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Why ERP is Crucial to the Automotive Industry

The automotive industry plays a massive role in the global economy and delivering high-quality goods and services compliant with IATF 16949 has never been more important. Leaders and management of companies working in the sector are now making more critical decisions to improve operations and efficiency in order to push ahead in a competitive market. One key consideration for businesses is choosing the right Enterprise Resource Planning (ERP) system for their specific needs. In this article, we're going to look at the features and benefits of Automotive ERP and why it should be a priority for the industry.

What is Automotive ERP?

Automotive ERP systems plan, manage and deliver specific functionalities that support the manufacturing effort throughout businesses working in the industry. The software is used to manage day-to-day business activities and collects data on internal processes to adapt to disruption and challenges quickly and effectively. ERP also allows the flow of data between these internal processes to plan, budget, predict, and report on financial results with improved accuracy, eliminating data duplication and providing greater integrity.

Why are ERP Systems Valuable?

A study by CIO Magazine published in 2008 surveyed business leaders to find out how ERP systems had influenced their core operations. 85 percent said that ERP software was vital to the way their organization operated and they “could not live without them”. Automotive ERP can be integrated into any organization, but it does require a considerable amount of time, investment, and cooperation between the management team. Once successfully rolled out, ERP is invaluable and provides a competitive advantage in a global industry that faces a growing demand for electric vehicles, autonomous vehicles, and connected mobility. Businesses can expect inventory management, the integration of various value chain activities, enterprise visibility and more.

Features and Benefits of Automotive ERP

In this section, we we'll look at the reasons why organizations in the automotive industry need to implement ERP systems. The following features and benefits of Automotive ERP will support modern manufacturers that regularly handle components of different sizes and varieties across a range of workstations:

  • Increased Real-Time Data Access: Automotive ERP systems streamline the information flow within an organization. Accurately collecting data from every department gives management teams the power to make informed decisions about internal processes. The data collected by this software includes resource availability, employee management and manufacturing statuses.
  • Reduced Costs and Higher ROI: ERP systems will work to consolidate the fragments of software systems businesses already use. Uniting product development, finance, supply chain management (SCM), customer relationship management (CRM) and inventory management systems into a single interface will improve cost efficiency and optimize business processes.
  • Automation of Tasks: All reports and sheets are electronically generated, meaning it doesn’t require an employee to manually generate delivery notes and invoices. This saves time, money, and effort, while eliminating the risk of human error.
  • Enhanced Collaboration and Communication: Sharing of company data in real-time, accessible databases, and enhanced security all contribute to improved collaboration and communication. Different teams around the business can share and access information on a single system, allowing them to work more efficiently together.
  • Improved Customer Support: Automotive ERP systems enhance quality assurance processes and reports. It will manage receiving, delivery inspections, bin management, quality control and a Material Review Board. Management can use this to take quick and decisive action when there are issues or faults, ensuring customer demands are always met on time with the highest possible quality.
  • Optimization of Resources: ERP solutions and the data they collect on production helps manufacturers develop a lean supply chain and ensures optimum utilization of resources, improved lead time, and reduced waste.
  • Greater Employee Efficiency: Using ERP systems automates operations and eliminates data redundancy. This improves employee satisfaction and efficiency, and a happy workforce is more productive. All the data collected by ERP software can also be accessed with handheld devices, enabling employees to work remotely. This can increase employee retention and help attract new staff.
  • Compliance with Rules and Regulations: All organizations in the automotive industry must comply with regulations under the Sarbanes-Oxley act and Federal Information Security Management act. With Automotive ERP systems, the ability to generate and manage secure reports to submit to regulatory bodies makes it easy to be compliant. The traceability provided by ERP also lets you know if parts are defective or certain processes aren’t up to spec, another important factor when it comes to complying with government standards.
  • Inventory Management: Manufacturers rely on stable inventory and production processes, but ERP systems can improve it further. Problems like holding costs, excess inventory and deliveries not arriving on time can all be avoided by using ERP systems. Businesses can expect leaner operations, synchronized delivery of raw materials with the start of production, and accurate data on their inventory.

There is no doubt that ERP systems can greatly improve internal processes and efficiency throughout the manufacturing process, but it can be costly to implement and leaves management teams with an important decision to make. You need to identify specific goals and consider whether ERP can help you meet these targets. Consider the following:

  • Do you want to improve customer support, inventory management and overall transparency?
  • Are you looking for improved efficiency throughout your manufacturing process?
  • Are you looking to expand and grow without incurring unnecessary costs?

If you’ve decided your business would benefit from Automotive ERP software, Plex’s Enterprise Resource Planning platform provides enterprise accounting and consolidation, financial management, human capital management, suppliers and purchasing management and more advanced capabilities.