Complex business processes form the core of the automotive industry, from development and manufacturing, through sales and service. At the SAP Automotive Symposium, manufacturers and component suppliers are engaged in the search for greater efficiency. This year, the event is being held at the International Congress Center (ICC) in Berlin. SAP.info is there to check out the action.
In total, 555 participants and 32 partner companies gathered in the main auditorium to hear the keynotes on the first day of the event. As well as representatives from automobile manufacturers such as Audi, BMW, Daimler, MAN, and Volkswagen, automotive component suppliers are also out in force, including Continental, Harman Becker, and ZF Friedrichshafen.
Excess capacity, revenue shortfalls, and protectionism
The global automotive industry is facing tough challenges – a statement echoed by Maximilian Brandl, head of Discrete Manufacturing Industries at SAP. More specifically, this means that the industry needs to get a grip on excess capacity in automobile production and the associated revenue shortfalls. In Germany, the luxury vehicle segment and truck manufacturers are being hit particularly hard, with shrinking profit margins and sales way off target.
And in the component supplier industry, the outlook is far from rosy at the moment, too. High price pressure from auto manufacturers has triggered insolvency among a whole host of suppliers.
MAN opts for business intelligence portal
In his keynote, Dr. Bernhart Herr from Information Systems and Organization Strategic Development at the MAN Nutzfahrzeuge Group initially focused on globalization as a core element of corporate strategy. He defined three different types of company. First, there’s the ethnocentric type, which operates on the domestic market only. Second, there’s the polycentric type, of which MAN is an example, where the company is active on the domestic market and abroad. Finally, there’s the geocentric type, which has no ties to a particular country. Herr cited McDonald’s as an example of such an approach.
According to Herr, the consequences of globalization are tougher competition, the necessity to grow, the need to tap new markets, and the obligation to make major cost reductions. And there’s only one response to the last consequence – and that’s the standardization of processes. MAN has implemented 11 processes at its central IT locations. Furthermore, it has standardized purchasing and central IT hosting at its Munich plant. And finally, MAN is looking ahead to the future and has developed a scenario that includes a business intelligence portal with the SAP BusinessObjects portfolio.
In-house production impacts procurement software
During the symposium, some of the automobile companies present suggested that the current economic crisis could trigger changes in their procurement strategy. In other words, they would return to manufacturing more components in-house. This means new challenges for IT processes and how they are mapped in software solutions. But anyone who looks back over the past 10 years will observe that precisely the opposite strategy was adopted to contain costs: lower costs through external production.