Processes Keep the Auto Industry Rolling

Feature Article | November 12, 2009 by Frank Völkel

Joachim Hechler auf dem SAP Automotive Symposium (Foto: Frank Völkel)

Joachim Hechler at SAP Automotive Symposium (photo: Frank Völkel)

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.

Next Page: Standardization, transparency, and innovation

Porsche Panamera 4S - auch das Luxus-Segment braucht Ideen (Foto: Frank Völkel)

Porsche Panamera 4S (photo: Frank Völkel)

Maximilian Brandl von SAP - links im Bild (Foto: Frank Völkel)

Maximilian Brandl from SAP - on the left side (photo: Frank Völkel)

Standardization, transparency, and innovation

Brandl also talked of production locations that are constantly shifting, the risks associated with such moves, and the protectionism that can be observed on some markets. As far as SAP is concerned, practically all automotive companies have to deal with three key issues. First of all, they need to look at containing costs through standardization. According to Brandl, most companies are on the right track here. Second, organizations must have a clear view of all their stock. And third, companies must strive for innovation and sustainability.

After Brandl’s welcome, Joachim Hechler, executive vice president SAP Business Suite, took the stage. He explained that software such as SAP Business Suite 7 can improve business processes both within organizations and across company boundaries. To support this approach, upgrades can be performed during production operation in the form of SAP enhancement packages (for example, enhancement package 5). By implementing a responsive production system, companies can tackle the pressure of competition from increasing globalization. Thanks to flexible and cost-effective production, lead times can be cut and stock levels reduced. As a result, companies spend less while increasing their ability to deliver.

According to Hechler, kanban production processes, which were introduced in the 1970s by Japanese auto manufacturer Toyota, have been integrated step-by-step into SAP software since as far back as the mid-1990s.

Concluding his presentation, Hechler expressed the belief that, in particular, mobile devices will provide an opportunity for companies’ IT landscapes to be accessed while employees are on the move. For more information, see the article iPhone or BlackBerry – Comparing the Future of CRM.

Next Page: MAN opts for business intelligence portal

555 Teilnehmer waren in Berlin auf dem Automotive Symposium (Foto: Frank Völkel)

555 participants at Automotive Symposium in Berlin (photo: Frank Völkel)

Dr. Bernhart Herr von MAN spricht über das neue BI-Portal (Foto: Frank Völkel)

Dr. Bernhart Herr, MAN, about BI-Solutions (photo: Frank Völkel)

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.

Next Page: In-house production impacts procurement software

Live-Demo hier mit Karsten Brockmann und Smart Ops (Foto: Frank Völkel)

Live-Demo with Karsten Brockmann and Smart Ops (photo: Frank Völkel)

Neben der Business Suite 7 stand Business Objects im Vordergrund

Business Suite 7 and Business Objects were topics (photo: Frank Völkel)

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.

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