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GUIDELINES

ERP Selection for Midmarket Automotive Companies

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Automotive-Specific Requirements for ERP SelectionWhen automotive companies look for a new ERP software, they need more than just a solution intended solely for manufacturers. The bar for ERP software in the automo-tive supply industry is high. Norms and business process-es in the area of EDI are integral components, but so are other processes, such as NLK, the new logistics concept from VW and Audi, or in the area of sequencing, String of Pearls from Audi. Many of today‘s suppliers also require support for “distributed production”. Only if the software is multi-site capable can production in all plants be cen-trally controlled and automatic data exchange between individual plants be ensured.

Industry know howBut mastery of the processes is only half the measure of a successful ERP implementation. Suppliers in the auto-motive industry today are under constant pressure. ERP providers in the automotive sector must have answers for continuous delivery readiness and price reductions. In-dustry expertise is essential. Price adjustments and price reductions by OEMs are compensated by the suppliers through the value-added chain. It requires a large degree of transparency. Company key figures, PPM values, own delivery valuations—an ERP system designed for the automotive branch provides this information.

Furthermore, an ERP solution for suppliers should answer questions about the delivery schedule situation, the acceptance of agreed quantities and the quality of the delivery schedules, to determine, for example, whether forecast delivery schedules have been misused as JIT delivery schedules.

• Blanket order management• Delivery schedule

management• Price history • Shipping planning

• Shipping documents• ESP/WLC processing• Container management

ERP SELEcTION FOR MIDMARKET AUTOMOTIVE cOMPANIES

GUIDELINES

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BI reports to analyze delivery

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Sales Shipping

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Internationalization Separates the Wheat from the ChaffAnother important point to consider when searching for an appropriate ERP system for the automotive industry is the international capability of the software. can the ERP provider follow the company abroad, does the ERP system support the local language of the branch office, and does the ERP suite offer financial accounting for the appropri-ate countries? To answer these with “Yes” the provider should have branches in the different countries in which the software is localized. Furthermore, the provider should have an international implementation method. When it comes to selecting a provider, this is where the wheat is separated from the chaff. There are only a few midmarket ERP providers that can do this and have real localizations of their software in the most important eco-nomic regions around the world.

What must an ERP System for the Automotive Industry be Capable of for Data Exchange between Different Pro-duction SystemsIn addition to standard OFTP and OFTP2 transmissions over the internet or XML, data from automotive companies are also transmitted in real time. It’s called high-definition production. This is an essential feature of an ERP system for the automotive supply industry. It enables the soft-ware to prepare better planning data and help eliminate unnecessary stock reserves. With this production strategy vendors receive sequential delivery schedule informa-tion in real time from their OEM. Real-time data include information such as production identification numbers, the corresponding parts numbers, the assembly line, and a sequence number. Automated document exchange between companies is also a part of this strategy. To plan and control production in real time, the different systems should be connected by an MES (Manufacturing Execution System).

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GLOBAL USER SATISFAcTION PORTFOLIO

More than 1,700 companies from 35 countries participated in the “Global ERP User Satisfaction Survey” conducted by the Swiss consulting and analysis firm i2s. abas received the highest international rankings.

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Providers Need to Continue to Develop their SoftwareImportant criterion for the selection of a new business software: Does the provider continue to develop the solu-tion? Particularly in the automotive field, smaller provid-ers have trouble meeting the industry requirements. Mod-ern ERP systems offer the ability to, for example, display changes to the delivery schedule situation and associated production plan changes as well as shipping informa-tion, even outside of the company. Mobility is increasingly dictating daily profession. Solutions from providers are required. The displayed or edited data should be directly reflected in the ERP software. It should also be possible to mobile scan, read and edit work slips. Investment decision: Initial Investment vs. Long-term CostsThe decision to purchase and implement an ERP system is a trend setter for any company. The initial investments to purchase licenses and implement the system are gen-erally dictated by the current business requirements.

But long-term investments to adjust the system to meet changing business requirements and processes are at least as important. Especially in the automotive branch, long-term costs for system adjustments can be signifi-cant, particularly if the business critical systems that need to be changed are difficult to modify.

Adjustments and customizations required to implement an ERP system always bear risks and affect the continued maintenance of the system.

The costs for system adjustments and upgrades are not limited to direct expenses and can spiral out of control when lost productivity is added in. And that‘s something to avoid, particularly in the automotive branch. For this rea-son, the flexibility, modifiability, and upgrade-compatibility of an ERP system are key criteria.

Trovarit AG conducted a survey on the use of ERP solutions on a broad empirical basis. 2,159 evaluations were included in the study. abas was rated the best system for combined satisfaction with flexibility and upgrade compatibility.

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At A glAnCE: WhAT ShOULD AUTOMOTIVE SUPPLIERS KEEP IN MIND DURING ThE ERP SELEcTION?1. Are automotive-specific requirements covered in the software (for example, NLK,

String of Pearls, distributed production)?2. Does the ERP provider have industry expertise?3. Is the ERP solution internationally operable?4. Is the software continuously developed?5. Is real-time data exchange possible (high-definition production)?6. Does the investment review include not just the acquisitions costs, but also the

long-term expenses for modifications and upgrades?7. Is a methodical selection process supported?

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METhODIcAL SELEcTION PROcESS

How to proceed when selecting a new ERP system?countless companies from the automotive branch face this question every year. A methodical selection process helps the company determine whether internal and external business processes can be supported by the ERP systems up for selection. Furthermore, typical bottlenecks should be identifiable.

First MeetingAfter a short list of possible ERP providers has been cre-ated, the providers are invited to a first meeting. Business management and project management should participate in this meeting.

SurveyFamiliarity is essential for successful collaboration. For this reason, the ERP provider should have the opportunity to survey the current situation in the company. The more detailed the company presents itself, the more definitive the decision templates the ERP selector will receive.

Preparing SolutionsAfter the survey meeting, the company data and situation are known. Now the ERP provider should prepare solu-tions and processes. This way you can determine whether the provider understands your company and get an idea of what the software can do for your business in the future.

Workshop with Key Users and Company ManagementA classic, one-sided presentation is only able to demon-strate a limited range of the benefits a new ERP partner provides. That’s why it’s useful to hold a workshop togeth-er with the key users and the company management to go over how the ERP system can help the business optimize inter and intra company processes.

Follow up and OfferAfter the workshop, the ERP provider should leave the workshop documentation with the ERP selector and cre-ate a detailed offer under consideration of the workshop results.

ReferencesA high share in the market or large function range of the software package are not always a guarantee for long-lasting customer support or high customer satisfaction. References provide the greatest certainty when select-ing a software. We recommend visiting users of the ERP package where the software was implemented under similar conditions. Even talking to several users of an ERP software over the phone about their experience in daily operation provides valuable information. Fifteen or more of these discussions provides meaningful input. ERP user satisfaction studies can also be of help in this regard.

The decisionIntense preparation in the ERP selection process gener-ally bears fruit quickly. The more structured the approach, the more transparent the ERP provider’s offer, which in turn provides greater certainty. To get the solution ready for the productive start quickly and safely, all results and solutions from the evaluation process should be included in the implementation of the software.

Participantsfrom yourCompany

• Managing • Director• Project

Management

• Managing Director

• Project Management

• IT• Key User

• Managing Director

• Project Management

• IT• Key User

• Managing Director

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First Meeting Survey Preparation Workshop Follow up, Offer Visits to Customers

Decision

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ThE cOMPLETE PORTFOLIO FOR AUTOMOTIVE AND SUPPLY

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SALES cONTROL + cUSTOMER MANAGEMENT

(cRM)

PRODUcTION cONTROL + ADVANcED PLANNING

PURchASING PRODUcTION PLANNING +cONTROL (PPc)

MATERIALS MANAGEMENT

cRM, Sales, costing, Quotation Management, Webshop/ e-commerce, Mobile Delivery, Mobile cRM, Purchasing, Sales Planning / Forecasting, Document Management

Detailed Planning / APS, Production, MRP

Requisitions, Purchasing, Mobile Purchase, Supplier Relationship Management,

Sales Planning / Forecasting, Document

Management

Production, Work Order Management, Mobile TcI,

cAD Integration

Inventory Management, Warehouse Management,

Mobile cycle count, Mobile Inventory Management,

Scheduling, Materials cost Posting, Sales, Production

SERVIcE PROcESSING

EDI + hIGh-PERFORMANcE LOGISTIcS

FINANcIAL AccOUNTING+ cONTROLLING

PROcESS cONTROL + WORKFLOW MANAGEMENT

BUSINESS INTELLIGENcE + ANALYSIS

MULTI-cOMPANY AccOUNTING

DOcUMENT MANAGMENT

MULTISITE

MOBILE PROcESSES

PROJEcT MANAGEMENT

Service Processing, Service Planner, Service Product, Mobile Service, Mobile Service Request, Document Management

EDI, Automotive & Supply, Mobile Delivery

Financial Accounting, Fixed Assets,

cost Accounting, Materials cost Posting,

Liquidity Planning, controlling

Workflow Management

Business Intelligence with BI standard reports for many areas, Self-service BI

Multi-company Accoun-ting, Multiple company

Accounting, Inter-company Transactions, Financial

consolidations

Document Management with audit-proof archiving

Multi-Site, Inter-company Planning,

Master Data Synchronization

Mobile Apps, e.g. cRM, Sales, Delivery, cycle count, Inventory Management, TcI,

Service, Service Request

Project Management, Project cost Accouting

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An ERP implementation in the supply industry is a lot like building a house. There are approaches that have proven themselves. Building a house begins with a foundation and ends with the roof. A good implementation method is very similar. It should fulfill the goals associated with the ERP implementation with the available personnel and economic resources within a specified time frame and budget. The most important part of the project here

is a mutual understanding of the requirements on the one hand and the functional development of the system on the other. Once this is established, it‘s just a matter of resolving the delta. The strengths and weaknesses of the previous business organization will be analyzed during the implementation; what‘s good will be retained and potential optimizations will be identified.

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AFTER ThE ERP SELEcTION:QUIcKER START ThANKS TO PROVEN IMPLEMENTATION METhOD

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Corina M.Travel enthusiast, hobby photographer,abas Automotive & Supply chain consultant

AnY QUEStIOnS?CAll US AttEl. +49 721 / 9 67 23 - 263OR SEnD An EMAIl: SAlES@AbAS-ERP.COM

ABAS SOFTWARE AG Gartenstraße 67 | 76135 Karlsruhe | Germany | sales@abas-erp.com | www.abas-erp.com

© abas Software AG | As of: December 2016 | Subject to change