ERP Systems in the Automotive Industry

The world relies heavily on automobiles.

This statement may be sweeping, but it’s no exaggeration. Automotive manufacturers and suppliers play a pivotal role in the global economy–producing, shipping, and selling goods and services that literally drive GDPs.

To make the complicated processes happening within these organizations more efficient, automotive manufacturing firms usually rely on some kind of Enterprise Resource Planning (ERP) system.

It’s easy to understand just how valuable the role of ERP is for auto manufacturers and suppliers. Among many other things, the best ERP systems have the ability to:

  • Offer a comprehensive system that can be audited any time
  • Facilitate functions involving supply chain management
  • Serve as an internal communication tool for collaboration
  • Provide a clear end-to-end perspective on what exactly is happening in the organization

An ERP creates the ideal environment that lets you focus on what makes any company in the automotive manufacturing industry successful: continuous growth and improvement, effective communication, and effective supply chain planning.

Let’s look at ERP Systems in the Automotive Industry:

A. Continuous Growth and Improvement

The ability to sustain growth and keep improving is of the utmost importance for any automotive company. Innovation breeds products that stand out from the competition, and it also ensures your brand stays relevant in the minds of your target market. Moreover, the ability to keep moving forward helps create newer processes that aren’t just better, but also more efficient.

B. Effective Communication

Communication is about bringing stakeholders together, whether from within the organization or outside of it. The goal is to encourage a sharing of information and best practices, which in turn help to maximize available resources.

For example, connecting seemingly unrelated departments (think customer service and designers) that actually affect one another will help lead to mutually beneficial collaboration, revealing new processes that make the organization more efficient.

From an external point of view, tighter collaboration with the Original Equipment Manufacturer (OEM) can help guarantee that specifications are met and changes (if any) are communicated in a timely manner.

C. Effective Supply Chain Planning

Proper supply chain planning is critical when accounting for demand, avoiding inventory holding costs, and providing goods and services as customers need them. Having the ability to ensure you have normal supply at all times also makes doing business with you a smooth and easy process.

An ERP can dramatically improve and simplify these processes, allowing the automotive company to focus on innovating, predicting, and meeting client demand instead of triaging crisis after crisis.

How Automotive Companies Use ERP Systems In Their Organizations

The global automotive industry is enjoying steady growth, so much so that automotive suppliers and manufacturers in many parts of the world are experiencing problems facilitating the increased demand and production of high-quality but affordable products. Add in the continually increasing demand for the best customer experience, and it’s easy to see why these companies require an ERP solution.

All these factors place immense pressure on your company to have a fully functioning and efficient supply chain. And because both your company’s needs and those of your clients’ are constantly changing, your ERP will need to be adaptable to keep up.

Here’s another reason: One of the recent trends in automotive ERP systems revolves around integrating the value chain, making it relevant even after the sale. Whether you are looking to identify new OEMs and suppliers for specific components, or you want to improve your organization’s after-sales support, a robust ERP system can improve the visibility of all your costs and processes from one end to the other. But that means your ERP needs to add value to the value chain, or change in order to do so.

Full Service Auto Parts and its recent ERP upgrade is a perfect example of this. Earlier this year, Full Service, an automotive replacement parts distributor with 15 locations in south-central Texas, announced that it would upgrade its ERP system, Epicor Ultimate, to the newer, more robust Epicor Vision.

The software solution, offered by Epicor Software Corporation, a global provider of industry-specific enterprise software systems, “enables automotive aftermarket distributors to achieve real-time visibility into virtually every area of their businesses to optimize processes, reduce costs and increase sales and customer loyalty.”

According to Full Service Auto Parts VP Chris Huff, “We’ve definitely gotten good use out of it (Ultimate), but it’s the right time for us to move to Vision software. It is imperative that we keep using technology to help make us better in everything we do. Quite a few PRONTO distributors have moved to the Vision solution and based on their experiences we feel we can really benefit from this investment.”

The automotive parts specialist is one of many companies recently upgrading from the Ultimate system.

The Impact ERP Systems Make on Automotive Companies

Here are a few areas where a powerful ERP solution can make a profound impact on your automotive manufacturing company.

1. Improved Lot Tracking

Vehicles aren’t just vehicles anymore. More than ever, automobiles are packed with an array of communications and electronics components, which have evolved from being the complementary features as they were in the past. Increased integration with these components means that quality and reliability are of the utmost importance.

An ERP system allows automotive manufacturers to identify the origin of every single auto component that comes their way, where it went during the production process, which departments handled it, and which customer purchased the final product.

This level of thoroughness is key to avoiding problems like botched product recalls, which can wreak havoc on any company supplying or manufacturing automotive components or create costly liability that kills profit. Having top-quality kind of auditability in your value chain can be a godsend.

2. Online Support for Manufacturers and Suppliers

Support for online portals is perhaps the most important function for first-time adopters of ERP software. These portals offer manufacturers and suppliers an accessible interface for collaboration and real-time processing of orders and shipments.

For example, manufacturers and suppliers can make the supply chain more efficient by providing an avenue to notify each other when an order is needed for deployment, or to simply check on the status of orders. It will seem like such a minor feature, but you’ll be amazed what having a central database accessible by both you and your suppliers can do for your value chain. It can also reduce the time your employees spend on the phone, while increasing your customers’ satisfaction. Talk about a win/win.

3. Expense Tracking

Fixing the supply chain isn’t just about streamlining different processes involved in the overall chain. It’s also about keeping track of where each penny goes during the production process. It might seem like a common sense feature, but monitoring expenses down to the letter can lead to revelations about improvements you can make that will drive significant ROI.

A solid ERP system comes in by offering cost-tracking modules that automatically give you reports based on invoices, sales data, and purchase orders. If you think your accountant is overworked, an ERP can make their life easier.

4. Customer Support

Another area where ERP systems offer value to automotive companies is in customer support and management. For example, the advent of Internet-of-Things-enhanced automobiles is paving way for the once-unique feature of sending vehicle data directly to manufacturers to become standard functionality.

Naturally, ERP systems are critical in receiving and organizing this data, sending any relevant information to the customer relationship management (CRM) system, which in turn, will prompt customer support teams to initiate the process of reaching out to customers to resolve their problems.

5. Flexibility for Changing Environments

Last but not least, ERP systems offer automotive companies the flexibility to quickly adapt to changing landscapes without incurring large scale costs or major disruptions.

Flexibility is especially important given the current state of automotive industry, which, although reporting increased demand, is also in flux, with the rise of IoT and other connectivity features. This in turn has given rise to new production equipment and standards, putting pressure on automotive manufacturers and suppliers to be able to adjust when needed.

And of course, the entire auto industry is changing. From electric vehicles to self-driving technology, changes are coming. Your ERP needs to be ready to account for these changes (and the generation after them) so you can stay on par with the market.

ERP Vendors Offering Software Solutions in the Automotive Industry

Several software vendors that recognize the unique needs of the automotive industry offer a variety of ERP solutions, each one with its unique pros and cons, depending on your specific needs. For the most part, automotive manufacturers and suppliers are most concerned with being OEM certified. As such, many ERP vendors offer functions that allow you to facilitate certification with the OEM supplier.

Some of the most popular ERP vendors with products for the automotive industry are:

As you can see, several vendors offer a variety of solutions. And that doesn’t include the variety of custom-built ERP systems that can be built specifically for the needs of your organization.

In Summary

America’s auto industry may have suffered losses during the recession, but things are back in full swing. Those that weathered the economic storm are seeing increased demand, so much so that they’re having problems with production keeping up.

This combination of events has paved way for the rise of the automotive ERP solution, which is built not just to enhance productivity, but also to improve areas like communication, customer support, and innovation.

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