SAP Best Practices for AutomotiveSolution Brief

SAP BEST PRACTICES FOR AUTOMOTIVESAP Best Practices for Automotive Industry,Made Easy by SAP

With more than three decades

of automotive experience, only

SAP offers comprehensive

industry solutions that support

collaborative scenarios among

suppliers, OEMs, importers,

and dealers. In fact, over 1,000

Midsize Enterprises in the

automotive industry globally

have chosen SAP solutions as

the platform to help grow their

businesses. SAP Best

Practices for Automotive

supports Midsize Enterprises

that require rapid

implementation, whether you

are a new or existing SAP

customer. It was never easier,

faster, safer and more cost-

effective to implement

automotive best practices

business processes.

SAP for Automotive Innovate, Collaborate,

and Win

In the automotive industry today, there is no shortage ofchallenges. Executives find themselves being pulled in manydirections and struggling to do more with less.

Stable volumes in mature markets and increased competitionfrom emerging economies are putting pressure on prices andmargins, driving shorter product-development cycles, andmaking asset utilization a critical issue. Meanwhile, the costof everything from raw materials to warranties must bestrictly controlled. And customers, of course, have ever-increasing expectations for quality, speed, and flexibility.

At the same time, automotive companies face the growingcomplexity of managing an ecosystem of partners and theirown far-flung operations in markets such as China andSoutheast Asia. The resulting complexity is multiplied by agrowing array of regulations which requires reporting ofdetailed data about consumer complaints, service events, andwarranty claims; and the international material data sheet(IMDS) and RoHS/WEEE requirements for monitoringenvironmental factors.

A More Comprehensive Approach

SAP helps companies meet their business challenges andcapitalize on new opportunities with the SAP for Automotivesolution portfolio designed specifically for the industry.Drawing on more than 30 years of working with automotiveorganizations, SAP enables companies to manage andintegrate critical business processes and collaborate withpartners across the value network.

Today, more than 1,600 automotive companies worldwiderely on SAP solutions. SAP for Automotive supports theentire range of industry processes, including supply chainplanning, manufacturing, logistics, sales and marketing, and customer service.

It provides OEMs with support for everything from researchand development to planning, manufacturing, and vehicleend-of-life considerations. It gives suppliers the tools theyneed to handle product development, engineering, quoting,and procurement processes. And it enables sales and service organizations to manage processes such as vehicleconfiguration, service-parts logistics, and warranty claims among many others.

SAP Best Practices for Automotive Solutions

Designed for Businesses of All Sizes

SAP Best Practices for Automotive supports MidsizeEnterprises that require rapid implementation and largecompanies that want to create a corporate template for their subsidiaries. Whether you are a new or existing SAPcustomer, using SAP Best Practices for Automotive gets yoursolutions up and running quickly.

SAP Best Practices for Automotive describes exactly how bestto implement various key business processes in your system including how to set up and configure your SAP software. These SAP best practices offer an unrivalled combination ofdetailed business documentation that describes first-in-classbusiness practices and includes a complete set of technicaltools and information to help you implement the businessprocesses in the system.

SAP Best Practices for Automotive offer proven benefits. It was never easier, faster, saver and more cost-effective toimplement advanced automotive business processes with SAP.

Highlights

Supplier Collaboration and Manufacturing

Scheduling Agreement Processing with FDS and Invoice Processing FormsThis SAP best practice describes collaboration between anoriginal equipment manufacturer (OEM) and a supplier with regard to forecast delivery schedule (FDS), delivery, and invoice processing. Flexible planning can be used as an alternative planning method.

Scheduling with Invoices and Tracing with BatchNumbers or Serial Numbers This SAP best practice focuses on a collaborative process that uses batch numbers or serial numbers to trace goods.

Scheduling Agreement Processing with FDS, JIT-DS, HUM, ERS, and Returnable PackagingThis SAP best practice describes a business process between an automotive OEM and a supplier. When the OEM requiresa certain part, the supplier uses the information that comesfrom the OEM via electronic data interchange (EDI) toprepare its production planning by repetitive mode. If thereis a requirement for raw material in the production line, the kanban strategy is used. During the logistics process,returnable packaging material, which is not subject to billing, is used, as are handling units.

Scheduling Agreement Processing with Revaluationand Credit Memos Within and Outside Tolerance LimitsThis SAP best practice focuses on the scheduling agreementprocess with revaluation and credit memos within andoutside tolerance limits. After a certain period, the price thathad been negotiated between an OEM and vendor is changed.The vendor agrees to compensate the OEM for the loss invalue that occurs when the current price is lower than theoriginal price. In a situation where the auto-paymentfunction is used, if the credit memo contains an amount thatdeviates from the vendors open items, the difference will beprocessed with a credit memo inside or outside tolerancelimits, depending on the deviation.

Scheduling Agreement Processing with MAISThis SAP best practice describes a collaborative processbetween an OEM and a supplier that is based on a materialinformation system (MAIS) procedure.

Scheduling Agreement Processing with Series/SpareParts and Warehouse ManagementThis SAP best practice describes forecast or JIT (just-in-time)delivery schedule processing, repetitive manufacturing withMRP (material requirements planning), delivery ex works,and picking via warehouse management.

External Service Provider or Logistics Service Provider Scheduling with Consignment StockThis SAP best practice supports component supplyprocessing, with the vendor producing the finished productin repetitive manufacturing. Assemblies, on the other hand,are produced using kanban and purchased parts are procuredusing kanban.

Third-Party Order Procurement with SubcontractingThis SAP best practice supports the business processcollaboration between an automotive OEM and anautomotive components supplier. The OEM and suppliercollaborate via an outline agreement and communicatethrough EDI. The first-tier component supplier producescomponents through repetitive manufacturing and adopts a make-to-order planning strategy. In the procurementprocess, the first-tier component supplier has three types of processes: standard purchase process to second-tiercomponent suppliers, third-party procurement, and subcontracting.

Sales Order Processing with Cross-Company-CodeStock TransferThis SAP best practice provides a description of acollaborative stock transfer between a production plant and a main plant that are in different company codes.

Sequenced JIT Call This SAP best practice focuses on forecast-signal SeqJC, signalfor release to production or release to shipment, SeqJCproduction and picking, and sequence-specific shipping withIDoc transfer.

Summarized JIT Call This SAP best practice supports the creation of a summarizedJIT call from the production planning kanban board or ininbound processing, delivering the summarized JIT call, andbilling the summarized JIT call delivery.

MTO (Make-to-Order) with Repetitive Manufacturing This SAP best practice describes the repetitive manufacturingfor a sales order with enhanced controlling functions.

Quality Management in ProcurementThis SAP best practice focuses on quality inspections duringthe procurement process.

APQP Efficient Project Management with Control PlanThis SAP best practice describes the method and necessaryactions for a project execution process following theAdvanced Product Quality Planning standard using SAP c-Project components.

OEM and Supplier Collaboration (Engineering Change)This SAP best practice describes the detail process for acomplete collaboration project between OEM and Supplierusing SAP c-Project components.

Supply Chain Management

Advanced Repetitive Manufacturing & CMDSThis SAP best practice describes the method to perform a production planning run to cover the requirements,eliminate resource overloads, etc. The main planning tool for this task is the product planning table.

Suppler Managed Inventory (Inventory Collaboration Hub)This SAP best practice describes the collaboration processingwith Inventory Collaboration Hub. With this scenario,Supplier fully manage the inventory of OEM.

Release ProcessingThis SAP best practice describes a variant of SupplierManagement Inventory, controlled by the releasing ofScheduling Agreement.

Service Parts Order FulfillmentThis SAP best practice describes a process to handle the ATPof multiple locations, the parts in the service order can thenbe committed cross location.

KANBAN with ReplenishmentThis SAP best practice describes the way to operate KANBANwith web-interface. In this scenario, the purchase ordergenerated by KANBAN is transferred via XI, to ensure theability for OEM to link to different types of Supplier systems.

From 0 to 100 in 2.5 Month

With the pre-populated solution

accelerators of SAP Best Practices, we

had an impressive average solution fit of

75% across all components from the very

beginning. SAP Best Practices greatly

reduced our implementation effort and cost

and resulted in the time to ROI significantly

exceeding our expectations. SAP has the

deep vertical industry understanding were

looking for as a long-term trusted partner

for innovation-fueled growth.

Frank Jackelen, Global SAP Manager, Kautex

Kautex Shanghai, one of 26 manufacturing plants of the automotivesupplier Kautex implemented an ERP solution from SAP in less than three months. Kautex Shanghai is just one of many Midsize customersbenefiting from SAP Best Practices.

Make-to-Order Process with Configuration Change inVehicle Management SystemThis SAP best practice describes the full process of the vehiclesales on the Sellers side. With VMS, the whole procedure ofthe vehicle sales could be tracked in a single interface, and allthe history data is recorded centrally. This scenario is focuson the make-to-stock planning type.

Vehicle Management System Integration with CRMThis SAP best practice describes a full cycle of the vehiclesales, and how the data can be transferred from the VMSsystem to the CRM system.

Dealer Business Management

Vehicle SalesThis SAP best practice scenario describes the vehicle salesprocess, which involves car manufacturer, dealer/importer,and end customer.

Vehicle Service This SAP best practice scenario describes a full lifecycle forthe dealer to handle the service process, from servicequotation down to service billing. The scenarios also support special functions like vehicle sales order splitting.

Spare Parts Sales and Cash Desk This SAP best practice scenario describes the process tomanage the parts sales, and supports a centralized processingfor the cash business.

Sales and Customer Service

Warranty Processing with Returnable PartsThis SAP best practice describes warranty processing forreturnable parts. Claimant, processor, and reimburserparticipate in this collaborative process.

Warranty Claim Processing with Post-creditingThis SAP best practice describes how a warranty processorcan simply administer warranty claims in the SAP system. All claims entered by the warranty processor areautomatically checked against the conditions (Mileage) in the Master warranty. All financial postings areautomatically performed.

Recall and Warranty ProcessingThis SAP best practice describes how a warranty processorcan synchronize the recall data provided by the reimburserwith the claim data from the dealer (claimant). All theclaims entered by the claimant are automatically validatedagainst the recall data. Validated claims are processed andtransmitted to accounting.

Make-to-Stock with ReservationThis SAP best practice describes the full process of the vehiclesales on the Sellers side. With VMS, the whole procedure ofthe vehicle sales could be tracked in a single interface, and allthe history data is recorded centrally. This scenario is focuson the make-to-order planning type.

Benefits

SAP Automotive Means ROI

A survey of leading companies in the automotive suppliersegment demonstrates that the SAP for Automotive solutionportfolio helps achieve real results. In a benchmarking studyconducted by Stratascope Inc. analyzing trends in keyperformance indicators over the last three years, SAPcustomers in the automotive supplier segment outperformother companies by growing revenue 2.5 times faster,operating with 3% lower cost of goods sold, and utilizingcapital 27% more effectively to generate the same amount of revenue.

SAP Best Practices Benefits

Based on the best business practices of more than 6,000customers worldwide in over 20 industries, SAP Best Practicesdeliver proven methodology, documentation, and pre-configuration that enable rapid, reliable deployment withquick return on investment. SAP Best Practices can reduceimplementation time for complete mySAP ERP solutions to a matter of months and, for individual mySAP componentslike Financials, time-to-benefit can be as short as five weeks.

A recent internal survey of SAP Best Practices customersacross Asia Pacific showed the following:

The average solution fit is 72,5% and a high solution fit is with nearly 70% a major decision criterion for customers.

The average duration of the surveyed implementation projects was reduced by about 27 percent.

The average project core team in a SAP Best Practices project consists of 4,5 FTE, only 50 percent of a non-SAP Best Practices project.

In 75 percent of the projects, the use of SAP Best Practices contributed to a reduction in project costs, estimated between 100,000 Euro and 1 million Euro.

100 percent of the survey participants would again use SAP Best Practices offerings to save time, lower costs and reduce project risk.

The average duration of the surveyed implementation projects

was reduced by about 25%.

Implementation

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We found that most of the SAP pre-

configured best practices were a good fit with

the plants needs. Within days, the team had a

fully documented working prototype and a

plan for how to proceed with a rapid

implementation. In the plant, the SAP system

is now facilitating business processes, giving

us visibility into operations and making it

easier to provide timely information to group

management. By the end of the year 2006,

SAP will be running at four factories and two

of our group offices in Asia.

Daniel Nickle, IT Director, Magna Powertrain

Automotive supplier Magna Powertrain implemented an SAP Automotivesolution at their production facility in Changzhou/China in three months.Magna Powertrain China is just one of many Midsize customers benefitingfrom SAP Best Practices.

www.sap.com/contactsap

(06/07)

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