How to implement ERP for the automotive business

Alexandra Datsenko is a Technology Research Analyst at software development company Itransition. She tells us what to consider before implementing ERP

Automobile industry innovation is impossible if manufacturers continue to rely on outdated processes. Companies need a solution that manages enterprise data and optimises operations to keep pace with the changing market demand and ensure high performance. 

Enterprise resource planning (ERP) can streamline all business processes. However, implementing ERP can be a complex undertaking. At Itransition, professional ERP consultants can help you build a viable plan and seamlessly integrate ERP into your automotive business. 

Still, we recommend considering the following factors before investing in and implementing automotive ERP in your business.

Things to consider before implementing ERP

An automotive ERP system with all its features is a worthwhile addition for an automotive company with multiple complex processes that require optimisation. However, before implementing automotive ERP, take note of the following factors:

Requirements of your business

When you know precisely why you need an ERP, make a detailed list of all the requirements for the system. Include top managers and regular employees to learn about their views regarding the software. Make a comprehensive assessment of your business needs and identify processes that require improvement. Prioritise factors based on their benefits and urgency.

Company readiness

The first step is to ensure that your firm has the necessary human and financial resources to support ERP software. It's also worth checking that your employees are ready for a change. Implementing an ERP system will take a lot of time and effort, and if your company has other issues prioritised, you should postpone the implementation to a later date.

Budget

An automotive ERP system will serve you for a long time and help improve your business processes and streamline operations. When planning your budget for ERP, determine the requirements for the new system and whether you have enough in-house expertise to support it. 

The ERP cost largely depends on the deployment model – cloud-based or on-premises – and the critical functionality and integrations required. In the case of a cloud-based ERP, which quotes the cost per user, it is important to define how many people will use the ERP to plan your budget accordingly. It may also be more cost-effective to turn to third-party experts or a vendor implementing the ERP for support and maintenance services than hiring an in-house IT team.

ROI

As a business owner, you set up reporting and calculate return on investment (ROI). Implementing an ERP solution, you should estimate all the additional costs it may entail. Calculate ROI after allocating the associated costs and considering benefits over time. Make sure that the ROI of your ERP meets your firm's requirements. 

How to choose a suitable service provider

Choosing the most appropriate ERP service provider for your company should be done based on the standards and requirements of the firm. Consider the following factors:

  • Long-term continuity. The vendor's track record speaks for itself. An established ERP vendor is well-positioned in the market and has implemented multiple successful ERP projects.
  • Industry-specific expertise. Look for an ERP vendor specialising in your industry and considering your business's uniqueness. That way, you'll save time and effort, reduce customisation, and have a faster implementation.
  • Successful implementation. An ERP provider should have enough expertise to adhere to the implementation plan. Read reviews from other customers in your industry to make sure the ERP vendor delivers on its promises.
  • Post-implementation support and training. Look for a vendor that will support the system even after integration and can create materials available for employees to learn.
  • Prevent application erosion. Your vendor should be able to provide information on what's available or coming in a future release, auditing the system so that your ERP uses its full potential.

ERP that does not meet compliance standards can bring down your entire business and leave a lot of hassle for your employees.

ERP services for the automotive business 

Different ERP solution providers offer specific features and functions according to the automotive industry specifics. Here's a set of basic ERP features to consider when making your choice:

  • Finance management and accounting
  • Inventory management
  • Supply chain and sales management
  • Control of business processes, projects, and human resources
  • Product quality control
  • Vendor management
  • Customer relationship management
  • Electronic document handling 

Before choosing a particular solution, you can determine whether a specific ERP supports all the necessary functionality.

Integration with other systems

Every organisation has some systems to support its business processes. The new automotive ERP system should be able to access, read and process data from other corporate systems. For example, the following solutions can seamlessly integrate with ERP:

  • CRM to store and manage information about potential customers and buyers 
  • HCM for storage and management of employee databases, payroll management, and staff development 
  • EAM to allocate funds according to priority work orders and purchase planning 
  • BI to visualise and analyse data, predict and model possible business scenarios
  • EDI to automate communications through streamlined data exchange between suppliers and customers

Future scalability

Make sure that the ERP system will grow with your company. If the system cannot expand and support your business's growth, it is not the best ERP for your company.

When choosing a system or partner that provides automotive ERP integration services, it's worth discovering if the offered solution can be customised, upgraded, and scaled. In addition, if you choose an ERP provider, check out their previous commitment to maintaining a future scaling strategy.

ERP implementation roadmap

ERP implementation for an automotive enterprise comprises six basic steps.

Planning

The first phase of an automotive ERP implementation includes finding a system provider, establishing a project team, and defining detailed system requirements.

The main goal of the project team is to understand current problems, process inefficiencies, and ERP requirements. For example, suppose you have found a service provider and identified common business problems and implementation goals. In that case, the team can use this data to conduct a more detailed analysis and document existing business processes.

Designing

A new automotive ERP system is designed based on detailed requirements and an understanding of current workflows. This includes developing new workflows and other business processes that take advantage of the system. Based on the specifications, the project team describes the system architecture and designs the solution prototype with layouts and UX/UI diagrams to display ERP workflows.  

Development

The development phase includes:

  • Front-end and back-end development
  • Integration of the software with other corporate systems that the ERP system will not replace
  • Database setup for data storage and migration

 

Here, the supplier’s team creates training materials to help employees adapt to the new system and plans for data migration. 

Testing

The project team tests ERP modules and features and develops fixes or adjustments based on the results. Initial testing of the core automotive ERP is followed by thorough testing of all system features, including allowing some employees to test the system for their day-to-day activities. 

Deployment

Depending on the deployment model of your choice, the final ERP system is rolled-out on-premises or in a cloud-based environment. A cloud-based ERP system is usually provided as a subscription service and can be implemented more quickly. 

The automotive ERP provider's team should be ready to help users understand the system and troubleshoot any issues. Employees may also need time to adjust to the new solution and achieve the expected productivity gains.  

Support

Once the ERP system is up and running, the project team provides sufficient user support to accelerate implementation among employees and help them adapt to the new day-to-day business processes. 

If you have an on-premises ERP system, you'll need to install software updates and upgrade your hardware periodically. If you use a cloud ERP system, your vendor updates the software automatically.

The bottom line

Whether your business is producing cars and components or selling them, you will deal with accounting, take care of your employees, keep track of inventory, and monitor deliveries and workflows.

With so much to do, you can miss out on vital aspects, which can be disadvantageous in the long run. Therefore, a highly adaptable ERP can help to build a smoothly-running operating process in the evolving automotive industry. Follow the implementation tips to make a well-informed decision about the ERP system best suited for your business needs.



Alexandra Datsenko, Technology Research Analyst at Itransition.

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