How Digital Updates to Automotive ERP Systems Boost Efficiency and Cut Waste

The automotive industry keeps our economy running. Sound like an overstatement? Pick an industry—any industry—and imagine what would happen if it didn’t have reliable transportation for employees and executives, an efficient delivery system for delivering goods to customers, or a vehicle fleet for moving parts and products from one location to another.

From Google executives to lumber company drivers, it’s the automotive industry that gets people where they need to go. But what keeps the automotive companies operating at full capacity?

One big factor is enterprise resource planning (ERP) systems. An ERP helps automotive designers, manufacturers, and salespeople manage the many complex processes and resources that keep their wheels turning.

We’ve seen some impressive innovations in automotive ERP systems over the past decade or so, especially as connected devices and equipment sensors have given us more data to work with. For example, Karmak (probably the No. 1 ERP in the automotive industry) offers real-time monitoring of KPIs, data analysis and automated alerts, making it possible to get critical information to the people who need it. Their alert system can:
* Send notifications when a backordered part has been received
* Notify purchasing when additional parts need to be ordered
* Keep customers up-to-date on order status

Those are just examples of how your ERP can promote greater efficiency. A robust ERP can help you improve customer service, streamline production and logistics, simplify supply chain management, facilitate internal and external communicationm and support overall growth.

The question is: does your ERP offer the functions you need to realize those benefits?

To make the most of your resources and budget, you need an ERP that keeps pace with the demands of today’s market. Let’s take a look at some ways you can update your automotive ERP for better results.

ERP Functions You Can’t Live Without

It’s easy to assume your ERP is just fine because it’s working the same way it always has. But the truth is that today’s digitally integrated ERP systems can help you get work done faster, more efficiently, and at lower cost than an outdated legacy system. Here are 7 ERP functions that every automotive company needs, and how digital innovation can improve their function:

1. Part and Product Traceability

Your system should be able to track individual parts and packages as they move through each stage of your business processes, from production to deployment. That means it should monitor both manufacturing and supply-chain data so you can view historical reports, ensure regulatory compliance, and offer efficient after-sale customer support. IoT sensors make this process more efficient by sending real-time data to your ERP.

2. Inventory Management

Keeping either too many or too few parts and products in stock can cost you money. If you have excess inventory on hand, you’ll end up incurring additional holding costs, but insufficient inventory could inhibit sales. That’s why you need an inventory management solution that supports lean manufacturing practices by eliminating waste and increasing productivity.

Updating your inventory management capabilities also makes it easier to adjust your production strategy in response to changes in customer demand. For example, your ERP can help you implement data-based demand planning, production forecasts, and sales forecasts, and then use that data to predict inventory needs and reduce the costs of storing excess product.

3. Supply Chain Monitoring

Three out of four (78%) manufacturers express concern about interruptions to the supply chain. That’s because those interruptions can be costly in terms of lost production time, lost sales, and lost profits. Your ERP can help mitigate that risk by collecting and storing supply chain data, supporting faster cycle times and more efficient logistics. This information should also be easy to store and access for future reference (such as an audit or a recall).

You can also use your ERP to collaborate with your supplier network on part sourcing, timetables, and potential shortages. Many ERP systems now offer real-time monitoring on this data so you can make better logistical decisions to meet customer demand.

4. Financials

From tax filing to payment records to financial reports, your ERP manages accounting and banking information to comply with legal requirements and avoid fines for errors. Digital innovation makes it possible to see this information in real time, giving you a more nuanced control over cash flow and profitability.

5. Product Lifecycle Management

End-to-end management of the product lifecycle keeps you on target with regulatory guidelines and quality assurance while also managing costs. Your ERP can help you cut waste and promote lean processes without sacrificing quality, and that’s essential in an industry rife with costly recalls. There are also some exciting new capabilities like 3D modeling and visualization technology on the market, which can be useful for prototypes and custom parts.

6. Integration with Manufacturing Processes

Fully integrated ERP systems support manufacturing innovations like IoT, digital alert systems, and collaborative capabilities. While manufacturing integration has been around a long time, newer technologies can create powerful connections between manufacturing processes and ERP modules. For example, data analytics and real-time reports demonstrate cause-and-effect patterns within your manufacturing processes and support better decision-making.

7. CRM Integration

You may not think of sales, marketing and customer service as part of your ERP, but integrating your CRM software will enable cross-organizational collaboration to serve customers more efficiently. If your salespeople have access to marketing modules and vice versa, both departments can work together to make sure every customer has the right information and the best service. ERP and CRM module integration help you automate sales and marketing data so you can accurately assess customer demand and monitor purchase habits to drive decisions. 

ERP Innovations That Boost Profitability and Productivity

None of the functionalities we’ve talked about so far should be groundbreaking. Yes, your ERP might need enhancements, and you can certainly benefit from updated data analytics capabilities and real-time reporting. But it’s worth considering the additional innovations that can make significant differences in your productivity, profitability, and cycle times—innovations that may require an investment in new technology or updated strategy. Let’s take a look at five of the most urgent:

1. Mobile Connectivity

Accessing data and process information remotely could be a game-changer for your automotive plant. Why? Because your team can connect to data reports, software functions, and communications from any device, facilitating collaboration through the platform no matter where they are. That could substantially boost operational speed as employees sign off on contracts, make sales calls, manage transportation shipments, and monitor inventory status in the field or on the manufacturing floor just as easily as they do in the office.

2. Data Dashboards

Data dashboards bring multiple KPI metrics together in one place so you can view essential information in real-time. The benefits are huge: faster decision-making, more accurate reporting, higher process efficiency, and greater flexibility in response to data trends, just to name a few. For example, a supply chain dashboard could track shipping costs, quantities shipped, orders by warehouse, average shelf time, and shipping logistics to identify inefficiencies or needs. A sales dashboard could monitor sales quantity, average cost, average price, total profits, and total revenues.

3. Machine Learning Tools

Machine learning is an AI application that “learns” from data patterns and trends and applies those insights to future analysis. As part of your ERP, machine learning can identify root causes of problems in your supply chain by bringing together data from multiple sources. It can also improve your production capacity by pinpointing quality issues, productivity hangups, and waste.

4. Predictive Analytics

Predictive analytics is another application of machine learning. It uses historical data to predict future trends, giving you much more accurate demand forecasting ability. You can drill down into specific triggers of customer behavior and use that information to predict inventory needs, plan for spikes or drops in demand, and identify which parts and products will sell fastest.

5. IoT

IoT is already well on its way to becoming a staple feature of manufacturing plants in most industries. That’s because the technology can manage equipment more efficiently than manual processes can. It can also predict maintenance needs and monitor parts and products through the entire production process and supply chain. By integrating that information with your ERP, you can put the most urgent data in the hands of the people who need it most—in real time. In some cases, IoT-enabled equipment can communicate directly with your ERP, facilitating faster communication and more accurate business intelligence.


Your ERP is at the heart of your automotive business. By integrating strategic digital innovations, you can improve visibility across the organization, optimize your decision-making process, and improve speed and efficiency. And that’s the key to higher profits and lower costs.

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