leave several features unused—even though you’re paying a premium to include them in your overall ERP solution.
If your business processes are adjustable, then this may not be a major frustration. Designing actual workflows to mirror the way the ERP works can result in more efficiency and value. But most of the companies we talk to have established workflows, and they would prefer for the software to change to meet their needs.
So what do you do? It depends on how close your needs match the ERP solutions available. If the available features overlap with most of your needs, you might have the right fit. If not, you may need to consider combining integrating multiple software solutions or some other custom solution.
This patchwork approach may be intimidating, but it can work. For example, use a SaaS product like Salesforce to manage the sales process, and make sure it integrates with an inventory management system. If you know what you’re doing, you can get more bang for the buck.
Custom software development is also a way around a one-size-fits-none ERP. This approach can use API integrations and web portals to share data across systems and ensure that your established business workflow is determining how your software works instead of the other way around.
This approach is pretty common. CFO.com says that 9 out of 10 organizations customize software to some degree. Here’s why:
“That’s not to say that customization is a good thing and you should just embrace it, but no ERP system is going to meet every need of an organization. So it’s a matter of cherry-picking areas that are the high-value core competencies of your organization where maybe it does make sense to customize — without going too far down that slippery slope.”
Frustration #3: Document Mismanagement
From spec sheets to CAD drawings to customer order forms, the automotive industry has a variety of types of documents. And it’s understandably infuriating when it’s impossible to find those documents in your ERP when you need them.
The result of document mismanagement is often a bunch of wasted time, which limits productivity and profit. But more insidious things can happen as well. A failure to manage documents well may mean that requests of manufacturing labs or supply chains are missed, which can destroy timelines and put money into the wrong parts and products. It can also expose your company to liability to your customers or to end users, because something wasn’t made or recorded correctly.
So document management should be a priority in your ERP system. Documents should be easy to find, and should be searchable if at all possible. They should support versioning and should connect to the workflow of your business. Most of all, they should be available across departments and steps in your workflow process—which can be problematic if your ERP doesn’t provide an end-to-end solution.
Because if you don’t manage documents well, you’re invariably going to fall victim to the next frustration…
Frustration #4: Traceability and Compliance
It’s vital that your company can demonstrate how it creates products, tests them, and fulfills orders. This traceability provides several key benefits for your business:
- It helps you understand where projects are in the process, and why they are on schedule or delayed
- It allows for clear communication with customers about delivery timelines
- It provides data that can be used to improve processes and mitigate risk
- It makes compliance reporting simpler because necessary documents are easy to find and easy to use
This last point is a crucial one. Whether you’re complying with government regulations, internal company processes, or ISO certification requirements, you need to be able to document your adherence to the rules. If your software isn’t helping you create compliance reports and access documents necessary to prove compliance, then your employees will unavoidably end up frustrated.
Compliance is one of the major benefits you should look for when evaluating automotive ERP solutions or other custom software that may address specific business needs. Where you put this on the list of features will depend on the level of your company’s compliance requirements—but it should be considered in every case.
Frustration #5: Real-Time Data and Reporting
Your business should never have to ask what is happening with a specific project or part or shipment. You should be able to log in and find the answer you’re looking for.
Proactive businesses won’t stop at visibility. They’ll want to see regular reports that surface problems before customers or regulators notice. This kind of reporting and data visualization can help keep small problems and emerging issues from becoming major roadblocks or full-blown crisis moments.
Of course, not every business is in this position. This may be because a smaller business has not had the cash flow to invest appropriately in an ERP or in custom automotive industry software. Or it may be because a large business can’t break through the silos that departments and manufacturing plants operate in.
In either case, business leaders in this situation will invariably spend time in meetings either lamenting the lack of real-time knowledge, or lambasting people who can’t provide answers. But the problem isn’t a people problem—it’s a software problem. If you find yourself in this situation, you should consider software or ERP solutions that will provide real-time data that’s easy to access and understandable at a glance.
Frustration #6: End-to-End Breakdowns
Some automotive industry corporations use a mix of software for different departments or functions within the organization. This makes sense on the surface, because off-the-shelf solutions may fit a specific business unit’s process relatively seamlessly.
But this can create a problem. If a piece of software works for one department but doesn’t communicate with software that other departments use, you end up with stranded data that can only be shared through manual steps using email and spreadsheet downloads or even printouts. The result is a process that’s refined for one specific area but ultimately not helpful to the business as a whole.
We’ve even seen automotive industry companies, as well as companies in other industries, where a single machine in a single department is the only way to access or update information. This creates major access issues for the rest of the company—and that’s if it works all the time.
A real ERP solution that serves your business needs to either work with or replace these islands of software in your organization. If you’re not ready to replace those pieces of software, then you need to find ways to integrate the data in that system into your larger software. This can happen via an API integration, or via other methods such as a flat-file integration.
Either way, you need to work toward the goal of having all data available to all users. This will help you avoid the issue of excruciating gaps in your end-to-end workflow.
Frustration #7: Irate Customers
Nothing is more frustrating in business than working hard to provide a quality product at a quality value, only to fail your customers because of a breakdown somewhere along the way. These feelings are heightened by the emotion customers express—disappointment or even anger.
Of course, ERP solutions won’t force every customer to interact with you in a Miss Manners-approved way. But it will empower your employees to give customers real-time information on order status and product development. That level of insight will ultimately be a key tool in creating satisfied customers.
Your business’s ERP, along with the rest of your software stack, should make your business run more smoothly. If it’s causing frustration instead, then it’s time for an upgrade.
So do some research. Begin the conversation about what it would look like to upgrade your ERP. Take steps now to ensure that your software is making things better in your business, not making things miserable.