a look at the ERP systems used in the automative industry with case studies on Toyota & Volkswagen

1. 104- Ghanshyam Bheda
119- Anuj Shah
128- Aprajita Mehta
311- Lokesh Gada
327- Yuyutsu Tulshyan
ERP in Automotive Industry

2. Present Scenario
 At present time, Indian automobile industry is
making a major contribution in increasing the
country's GDP by 9% every year.
 New heights has been scaled by the industry in
the year 2011.
 In January 2012, total automobile sales
21,14,157 units, an increment of 44.9%
compared to the sales units of same period last
year.
 By 2050, the country is expected to top the
world in car volumes with approximately 611

3. 2 WHEELER
MOTORCYCLE
AUTOMOBILE
3 WHEELER
PASSENGER
VEHICLE
COMMERCIAL
VEHICLE
SCOOTERS SCOOTERETTES MOPEDS
I.C.V. M.C.V. H.C.V.

4. The Key Players…
Commercial
vehicles
TATA Motors, Ashok Leyland, Swaraj Mazda, Mahindra & Mahindra ,Force
motors, Eicher Motors
Passenger
vehicle
TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra &
Mahindra, Daimler Chrysler, Hindustan Motors
Two Wheeler Hero, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors
Three Wheeler Bajaj Auto, Piaggio India

5. Need for ERP in Automobile
Industry
 1) Full Traceability : A system that enables to
accurately track individual bins, containers,
during manufacturing and distribution chain
 2)Quality and Supply Chain Management:
Capability to track real-time data on
manufacturing and supply during production

6.  3) Electronic Document Management: Not only
does this save employees time, it speeds up
overall operations, reduces waste, and
minimizes room for human error
 4) Inventory Optimization: excess inventory is an
unnecessary expense and contrary to the lean
manufacturing processes the enterprises are
embracing
 Inventory optimization is a “must-have” ERP feature
for automotive parts manufacturers as excess
inventory is unnecessary expense

7.  5) Integrated Financials: To trace costs
associated with individual products and
product lines right down to the raw materials
used in production.
 6) Built-in Barcode and OEM Shipping Labels:
Built-in support for printing, reading, encoding,
and utilizing barcode labels

8.  7) Built-in EDI (Electronic Data Interchange)
Templates
 8) Tooling and Maintenance: Specifically
tracks which tools are used as well as the raw
materials used in the making of the product
 how many parts are produced before
replacement or adjustment is necessary to
maintain proper quality specifications.

9. Industry Requirements
 Kanban : Controlling Production and Material
Flow.
 Planning/Scheduling for multiple models at
the same time in assembly line
 Warranty Management
 Just-in-sequence deliveries by suppliers
 Managing vehicle information for vehicle
lifecycle
 Managing dealer business
 Car leasing

10. Different vendors provide different
kind of industry specific solutions.
Selection depends upon the
company and their requirements

11. •Tata Motors
•Hero Honda
Company Implementation

12. Tata Motors
 Since 1945 the largest automotive company
 IT Solutions Provided by Tata Technologies
(Tata Motors subsidiary)
 Huge Employee Base (30000)
 Wide Scale production
 One of the key businesses of the Tata Group
 Very big distribution unit size

13. Why ERP?
 No online real time data available?
 Production Loss
 Legacy systems not integrated
 Inconsistent Data
 Difficult interpretations
 Independent planning systems
 Cumbersome information flow
 To scale up production and increase capacity
 Backward Integration required

14. Tata Motors - Enterprise Software
Vendor

15. Why SAP?
 30 years of working with automotive
organizations
 1600 automotive companies worldwide rely on
SAP
 SAP for automotive designed to help
automotive companies of virtually any size
 Ready made processes for auto
manufacturers

16. Success Factors: TM’s
Consideration
 Improved Sales Revenue
 Cost Reduction
 Reduced Inventory
 Improved Production Scheduling
 Improved Productivity
 Enhanced organization-wide communication

17. What SAP covered?
 Functional and Technical Consulting for
implementation of mySAP portfolio of products
 SAP R/3 Implementations including Industry Specific
Solutions
 BIW, CRM, SRM, APO, SCM, Enterprise Portals
 Change Management
 SAP Implémentation Audit
 Identification of Risk Factors
 Risk mitigation Planning
 Solution / System Optimization
 System Operations Plan

18. Project VECTOR
 Value Enhancement by Collaboration through
Technology & Operational Restructuring
 mySAP SRM 40 implementation
 Mission: Revolutionize the supply chain by
under covering the hidden value through
technology driven Sourcing & collaborative
Purchasing

19. Phases of Implementation
 Phase 1
 Pilot implementation covering:
 four locations for selected product categories and
 four vendors each for direct and indirect materials
 Was primed by SAP Consulting
 Phase 2
 Rollout of mySAP for Direct and Indirect Materials for
balance Product Categories and Vendors covering all
locations.
 Also implement Invoice entry and Approval Modules.
 Was primed by Tata Technologies Limited

20.  1997 : SAP version 3.4
 First implementation was decentralized due to WAN
architecture.
 4 Servers
 3 manufacturing (Jamshedpur, Lucknow and Pune)
 1 sales and corporate services (Mumbai)
 2003 : SAP version 4.6 (Upgradation)
 Single server architecture
 Need to consolidate operations
 3000 users
 20 Modules of SAP implemented

21. October
2004
November
2004
December
2004
January
2005
February
2005
March
2005
April
2005
May
2005
Project Preparation
Business Blueprint
Realization
Final Preparation
Going Live
Schedule of Implementation

22. SRM
Tata Motors has used the following
features
• Self Service procurement.
• Catalog and Content Management.
• Strategic Purchasing Scenario: Spend Analysis,
Contract Monitoring.
• Sourcing Scenario: Rfq
• Supplier Self Registration Module.
• Order Collaboration Scenario with full support for
Goods Movement.
• Usage of SAP Netweaver: People Integration,
Process Integration and Information Integration

23. Tender
Floatation
Evaluation
of tender
Selection
of Vendor
Material
transport &
Documents
Exchange
Material
Acquisition
Purchase Process Flow

24. Business Process – Supply
Strategy Development
Supply Strategy Development is
initiated by assessing the
organization’s supply needs.
Products and/or product groups are
combined into sourcing categories.
Categories are positioned according to
their business impact.
Market information, technology and
industry trends are collected along
with information about the supply
base.
Based on the analysis of this
combined information a supply
strategy is derived for each of the
souring categories.
DEFINITION
SRM COMPONENTS
• SAP Enterprise Buyer (Prof. Ed.)
• SAP Decision Support
• SAP Business Information
Warehouse
• SAP Collaborative Room
• SAP Supplier Collaboration
Services
Data
collection
www..
Strategic
analysis
Strategy
collaboration

25. Business Process – Supplier
Selection (commodity goods)
Strategic Sourcing is the process of
sourcing a strategic contact for a
material group where design
collaboration is less important.
A request for proposal is submitted
to qualified suppliers and
responses are evaluated. A contract
negotiation phase usually follows.
DEFINITION
SRM COMPONENTS
• SAP Enterprise Buyer Professional
• SAP Business Information
Warehouse
• SAP Decision Support
• SAP Dynamic Bidding
Strategic
Contract
Bid
Analysis
RFQ /
Reverse Auction
Bidding
scenario

26. Supplier Selection (commodity goods)
Create and
submit bid
Initiate
RFQ/Auction
Bid analysis
and
evaluation
Determine
Winner
Publish
RFQ/Auctio
n
SAP Dynamic Bidding
• RFQ/Reverse auction
capabilities in DB
• Initiate RFQ
SAP Dynamic Bidding
• RFQ/Reverse auction
capabilities in DB
• Bid invitation via e-mail
SAP Dynamic Bidding
• Online bidding in DB
• Attach document to bids
SAP Enterprise Buyer Pro
SAP Dynamic Bidding
• Contract Management in EB
• Integration of DB and EBP
SAP Dynamic Bidding
SAP Business Information Warehouse
SAP Decision Support
• Export of RFQ/Bid to BW
• Multi-parameter bid analysis1

27. Supplier Registration
• Supplier self-
registration
• Supplier
qualification
Design Collaboration
• New product design
• Collaborative project
management
Order Collaboration
• Account information
• Bidding event
notification
• Order management
• Invoice processing
• Dispute resolution
Supplier Connectivity
• Integration broker
• Supplier network
Collaborative
Replenishment
• Stock requirement
visibility
• Supplier managed
inventory
• Advance shipping
notification
Reduce administrative overhead for supplier
communication
Extend process control to your suppliers
Supplier Collaboration

28. Supplier Self Registration

29. BUYER SUPPLIER
Invoice
Invoice
Sales Order
Invoice
Confirmation/
ASN
Purchase Order
Confirmation/
ASN
Order/Change order
Order responseOrder response
Receipt
Receipt
ERS Invoice
Confirmation/ASN
Order Collaboration

30. Benefits
• Overall Integration of the departments – Finance,
Sales, Production etc.
• On Demand Decision making data
• Backward Demand Integration
• Reduction in inventory cost as real time info is
available
• Reduction in production bottleneck with better
scheduling
• Seamless integration across the Supply Chain
• Standardization of processes across plants at various
locations
• Reduction in manual efforts of Invoice Capture
• Reduction in Transaction Cost & Compress Cycle time

31. Delivering Better Customer Service
Hero Honda

32. Hero Honda
 A joint venture between Hero group and
Honda motor company in 1984
 However split in 2010 year end
 Discussion Scenario: May 2008

33. The Speed Breaker Ahead
 In 2001 Hero Honda sold 1.3 Million bikes in a
single year creating record.
 However they had over 20 million customer
base and counting across all geographies.
 Handling customer complaints and after sales
service was a problem.

34. Old Process
Customer Complain Hero Honda Office
SAP entry by
personnel
Call Distributor or
service engineer
Distributor or service
engineer checks
stock
Office checks for
replacement
Goes back to
distributor or service
engineer over phone
Part delivered A Few
Days

35. Objective
 The objective was to equip people with information
even when they are not in office or where they are
not able to access the internet
 Since everyone carries a phone these days you can
push that information with a critical alert, to the right
person.
 Vijay Sethi, CIO , Hero Honda said:
“We wanted information to be available to decision
makers when they needed it.”

36. The Solution
 The solution lay in an SMS-SAP implementation that
would ensure that the requested information is
available in real-time and the problems were
eliminated.
 The SMS based solution allows a Hero Honda staff to
share information with the company’s servers
irrespective of their location.
 The information is flashed to the key personnel’s
mobile phone nation wide, removing their need of
logging onto the website.
 It was termed as:
SMS PUSH-PULL service

38. The Solution cont…
 The solution was initially implemented in two plants of Hero
Honda in two phases
 SMS push on December 2006
 SMS pull on March 2007
 Employee strength of 4000
 Revenue of Rs.10089 crore
 19 bike models at a cost of Rs.7 lakh.
 The cost was broken down in two parts
 Cost of not getting information
 Cost-savings by negotiating with the service provider, to add
more value in terms of ROI.
 The infrastructure cost for such was not huge. SMS charges
are based on the usage.

39. Benefits
 Biggest benefit is that field staff have real time
information.
 Assisting dealers to cull out any information from
the database. The planned, produced and the
actual production data is sent as SMS at the end
of the shift to all concerned people.
 Another application of this is intimation across the
board to all the concerned employees in case of
any difference in actual and planned production.
 A business alert is generated immediately, and
sent to the concerned employees, informing them
of the change in figures so everyone stays
updated

40. Have a nice day 
Thank You