ERP - Automative Industry


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a look at the ERP systems used in the automative industry with case studies on Toyota & Volkswagen

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  • Customer wants to lodge a complaint or service requestGoes to Hero Honda officeEntry made In SAP system by personnelPersonnel from office would call the relevant distributor or service engineer and tell them about the defect.The distributor or engineer then checks his stock and revert back to the office.The office then checks for replacement stock and then go back to the distributor or customer over phoneFinally the desired part was sent to the customer.The whole process took a few days.
  • ERP - Automative Industry

    1. 1. 104- Ghanshyam Bheda 119- Anuj Shah 128- Aprajita Mehta 311- Lokesh Gada 327- Yuyutsu Tulshyan ERP in Automotive Industry
    2. 2. Present Scenario  At present time, Indian automobile industry is making a major contribution in increasing the country's GDP by 9% every year.  New heights has been scaled by the industry in the year 2011.  In January 2012, total automobile sales 21,14,157 units, an increment of 44.9% compared to the sales units of same period last year.  By 2050, the country is expected to top the world in car volumes with approximately 611
    4. 4. The Key Players… Commercial vehicles TATA Motors, Ashok Leyland, Swaraj Mazda, Mahindra & Mahindra ,Force motors, Eicher Motors Passenger vehicle TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra & Mahindra, Daimler Chrysler, Hindustan Motors Two Wheeler Hero, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors Three Wheeler Bajaj Auto, Piaggio India
    5. 5. Need for ERP in Automobile Industry  1) Full Traceability : A system that enables to accurately track individual bins, containers, during manufacturing and distribution chain  2)Quality and Supply Chain Management: Capability to track real-time data on manufacturing and supply during production
    6. 6.  3) Electronic Document Management: Not only does this save employees time, it speeds up overall operations, reduces waste, and minimizes room for human error  4) Inventory Optimization: excess inventory is an unnecessary expense and contrary to the lean manufacturing processes the enterprises are embracing  Inventory optimization is a “must-have” ERP feature for automotive parts manufacturers as excess inventory is unnecessary expense
    7. 7.  5) Integrated Financials: To trace costs associated with individual products and product lines right down to the raw materials used in production.  6) Built-in Barcode and OEM Shipping Labels: Built-in support for printing, reading, encoding, and utilizing barcode labels
    8. 8.  7) Built-in EDI (Electronic Data Interchange) Templates  8) Tooling and Maintenance: Specifically tracks which tools are used as well as the raw materials used in the making of the product  how many parts are produced before replacement or adjustment is necessary to maintain proper quality specifications.
    9. 9. Industry Requirements  Kanban : Controlling Production and Material Flow.  Planning/Scheduling for multiple models at the same time in assembly line  Warranty Management  Just-in-sequence deliveries by suppliers  Managing vehicle information for vehicle lifecycle  Managing dealer business  Car leasing
    10. 10. Different vendors provide different kind of industry specific solutions. Selection depends upon the company and their requirements
    11. 11. •Tata Motors •Hero Honda Company Implementation
    12. 12. Tata Motors  Since 1945 the largest automotive company  IT Solutions Provided by Tata Technologies (Tata Motors subsidiary)  Huge Employee Base (30000)  Wide Scale production  One of the key businesses of the Tata Group  Very big distribution unit size
    13. 13. Why ERP?  No online real time data available?  Production Loss  Legacy systems not integrated  Inconsistent Data  Difficult interpretations  Independent planning systems  Cumbersome information flow  To scale up production and increase capacity  Backward Integration required
    14. 14. Tata Motors - Enterprise Software Vendor
    15. 15. Why SAP?  30 years of working with automotive organizations  1600 automotive companies worldwide rely on SAP  SAP for automotive designed to help automotive companies of virtually any size  Ready made processes for auto manufacturers
    16. 16. Success Factors: TM’s Consideration  Improved Sales Revenue  Cost Reduction  Reduced Inventory  Improved Production Scheduling  Improved Productivity  Enhanced organization-wide communication
    17. 17. What SAP covered?  Functional and Technical Consulting for implementation of mySAP portfolio of products  SAP R/3 Implementations including Industry Specific Solutions  BIW, CRM, SRM, APO, SCM, Enterprise Portals  Change Management  SAP Implémentation Audit  Identification of Risk Factors  Risk mitigation Planning  Solution / System Optimization  System Operations Plan
    18. 18. Project VECTOR  Value Enhancement by Collaboration through Technology & Operational Restructuring  mySAP SRM 40 implementation  Mission: Revolutionize the supply chain by under covering the hidden value through technology driven Sourcing & collaborative Purchasing
    19. 19. Phases of Implementation  Phase 1  Pilot implementation covering:  four locations for selected product categories and  four vendors each for direct and indirect materials  Was primed by SAP Consulting  Phase 2  Rollout of mySAP for Direct and Indirect Materials for balance Product Categories and Vendors covering all locations.  Also implement Invoice entry and Approval Modules.  Was primed by Tata Technologies Limited
    20. 20.  1997 : SAP version 3.4  First implementation was decentralized due to WAN architecture.  4 Servers  3 manufacturing (Jamshedpur, Lucknow and Pune)  1 sales and corporate services (Mumbai)  2003 : SAP version 4.6 (Upgradation)  Single server architecture  Need to consolidate operations  3000 users  20 Modules of SAP implemented
    21. 21. October 2004 November 2004 December 2004 January 2005 February 2005 March 2005 April 2005 May 2005 Project Preparation Business Blueprint Realization Final Preparation Going Live Schedule of Implementation
    22. 22. SRM Tata Motors has used the following features • Self Service procurement. • Catalog and Content Management. • Strategic Purchasing Scenario: Spend Analysis, Contract Monitoring. • Sourcing Scenario: Rfq • Supplier Self Registration Module. • Order Collaboration Scenario with full support for Goods Movement. • Usage of SAP Netweaver: People Integration, Process Integration and Information Integration
    23. 23. Tender Floatation Evaluation of tender Selection of Vendor Material transport & Documents Exchange Material Acquisition Purchase Process Flow
    24. 24. Business Process – Supply Strategy Development Supply Strategy Development is initiated by assessing the organization’s supply needs. Products and/or product groups are combined into sourcing categories. Categories are positioned according to their business impact. Market information, technology and industry trends are collected along with information about the supply base. Based on the analysis of this combined information a supply strategy is derived for each of the souring categories. DEFINITION SRM COMPONENTS • SAP Enterprise Buyer (Prof. Ed.) • SAP Decision Support • SAP Business Information Warehouse • SAP Collaborative Room • SAP Supplier Collaboration Services Data collection www.. Strategic analysis Strategy collaboration
    25. 25. Business Process – Supplier Selection (commodity goods) Strategic Sourcing is the process of sourcing a strategic contact for a material group where design collaboration is less important. A request for proposal is submitted to qualified suppliers and responses are evaluated. A contract negotiation phase usually follows. DEFINITION SRM COMPONENTS • SAP Enterprise Buyer Professional • SAP Business Information Warehouse • SAP Decision Support • SAP Dynamic Bidding Strategic Contract Bid Analysis RFQ / Reverse Auction Bidding scenario
    26. 26. Supplier Selection (commodity goods) Create and submit bid Initiate RFQ/Auction Bid analysis and evaluation Determine Winner Publish RFQ/Auctio n SAP Dynamic Bidding • RFQ/Reverse auction capabilities in DB • Initiate RFQ SAP Dynamic Bidding • RFQ/Reverse auction capabilities in DB • Bid invitation via e-mail SAP Dynamic Bidding • Online bidding in DB • Attach document to bids SAP Enterprise Buyer Pro SAP Dynamic Bidding • Contract Management in EB • Integration of DB and EBP SAP Dynamic Bidding SAP Business Information Warehouse SAP Decision Support • Export of RFQ/Bid to BW • Multi-parameter bid analysis1
    27. 27. Supplier Registration • Supplier self- registration • Supplier qualification Design Collaboration • New product design • Collaborative project management Order Collaboration • Account information • Bidding event notification • Order management • Invoice processing • Dispute resolution Supplier Connectivity • Integration broker • Supplier network Collaborative Replenishment • Stock requirement visibility • Supplier managed inventory • Advance shipping notification Reduce administrative overhead for supplier communication Extend process control to your suppliers Supplier Collaboration
    28. 28. Supplier Self Registration
    29. 29. BUYER SUPPLIER Invoice Invoice Sales Order Invoice Confirmation/ ASN Purchase Order Confirmation/ ASN Order/Change order Order responseOrder response Receipt Receipt ERS Invoice Confirmation/ASN Order Collaboration
    30. 30. Benefits • Overall Integration of the departments – Finance, Sales, Production etc. • On Demand Decision making data • Backward Demand Integration • Reduction in inventory cost as real time info is available • Reduction in production bottleneck with better scheduling • Seamless integration across the Supply Chain • Standardization of processes across plants at various locations • Reduction in manual efforts of Invoice Capture • Reduction in Transaction Cost & Compress Cycle time
    31. 31. Delivering Better Customer Service Hero Honda
    32. 32. Hero Honda  A joint venture between Hero group and Honda motor company in 1984  However split in 2010 year end  Discussion Scenario: May 2008
    33. 33. The Speed Breaker Ahead  In 2001 Hero Honda sold 1.3 Million bikes in a single year creating record.  However they had over 20 million customer base and counting across all geographies.  Handling customer complaints and after sales service was a problem.
    34. 34. Old Process Customer Complain Hero Honda Office SAP entry by personnel Call Distributor or service engineer Distributor or service engineer checks stock Office checks for replacement Goes back to distributor or service engineer over phone Part delivered A Few Days
    35. 35. Objective  The objective was to equip people with information even when they are not in office or where they are not able to access the internet  Since everyone carries a phone these days you can push that information with a critical alert, to the right person.  Vijay Sethi, CIO , Hero Honda said: “We wanted information to be available to decision makers when they needed it.”
    36. 36. The Solution  The solution lay in an SMS-SAP implementation that would ensure that the requested information is available in real-time and the problems were eliminated.  The SMS based solution allows a Hero Honda staff to share information with the company’s servers irrespective of their location.  The information is flashed to the key personnel’s mobile phone nation wide, removing their need of logging onto the website.  It was termed as: SMS PUSH-PULL service
    37. 37. The Solution cont…  The solution was initially implemented in two plants of Hero Honda in two phases  SMS push on December 2006  SMS pull on March 2007  Employee strength of 4000  Revenue of Rs.10089 crore  19 bike models at a cost of Rs.7 lakh.  The cost was broken down in two parts  Cost of not getting information  Cost-savings by negotiating with the service provider, to add more value in terms of ROI.  The infrastructure cost for such was not huge. SMS charges are based on the usage.
    38. 38. Benefits  Biggest benefit is that field staff have real time information.  Assisting dealers to cull out any information from the database. The planned, produced and the actual production data is sent as SMS at the end of the shift to all concerned people.  Another application of this is intimation across the board to all the concerned employees in case of any difference in actual and planned production.  A business alert is generated immediately, and sent to the concerned employees, informing them of the change in figures so everyone stays updated
    39. 39. Have a nice day  Thank You