With a need for speed, automotive OEMs and Tier suppliers increasingly need ERP software to deliver data anytime, anywhere via the cloud
By Patrick Waurzyniak
It’s a given that automotive OEMs and Tier suppliers need to get components delivered on time, every time, in order to quickly and efficiently turn around parts to their own customers. With today’s enterprise resource management (ERP) systems, auto OEMs and suppliers alike depend on ERP developers to give them needed mobile access to data that’s often residing somewhere out on the cloud, and automotive customers also need their ERP systems to provide reliable part traceability, particularly in the case of product recalls.
ERP software is a fairly mature market that in 2012 grew at a somewhat leisurely 2% growth rate, according to a 2013 Gartner Group research report. Dominated by a few major developers such as SAP, Oracle, Sage and Microsoft, the top 10 vendors now own almost 64% of the ERP market, according to Gartner. Automotive makes up a big portion of the market, and automotive suppliers have distinct needs not only for data traceability but also in communications, with many auto suppliers relying on the Electronic Data Interchange (EDI) standard for transferring data with their trading partners.
What Automotive Wants from ERP
For most automotive ERP users, customers need an ERP system that has a strong manufacturing execution system (MES) at its core, like the Plex Online cloud-based ERP for manufacturing, noted Jason Prater, Plex Systems vice president, development. Automotive customers mainly want to focus on their businesses, not tinker with an ERP system, he added.
“What they’re not good at is technology infrastructure,” said Prater. “I think it really comes down to a couple of fronts—and a key is managing the shop floor, the MES and ERP. We actually don’t think there’s a segregation there.”
With Plex Systems’ ERP, MES is not an afterthought, as the company’s software originally was created with a manufacturing execution package developed by an automotive user. The integration of ERP with MES is key, Prater added. “We’re starting to get other manufacturing verticals that have the same desire,” Prater said. “You see it in high-cost, high-availability goods, like aerospace, where a bad part kills people.”
Other manufacturing industries, including food and beverage or the medical industry, where there is a high liability threat, also have a need for tightly integrated ERP/MES systems. “In automotive, we see where everybody’s trying to drive efficiency at the workstation,” Prater said. “There’s a lot of up cycle. They want to fine-tune what they run and who’s running it.”
At many Plex automotive customers, such as Avon Gear (Shelby Township, MI) and interiors supplier Inteva Products (Troy, MI), ERP systems are in high demand for managing the plant and other aspects of operations, many of which went through downsizing during the Great Recession. To help manufacturers juggle management of real-time data, Plex recently introduced a new tool, Plex Finite Scheduling, that helps manufacturing operations efficiently plan and manage availability and utilization of employees, tools, fixtures, workcenter space, and many other manufacturing resources in order to maximize shop-floor efficiency and ensure on-time deliveries.
“That’s the focus right now. So much excess capacity was cut out of the automotive industry during the crash,” Prater said. The Finite Scheduling includes capable-to-promise analysis, along with a dynamic calendar and scenario planning for “what-if” analyses, and organizations can plan based on load capacities, with configurable logic, using historical production data and forward-thinking forecasts.
The other major trend for automotive, noted Prater, is having access to the ERP tools that can effectively manage an increasingly globalized supply chain. With the Plex Enterprise Edition, Tier automotive suppliers can much more easily manage their far-flung factory operations, Prater added. “They can run the whole plant, wall-to-wall, or we can take over,” he said. “We actually do that quite a bit.” Plex’s cloud-only ERP system also offers customers its huge data center’s services, located at Plex headquarters in Troy, and also redundancy for customer data with the Plex backup data center in Colorado.
Getting ERP Data To Go
Mobile access to automotive ERP data, whether through an on-premise ERP database or through cloud-based systems, is also in high demand with today’s auto users. “We see a lot of requests from our customers to go mobile,” said Dusty Alexander, president of Global Shop Solutions (The Woodlands, TX). “I was at a customer last week and they were walking around with their schedule on an iPad to tell their employees what to work on next.”
A major factor attracting users to mobile is that many ERP users are hardly ever in their offices, added Chris Pinaire, Global Shop Solutions’ director of consulting. “In a shop, managers are never in their office just sitting there looking at their computers,” he said, “so the ability to move around with a mobile device while talking to their foreman or their employees is critical.”
Another trend is customized applications for ERP, Alexander added, noting that Global Shop Solutions now has created free applications that are available to its customers through the company’s app store. Global Shop recently released Version 2014.1 of its ERP software, which adds new features, enhanced customization and personalization, and updated general ledger history functions. It also adds a new Version Management System (VMS), which is an add-on to the company’s patented Document Control ERP module, that offers several new security features to ensure data integrity with version controls on customer documents.
“The other trend that I’m seeing is an increase in the use of our app store, which contains free applications developed by us or our customers using the Global Shop Solutions SDK [software development kit],” Alexander said. A popular one with users is a Cert app, which provides customers with certifications required for their industry. “The cert app grabs all the material certs that a customer has and it packages them up with the shipment,” he added. “We’re up to 1300 free apps for our customer base.”
On-Time Deliveries Mandated
In the automotive supply chain, auto suppliers typically use the Automotive Industry Action Group’s (AIAG; Southfield, MI) standards for barcoding product labels for delivery, noted Global Shop Solutions’ Pinaire. “A lot of mobile devices are scanning barcodes, so there’s no entry error,” he said. “Some of our older users were manually creating these labels, and with some it was taking 10, 20, even 30 hours a week. They’re all mobile now, which saves them time and money.
“One thing people may not realize is that if you shut down the plant because you shipped the wrong parts, you’re getting fined,” Pinaire said, noting almost everyone uses just-in-time delivery systems. “These fines can be millions of dollars a day.”
Meeting its Minimum Process Requirements (MPR) is a must with any automotive supplier partner for Honda of North America Inc., noted Stewart Baillie, vice president, products, manufacturing, for software solutions provider Epicor Corp. (Austin, TX), which recently released its Epicor ERP version 10. “There is increased pressure around automotive in the supply chain,” Baillie said. “If you’re a supplier of Honda, they’re quite strict. Honda will audit and if you’re not in compliance, it’s costly.”
Honda is setting the standard with its MPR, driving some pretty interesting requirements, Baillie said. “We’re automating some of these things through PLC validation,” he added. “There’s no operator intervention. Our software is basically communicating with the PLCs to recognize if the part has changed, and so there’s no possibility of shipping the wrong one. It’s error-proofing production reporting, so there’s no human involved.”
Many discrete manufacturers need traceability, more in material compliance standards, and outside of automotive, there’s a growing requirement for manufacturers to trace conflict minerals, Baillie said. “These material-compliance standards are getting more strict and less ad-hoc, like with the RoHS [Restriction of Hazardous Substances Directive] standard in Europe for electronics and the handling of dangerous substances like lead, cadmium, mercury, etc.,” he added. “For ERP, basically a lot of these standards are initially just flagging a particular part, and providing overall traceability to prove compliance if audited.
Similarly, ITAR (International Traffic in Arms Regulations) governs trading of aerospace, defense and computer technology that are deemed dangerous for export. “They’re all really frameworks around traceability, audit trails, and reports,” Baillie said. “We’ve got a lot of aerospace and defense customers who want to see continued support of ITAR.”
Automotive and the Cloud
While many ERP users have found a home in the cloud, automotive suppliers as a whole have been somewhat reticent about adopting cloud-based systems. But that may be slowly changing. “The cloud is a big deal. Manufacturing and automotive in particular has been slower in adoption of cloud,” said Jeff Nedwick, director, Automotive Industry Strategy, for ERP developer Infor (New York). There was little built-in automotive content for the cloud, according to Nedwick. “There are a lot of domain-specific enterprise system requirements; what’s needed for powertrain may not apply for body and electrical,” he added, “and automotive has taken more of a wait-and-see approach to the cloud.”
When cloud ERP initially came along, there were a lot of concerns about security, Nedwick noted, but the advent of large Internet-based services, like Amazon Web Services and Microsoft’s Azure system, most of that worry has dissipated. “Most companies are over that now,” he said. “Amazon Web services has been successfully managing that end of it for several years.”
An ERP and PLM developer, Infor recently announced its new Infor CloudSuite Automotive, an ERP solution tailored toward the needs of Tier parts suppliers and auto OEMs. Infor, which counts Ferrari, Nissan and Eberhard among its automotive customers, also recently announced the Infor Automotive Exchange for SyteLine. The exchange is aimed at providing faster, more efficient order demand, shipment, labeling information and improved connectivity for automotive manufacturers, offering users an EDI and release accounting system designed for auto Tier suppliers. The Infor Automotive Exchange includes EDI applications that cover global regions using the X.12, Edifact, Odette, VDA and newer XML standards.
“Automotive customers need to have automotive best practices built into their ERP system,” Nedwick said. “The unique business rules, configuration protocols and EDI transformation rules for every major trading partner are built into Automotive Exchange. That kind of intuitive automotive supply chain collaboration capability is what we do, with EDI mapping capability built-in for seamless data communication.”
EDI Reigns in Automotive
If you’re doing business with automotive suppliers, EDI probably is still the way to go. “In automotive, EDI is still rampant,” Baillie said, “even though the traditional discrete manufacturing company is probably ordering manually. Automotive users are still looking for EDI, whether it’s X12 or Edifact. You have to have all the transaction set supported.”
EDI coding is very specific to automotive, he added. “An 840 is a quote, 850 is a purchase order. An 862 shipping schedule gives you permission to ship in the next few days,” Baillie said.
Among Global Shop Solutions’ customers, many automotive suppliers still use EDI while others instead use customer portals, Pinaire said. “There are a lot that still use EDI,” he said, “but a lot of the big auto manufacturers just have the suppliers download the data from their portal. To be honest, what those portals do is similar to the way that EDI would handle the data, but the responsibility now is on the auto manufacturer’s supplier.”
A disadvantage of using the automotive manufacturers’ portals is that their customers often become frustrated by how inaccurate some information can be, he noted. “If it’s right 60% of the time, that’s pretty good,” Pinaire said. “The big frustration is they can’t trust the information.” This happens often enough with automakers’ customer portals, he said, that after they download the information, Global Shop Solutions’ ERP will run it through an EDI process afterward.
The Big Data Future
With automotive operations, the prospect of leveraging the vast amounts of data collected from automakers’ factory floors or from their vehicles in the field is both daunting and enticing. ERP developers are working on integrating Big Data into in-memory computing analytics engines that work with their databases to crunch very complex data effectively and present it in a meaningful form. To date, these developers include SAP’s HANA (High-Performance Analytic Appliance), the Oracle TimesTen development, Infor’s 10X, and Netezza from IBM.
With telematics data, automakers potentially could get information to help improve product quality. “That’s the part that’s of interest to Infor. Our in-memory analytics can help suppliers of components identify the root cause of product quality problems faster,” Nedwick said.
Mining shop-floor operations data could also help in diagnosing the source of component failures, said Nedwick, noting that in-memory analytics capabilities of Infor’s 10X platform can perform this type of analysis. An example is a manufacturer trying to isolate the source of porous engine castings that result in oil leakage through the castings, Nedwick said.
“You could use deep analytics to identify that kind of a problem by correlating with other external factors and isolating it to a certain shift, a certain time of day, or under certain climate conditions,” Nedwick said.
Automakers leveraging this kind of data from the shop floor could use the lessons learned to improve their product development programs and manufacturing processes, he added. “If you were diagnosing the root cause of a product defect—it could be your manufacturing process or one of your suppliers’ processes—this type of in-memory analytics capability can help you find it faster.” ME
This article was first published in the September 2014 edition of Manufacturing Engineering magazine.
Published Date : 8/19/2014