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Supply Chain Solutions for Automotive
Automotive
i2 solutions can help automotive companies make a smooth transition to global supply chain processes. With more than 15 years of experience working with leading automotive companies, i2 has developed solutions that cover the three major business process areas of global order-to-delivery (OTD), supply chain design, and total landed cost and design-to-source solutions. These process areas and solutions also span the four key capability areas of visibility, planning, collaboration, and control. i2 automotive solutions are being used in the production environments of five of the top six automotive companies in the world.
“We chose Service Parts Planner and Demand Planner to solve our problem because there were several key differentiators,” Hayden said. “We found that the other two finalists couldn’t scale to the size of the problem that we had, so that was obviously a big differentiator. The second thing was the ability to use the tool effectively. Compared to some of the approaches that the others were offering, we felt like i2 solutions were much more intuitive and provided our analysts with the ability to understand what needed to be done and how to get the job done.” John Hayden
Manager, Parts Materials
i2 solutions for the automotive industry can enable best practices including:
- Closed-loop (based on plan-do-check-act model) supply chain design, planning, and execution processes
- Total landed cost sourcing
- Global demand and supply capacity management
- International supply chain visibility and event management
Key challenges faced by automotive companies include:
- Transforming from local to global organizations and processes: Most automotive companies are organized by region with little-to-no interdependency among regions. As a result of globalization, these companies are likely to move to a primarily functional or process-oriented organization that spans regions, time zones, languages, and cultures. As different markets begin to share platforms, parts, and capacity supply, companies will have to develop new processes to quickly aggregate and disaggregate their demand, balance it against global supply, and perform intelligent allocation of constrained supplies to the “right” demand. Sales and operations planning processes will require increased attention since events and decisions in one part of the organization will now have a truly global impact.
- Total landed cost sourcing: When does it make business sense to source from a low-cost country? In a local model, companies typically make parts sourcing decisions based primarily on part-piece-cost and traditional supplier score-carding. With the shift to a global model, companies cannot base their sourcing decisions solely on traditional metrics. They will have to consider additional supply chain factors such as inbound lead times and associated variability, supply chain risk, protection of supply, and logistics costs, as well as risk and inventory costs. Failure to do so could result in increased costs, limited supply chain flexibility, and decreased customer responsiveness.
- Transportation focus: In the current model, transportation is a low percentage of overall costs (compared to parts and labor). Most companies do not consider transportation a core competency and outsource it to third- or fourth-party-logistics companies (3PLs or 4PLs). These companies perform the design, planning, and execution of the logistics networks, providing a turnkey service to their customers based on contracted SLAs. Globalization will increase both inbound and outbound transportation (“move”) activity. As a result, transportation costs will increase, especially as a percentage of overall costs. This will cause automotive companies to rethink their approach to transportation. Many (if not most) will take want to own the design, planning, and control of their logistics network while leaving execution with the outsourced service providers.
- Supplier collaboration, visibility and event management: In today’s local mode, automotive companies have developed people-based processes to gain visibility into significant events. While people will always be integral to any business process, a systematized approach is necessary to be effective, given the diverse time zones, languages, and cultural business environments of the global automotive industry. In order to respond to customer queries such as “Where is my order?” companies will require scaleable, repeatable, and globally consistent processes and systems to track orders, inventory, in-transits, and other information across global facilities, suppliers, transportation networks, and disparate information systems.
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Automotive SCM Solutions
Case Study
Steering Success Parts Management at Freightliner
Realizing that they were missing revenue opportunities and jeopardizing customer service by not having the right parts in stock at their dealer locations, Freightliner executives knew they needed to implement a third-party inventory management solution. Through Internet-enabled collaboration powered by i2 solutions, Freightliner has improved inventory turn rates and service levels, increased inventory revenue, and decreased working capital investment.
Success Story: Steering Success Parts Management at Freightliner
Video: Watch Now
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