Flexibility Creates Competitive Advantages

June 14, 2006 by admin

Automotive suppliers face some far-reaching changes. According to a current study by Roland Berger und Partner GmbH, for example, the concentration of original equipment manufacturers (OEMs) will continue to increase. According to the study, the number of suppliers will decrease from 5,600 by 2000 to 3,500 by 2010. The study also concludes that only eight automobile manufacturers will divide the world’s market among themselves by then.
To survive the changes, suppliers must also act globally and cooperate. The need to do so is even greater for suppliers, because they will assume greater responsibility for research, engineering, and production from manufacturers by 2015. That’s the finding of a study undertaken by the consulting firm of Mercer Inc. and the Fraunhofer Institute for Manufacturing Engineering and Automation (IPA in its German abbreviation) and the Fraunhofer Institute for Material Flow and Logistics (IML in its German abbreviation). This outsourcing opens potential total growth of 70 percent to suppliers.

IT Platforms for collaboration

In this environment suppliers will have to take more responsibility for management and system integration of processes in the future – particularly along the supply chain. Collaboration with automobile manufacturers and other suppliers produces dynamic and strongly integrated networks that cover various areas – from development right up to after-sales services. To some extent, the first group of dealers (retail business management) has already gotten in line.
In terms of IT, this type of collaboration requires unified, Internet-based platforms that deliver seamless process communication and information exchange beyond the boundaries of companies. The resulting challenge for companies in the automobile industry can be stated as a lowest common denominator: collaboration and integration. Changing business processes and new partners must be rapidly included in the collaboration. According to a study conducted by SAP, approximately 48 percent of all the companies surveyed regard a reaction to new conditions as very relevant. Without efficient and flexible IT, such companies can’t respond appropriately.
Nevertheless, investment in a new system landscape is difficult to calculate because of the unsure context of time and cost. A Gartner study, “Enlightened IT Use Survey,” shows that more than 80 percent of IT budgets are already tied up with existing systems. That situation increases the pressure to reduce operating costs as much as possible – but still deliver more flexibility and innovation.

More flexibility with an orientation to services

Enterprise SOA

Enterprise SOA

Companies can resolve this dilemma by recombining existing services within a company’s IT department – like the determination of work values or master data functions – and doing so beyond the boundaries of the company. An enterprise service-oriented architecture (enterprise SOA) offers a basis for taking this approach. In a sense, enterprise SOA helps companies integrate existing solutions and develop new services. Enterprise SOA incorporates and gives companies control over both structured information (like bills of material) and unstructured information (like inspection documents) from both SAP and non-SAP systems.
The SAP NetWeaver platform is the technological foundation of enterprise SOA. With Web services or Java, the platform is oriented to forward-looking technologies and supports all common standards like Extensible Markup Language (XML). SAP NetWeaver builds the framework for developing an existing IT landscape in the direction of enterprise SOA. Web services are an appropriate technology for implementing a service-oriented IT architecture by using all common communications mechanisms, including Simple Object Access Protocol (SOAP) and HTTP. Software components like SAP solutions or third-party applications can be linked to each other as Web services over the Internet. The open structure of enterprise SOA enables easy adjustment and combination of the components, making it easier for companies to react to changing business and to cooperate with their business partners.

A road map simplifies orientation

MHP

MHP

The enterprise SOA road map displays the actions necessary to implement a service-oriented architecture. Mieschke Hofmann und Partner (MHP), a management and IT consulting firm that specializes in the automobile industry, created such a road map according to a procedure model that it developed itself. The road map can be used to identify the required enterprise services along the process chain. It also determines the IT systems required to implement each service and evaluates their process relevancy and informational quality.
This approach enables companies to set up a long-term service-oriented IT strategy that takes existing systems, services and investments into account. Companies can use the analysis to review processes and information in terms of their strategic IT relevance and the life cycle of software solutions. Investment risk is minimized because existing systems are reused as part of migration planning or might be targeted for replacement. Operating costs sink simultaneously, and the ready-to-use enterprises services of SAP NetWeaver, which support common business scenarios out of the box, also help to reduce costs.
The MHP consulting firm developed its process-oriented and strategic procedure for implementing enterprise SOA based upon numerous successful projects at Porsche, BMW, Georg Fischer Automotive, and Knorr Bremse. With a service-oriented IT architecture, companies in the automobile industry are well equipped for future tasks.

Dr. Erwin Schuster

Dr. Erwin Schuster

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