The era of the Smart Factory: Supply Chain solutions for the automotive industry
In the last two decades, globalization has significantly impacted both supply and demand throughout the automotive industry. As a result, manufacturers are seeking to manage their automotive supply chain in a more responsive way. There are 35,000 components required to produce a car, and every single one has a key purpose that contributes to the overall performance and quality of the finished product. For manufacturing to operate smoothly these components, especially the most critical ones, must arrive on time and in the correct quantity to ensure production remains on schedule.
One of the most essential tactics for automotive supply companies to optimize material management is to analyze and evaluate demand. Having the ability to accurately predict demand allows automotive supply planners to create better inventory strategies for lower total inventory investment without compromising customer service levels.
At the same time, it’s important to distinguish between what an unconstrained demand plan indicates is possible and what the organization is actually capable of producing.
In order to manage the complex global network of suppliers and meet ever-changing customer demands, auto manufacturers are turning to automotive ERP systems capable of automating and optimizing their processes. ERP systems provide a holistic view of the entire supply chain, from suppliers to customers, and allow for better decision-making when it comes to production planning, inventory management, and order processing.
The automotive supply chain is complex, with unique technology requirements. An ERP system should be able to manage and integrate data from a variety of sources, including suppliers, parts manufacturers, distributors, dealers, and customers. It should also provide solutions for process automation, such as order management, inventory tracking, and supplier relationship management (SRM).
Benefits of ERP Solutions
Automotive supply chain management starts with having a greater understanding of how customer demand and production planning work together to ensure operational productivity. The automotive value chain has various processes working simultaneously, such as project planning, equipment management, production processes, and inventory management. These processes create data sets that companies use to gain a real-time snapshot of performance levels, allowing them to make better enterprise decisions.
An effective ERP system enables more control of the car industry supply chain. Manufacturers gain increased visibility across the entire value chain by accessing the collective data shared between processes and machines. Users can remain proactive, making decisions that increase productivity, reduce costs, or eliminate waste while reaching higher efficiency levels for leaner processes.
Communication is essential for every company. If there is a breakdown of inter-department communication due to lack of shared and accessible data, productivity slows down in every department. An ERP software solution can help break down barriers that are hampering communication to allow employees to access real-time data on demand. All areas of the company can access centralized information to enhance collaboration among production, procurement, finance, warehouse, sales, and other business functions.
Automotive companies face various challenges as they continuously improve operational processes to meet customer demand and corporate goals. ERP supply chain solutions from GIB meet the business drivers of automotive companies, allowing them to reduce costs, meet quality standards, improve efficiency, reduce errors, and gain supply chain visibility.
Another automotive supply chain process that can benefit from ERP is inventory management. Inventory management and SKU storage activities are often complex. Excess inventory might result in wasted resources, while obsolete components may cause trouble. With too few components, production lines are at risk of not meeting customer demand.
Forecasting and planning demand with ERP software for the automotive industry allows manufacturers to more accurately anticipate demand. Companies may use demand forecasting to learn how production lines are operating and when to maintain adequate inventory levels throughout the year.
An effective ERP system can help reduce operational costs without compromising automotive component quality. It ensures that every component that leaves the shop floor meets the company's standards. It brings every department together — production planning, finance, sales, shop floor, and quality assurance — to search for ways to reduce cost, eliminate redundancy and remove errors.
Want to get connected with a GIB customer in the automotive industry?
Fill out this short form below.