Automotive: Where Is Supply Chain Software for the Industry Coming from and Where Is It Heading?
By: Gabriel Gheorghiu, Research Analyst, Technology Evaluation Centers February 22, 2010
Analyst Insight: The automotive industry has one of the most complex supply chains, upstream (hundreds of part and accessory suppliers) and downstream (thousands of car dealers, repair shops, etc). Most, if not all, automotive manufacturers use different software systems in different locations, but even at the same location, for different purposes. Often, these systems are old or incompatible, which makes integration difficult.
Three types of business software for the automotive industry can address supply chain functionality needs:
• Supply chain management (SCM) systems for automotive: Some SCM vendors have adapted their products for the automotive industry by offering transportation or warehouse management, real-time visibility, etc. Some of them are: i2's solutions for the automotive industry, RedPrairie's E2e solutions for the automotive supply chain, and the HighJump Supply Chain Advantage suite for aerospace and automotive.
• Dealer management system (DMS) with supply chain functionality: Such systems are very similar to ERP systems, but were specifically created for the automotive and heavy equipment industry and are used exclusively by dealers. Vendors like Reynolds and Reynolds, ADP, Autologica, and Gemini Systems have created interfaces with the systems used by car manufacturers.
• ERP systems with supply chain functionality for the automotive industry: some of the major ERP vendors already including SCM functionality in their products have adapted their offerings for automotive industry players, including suppliers, dealers, and original equipment manufacturers (OEM). Some examples are Oracle's automotive products, SAP for Automotive, and IFS's automotive software.
According to a recent IBM study, it is not the software but organizational barriers that make a lack of visibility the main challenge for the automotive supply chain. In reality, it's both, since no software can work efficiently without well-defined business processes and work procedures.
The situation described above will probably not change significantly in the near future. Car manufacturers will try to find new ways to replace legacy systems and get organized so that their employees and partners can benefit from the latest advances in technology. The only major thing potentially happening is acquisitions of automotive software (DMS or automotive-flavored SCM) by big ERP players like Oracle, SAP, Infor, etc.