Driving Success in Automotive - JDA Software and Accenture


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While most automotive OEMs and their supplier tiers are
struggling to reconcile their old ways of doing business with the
“new normal” economy, there is good news for those companies
willing to innovate and adapt their production models.

Published in: Automotive
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Driving Success in Automotive - JDA Software and Accenture

  1. 1. D r i v i n g S u c c e ss i n A u t o m o t i v e
  2. 2. D r i v i n g S u c c e ss i n A u t o m o t i v eIn the “new normal” landscape of the global automotive industry, both OEMs and suppliers arestruggling to manage a number of increasingly complex challenges:• Continuing DEMAND UNCERTAINTY as consumer confidence ebbs and flows• Ongoing cost pressures that force GLOBAL INVENTORY REDUCTIONS• A shift from regional models to SELL ANYWHERE, BUILD ANYWHERE, SOURCE ANYWHERE supply chain designs• Competitive pressures to INNOVATE AND REFRESH vehicles and features at a much faster rate• A lack of GLOBAL VISIBILITY throughout the supply chain, enabling all participants to respond quickly to market shifts, supplier shortfalls and other issuesC r e at i n g a D y n a m i c ,D e m a n d - D r i v e n S u p p ly Cha i nWhile most automotive OEMs and their supplier tiers arestruggling to reconcile their old ways of doing business with the“new normal” economy, there is good news for those companieswilling to innovate and adapt their production models.Forward-looking supply chain leaders can achieve operating margin improvements of 15 to 20 percent, evenin an economic landscape that remains uncertain. The keys are tight synchronization of the entire supply chainwith demand signals, creating insights from shared data that drives decision making, and establishing a globalsales and operations planning (S&OP) process that promotes more agile execution and collaboration amongpartners.Working together, Accenture and JDA can help your business achieve this vision — and succeed in the face ofseemingly overwhelming challenges. By combining outstanding business acumen with proven technologyleadership, Accenture and JDA can help you master demand variability, link the entire supply chain to actualmarket signals, optimize pricing and customer service, build a winning product portfolio, and manage capacitiesand materials across regions, brands and platforms.
  3. 3. Th e A u t o m o t i v e S u p p ly Cha i n : I n c r e d i bl eC o m p l e x i t y, I n c r e d i bl e Chall e n g e sWhile every modern supply chain is complex, the automotive industry faces special challenges.Shifting from a regional sourcing and manufacturingapproach to a global production model means that todayautomakers are struggling to manage supply chains that spanthousands of miles and thousands of suppliers, who may beproviding up to 20,000 distinct parts and components.When faced with declining global sales, pressures to reduceinventories, high levels of demand variability, the threatof supply disruption and other challenges, it may seemimpossible for automakers to create a dynamic supply chainthat can respond with speed and agility.However, automotive manufacturers and their suppliers areforced to make transformative changes in order to remain competitive. Demand and supply complexities,if not well managed, can result in lost sales, underutilized global assets and significant investments infacilities, people, new products and other initiatives that fail to achieve a full payback. They also can result insurplus inventories that need to be purged through customer incentives — which significantly impact profitmargins — or, conversely, inventory shortages that divert sales to a competitor.Continuing Changes in the Automotive Landscape Prior to 2008 Evolving FutureIndustry Sales – USA example 17 million units 12-14 million unitsAverage channel inventory 70-80 days of supply 40-60 days of supplyConsumer demand variability Moderate Significant swingsRisk of supply disruptions Moderate IncreasingAverage rate of product lineup refresh Every 6 years Every 2-3 yearsVehicle platform Regional GlobalSourcing model Local/Regional Global
  4. 4. F l e x i b i l i t y a n d Ag i l i t y: Co r e Co m p e t e n c i e sAs demand has ebbed and flowed in recent years,automotive manufacturers and their supplier tiers havelearned that the key to success lies in maximizing theflexibility and responsiveness of their global networks, sothat unexpected market shifts do not take them by surprise.A recent research study conducted by Accenture confirms these priorities of the world’s manufacturing leaders. Ofthe top five answers to the question, “What are your key strategic priorities today?” four centered on maximizingthe speed, agility, flexibility and responsiveness of the worldwide supply chain.Automotive manufacturers and their suppliers have made a number of improvements in their product designs andproduction models in an effort to maximize their operational agility.For example, building multiple vehicles on common platforms, with standardized components, has significantlyenhanced manufacturing flexibility. Constructing multi-use facilities — in which multiple products can bemanufactured — has improved the efficiency of physical assets. Also, some automakers have established multiplephysical supply chains that accommodate production changes with relatively short notice.However, most automotive OEMS and their suppliers still lag in their ability to truly understand market needs,make decisions based on the most timely and accurate information, and align the entire geographically distributedsupply chain with a single set of reliable demand data. Until they can incorporate real-world, real-time market datainto their global operating models, automotive companies will not achieve the highest possible return on theirproduct lines and production investments. Top Five Concerns of Manufacturers and Their Suppliers 49% Optimizing cycle/delivery time 46% Ensuring product quality 31% Creating agility and speed of supply network 31% Maximizing responsiveness 30% Achieving supply chain flexibility Source: © 2011 Accenture. All rights reserved.
  5. 5. S y n c h r o n i z i n g t h e Gl o bal S u p p ly Cha i nWith Demand: A Dynamic Response toT o day ’ s Gl o bal Chall e n g e sAccenture and JDA can help automotive leaders take theiroperations performance to the next level, by synchronizingevery facet of the worldwide supply network with actualconsumer needs, based on a shared set of demand data.With a unique blend of business process acumen andadvanced technology solutions, the Accenture/JDA teamcan help your business synchronize the end-to-end supplychain with a shared demand forecast, providing marketvisibility that extends back through every supplier tier.Having one view of demand allows capacities, inventoriesand logistics along the lengthy global supply chain tobe planned with the necessary and synchronized buffersto remain agile and responsive, while avoiding surplusinventory, unused capacity and other inefficiencies thatdrive up total supply chain costs.
  6. 6. By implementing flexible technology solutions that link demand and supply — and supporting thoseadvanced tools with high-impact, collaborative business processes — the Accenture/JDA team can create thekind of dynamic capabilities that make a real financial and competitive difference:Accurate, real-time forecasting. Transportation optimization. Inbound, outboundBy gathering and intelligently applying point-of-sale and even dealer-to-dealer transportation planning caninsights and other consumer data, Accenture and JDA can be optimized, based on an accurate view of localizedprovide all supply chain partners with highly accurate, real- consumer needs and delivery priorities. Accenture andtime forecasts for both vehicles and individual product JDA can not only help you plan individual shipments infeatures. the most cost-effective manner, but also rationalize your entire transportation scheme against real market needs.Truly global sales and operations planning. Basedon those shared forecasts, Accenture and JDA can work More effective pricing and promotions. Over theto install a new collaborative, cyclical S&OP process past several years, consumers have come to expectacross the global supply chain that ensures all partners incentives when they purchase new vehicles. Accentureare working with up-to-date information — and are and JDA can help ensure that both your base prices andcontinually updating their plans as market needs shift. promotional incentives make good business sense and result in long-term profitability.Enhanced supplier collaboration and monitoring. Intoday’s complex world, consumer demand is not the only Fact-based vehicle portfolio management. Today,source of volatility. Accenture and JDA can help ensure vehicle models are being refreshed and replaced atthat the overall supply chain is synchronized not only a faster rate than ever before. Accenture and JDAwith demand, but also with materials shortages, supplier can partner with you to ensure that all your productcapacity issues, transportation cost development and portfolio management efforts — asincreases and other issues that create uncertainty on the well as your model mix — are based on up-to-date,supply side. factual information about the changing needs of consumers. By basing all product decisions on real-timeGlobal inventory optimization. Vehicles sitting on market data, you can minimize the risk associated witha lot, unsold, might be the most visible inventory these significant investments.challenge in the automotive industry. But, with up to20,000 components in the average automotive supply More effective spare parts planning andchain, excess parts inventories are an equally daunting replenishment. After the sale, spare parts represent achallenge, threatening the profitability of every supply long-term source of supply chain complexity for OEMschain participant. By gathering and sharing forecast data and their supplier tiers. Accenture and JDA can helpat the product feature level, Accenture and JDA can help reconcile your spare parts planning and replenishmentminimize inventories at every production stage. activities with real-world demand data, driving improved efficiency and profitability in this often-overlooked areaMore efficient assembly. Just as Accenture and JDA can of the supply chain.drive inventory efficiencies, they can maximize assemblyprocesses throughout the supply chain. Powertrainsand other systems can be built when they are needed,creating cost efficiencies by maximizing the utilization offacilities, equipment, employees and other assets.
  7. 7. W hy A c c e n t u r e a n d J D A T o g e t h e rAccenture and JDA have worked with many global manufacturing leaders to achieve greater value andincrease agility in their worldwide supply chains. Together, these partners can help you create trulydynamic operations by combining advanced technology solutions with the business strategies and processimprovements needed to maximize your return on investment.Drawing on the extensive experience of 16,000 JDA Software Group, Inc., The Supply Chainmanagement consultants globally, Accenture Company®, is a leading global provider of innovativeManagement Consulting helps clients identify and supply chain management, merchandising anddeliver value with pace, certainty and strategic pricing excellence solutions. JDA empowers moreagility. Accenture’s unique combination of skills, than 6,000 companies of all sizes to make optimalapproaches, assets and tools help develop and decisions that improve profitability and achieve realoperate scalable, efficient and agile business results in the discrete and process manufacturing,processes to deliver immediate and long-lasting wholesale distribution, transportation, retail andvalue. Operations that embody innovation and services industries. With an integrated solutionsoperational excellence are vital to enhancing long- offering that spans the entire supply chain fromterm profitability. By combining pioneering solutions materials to the consumer, JDA leverages thewith practical know-how, Accenture helps clients powerful heritage and knowledge capital ofalign underlying process and operating models to acquired market leaders including i2 Technologies®,support business strategies, link the supply chain Manugistics®, E3®, Intactix® and Arthur®. JDA’s robustto the end-to-end value chain, and create flexible services offering, including complete solutionoperations that enable rapid response to changing lifecycle management via JDA Cloud Services,customer demands and market opportunities. provides customers with leading-edge industry practices and supply chain expertise, lower total cost of ownership, long-term business value, and 24/7 functional and technical support.While the challenge of synchronizing your end-to-end supply chainwith market signals may seem daunting, Accenture and JDA bringthe unique combination of expertise needed to deliver rapid results,without any business disruption as the transformation occurs. Workingin a collaborative manner, Accenture and JDA can custom-tailor a set oftechnology solutions and high-impact business processes that meet yourown specific supply chain model and long-term strategic goals.
  8. 8. Is Y o u r S u p p ly Cha i n D r i v e n t o S u c c e e d ?If maximizing your supply chain flexibility, agility and profitability are strategic priorities, you can begin thetransformation process by answering these five foundational questions:• Have you appropriately segmented and optimized • Are there advanced forecasting technologies and your global supply chain to align with real-time market decision-support tools in place that enable broad demand? visibility and coordination across the supply chain in• Do you and your key partners have the ability to take real time? proactive, preventive and reactive action across the • Do you have the right partners, skills, production supply network? strategies and transportation schemes to balance• Do all supply chain participants have common customer satisfaction with long-term profitability? visibility into real-world consumer demand signals? Contacts: Accenture JDA Software Group, Inc. Allen Fujimoto 4-Color Manish Govil Senior Executive Senior Director allen.m.fujimoto@accenture.com manish.govil@jda.com