BI for Automotive

BI for Automotive

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  24 Auto Monitor APRIL 16-30, 2010 VIEWPOINT Drive automotive operations in the fast lane with business intelligence between different locations and suppliers, while increasing qual- o Adapting to change o Using data to identify business Asia Motor Works Uses BI to Cut Costs ity, innovation, and productivity. and process improvements Take an example of Asia its market share. ‘1KEY BI’s access They need a proven combination o I nc re a si ng k now le dge Motor Works (AMW) using SAP to SAP and non-SAP information of shared services, logistics and management for various business processes fulfi ls every department’s needs, outsourcing, so that they can BI is highly sought after in like planning, purchase, produc- aiding quick decision-making. reduce costs, cope with volatile most organisations. Business tion, sales, and fi nance on Oracle Costs have reduced by 20 percent markets and still deliver profits. leaders want to obtain real met- 9i database. However, the SAP and employee productivity has rics in near-real-time, linked standard reports used were not increased by 25 to 30 percent,’ BI gives meaning to data: directly to the business process- sufficient, especially for the sen- said VP-IT, Asia Motor Works, Having a solution geared to over- es, system data and insights from ior management, who required Umesh Mehta. come local business challenges people. The insights derived can data for comparing two different With BI, AMW can now clearly brings many benefits – like accel- be continually optimised, driv- horizons on the same data set, for correlate low sales volumes with erating time to market for new en by business users and their example, warranty cost of prod- high warranty cost in certain Sanjay Mehta products to stimulate continu- increasingly rich knowledge of ucts vis-à-vis sales, purchasing products and spot trends quick- ous demand. how to derive more intelligence trends vis-à-vis sales, sales vis-à- ly, predict risk more accurately M aximise insight for bet- Successful automotive com- and more value from the silos vis product costing. and manage inventory more effi- ter decision making pany requires a continuous of data available to them. The This emphasized the need for ciently, giving them a defi nite — better information stream of real-time updates of resulting visibility and business the availability of user friendly competitive edge. drives better business outcomes: customers, suppliers and com- insight helps all aspects of the MIS reports. Even operational AMW has noticed significant Business Intelligence (BI) helps petitive information. Decision business, whether by driving users required ad-hoc analysis improvements in the bottom line automotive companies move related to sales and quality man- improved product development capability with slice and dice, including increased productivity, into overdrive with improved agement, product development, from field and warranty data, drill-down, drill-through like material cost savings, and a more fi nancial visibility in the busi- and production planning and improving manufacturing oper- functionalities. Insufficient data agile strategy development proc- ness performance and increased manufacturing are dependent on ations by highlighting waste and access slowed down collabora- ess with immediate insight into efficiency of the business users. timely and accurate information. the reasons for lost production, tion and dragged down AMW’s business performance metrics The automotive industry BI in the hands of business users or increasing efficiency in com- users’ efficiency in turn mak- that will help drive future success. today demands more than just enables them to create an envi- plex global supply chains. ing business processes more 1KEY BI has improved the quality the blending of iron and steel into ronment that produces proactive Outsourcing and cutting edge expensive. And with the reces- of information as now it was easi- a car. Given the fiercely competi- and actionable business insights. technology can eliminate waste, sion casting its spell, led AMW to er to notice clear trends by linking tive nature of an industry working Capturing and sharing actionable across both supply and manufac- adopt 1KEY BI. two data sets. Sophisticated to balance demand in new mar- BI is critical to achieving desired turing chains. They help capture The benefits that BI brings are information management of the kets with overcapacity in others, automotive business outcomes, a greater share of the aftersales hard to miss. With improved visi- company’s data helps spot trends effective use of information is specifically improved product market to build custom- bility into business performance, more quickly, predict risk more vital to success. Business users innovation, quality, and overall er loyalty and operate AMW expects to grow by 10 per- accurately and manage invento- have to be given access to action- customer experiences. efficiently. With BI, cent year on year and also increase ry more efficiently. able piece of information in forms BI solutions enable automotive that support the long term goals companies to optimise business • Operating environment are being hit by a relentless stream and needs of such companies. outcomes by: • Outsourcing and off-shoring of disruptions, including: Intense compet i- production • Mergers, acquisitions, and tion and economic • Manufacturing cycle time divestitures downturn has put B) P r o duc t i v it y a nd • Dramatic changes in demand Competitiveness • Changing partnerships • Production equal to demand • Supplier restructurings (supply vs demand curve) • Frequent footprint modifi- • Velocity and flexibility cations that break existing • On-time delivery supply chain linkages C) Costs • Tighter budgets due to fi nan- • Logistics wage cial and economic pressures • Inventory Carrying Costs These disruptions affect the • Outsourced logistics cost entire organisation, not just sup- • Internal logistics cost as a ply organisations. Due to industry percentage of GDP (gross globalisation, demand fluctua- domestic product) tions can jeopardise a company’s • Cost per unit profitability or even its survival. • Opportunity costs Existing supply chain process- • Shrinkage es and systems, while relatively • Insurance and taxes sophisticated, are too function- • Total obsolescence ally isolated: manufacturing • Dist r ibut ion costs data is separate from design data, (warehousing) which is separate from sales data, D) Monitor Business Operations and so on. These systems are also • Percentage of logistics too sluggish because they oper- automotive business can be outsourcing ate using largely historic (often o Speeding product innovation more profitable than ever. • Eliminate /reduction of waste month-old or longer) data. dow nwa rd pressure o Improving the quality and • Project time frame on automotive profit margins timeliness of business Key Performance Indicators E) Effectiveness of Business Important BI capabilities for an and tightened the windows of decisions (KPI) Control automotive company opportunity for new product o Expanding the use of infor- Automotive industr y is • Fill rate BI is a breakthrough technol- introductions. Automotive com- mation and improv ing involved in the design, develop- • Forecasting ogy for collecting and sharing panies continue to respond by collaboration across a global ment, manufacture, marketing, • Gross margin data. While BI does exploit tech- globalising their supply chains supply chain and sale of motor vehicles. BI • Total operating revenue nology advances, it is primarily a in search of lower costs. These o Improving supply chain creates analytical reports that • Cost of goods sold powerful analytical framework longer and more complex supply visibility and minimising pro- work backwards from KPIs that • Hub (logistics network) for using information to establish chains present a number of sub- duction disruptions are directly linked with business • Just-in-Time a much more adaptable, dynam- stantial business and fi nancial o Reducing supply chain and objectives. KPIs could be associ- • Lean logistics ic supply chain. The following challenges, including: other operational costs ated with virtually any kind of • Radio frequency identification BI capabilities can be of partic- o Design-centre-to-dealer time- o Increasing customer revenues, performance objective, including (RFID) ular importance for automotive to-market performance satisfaction and retention improving delivery performance • Lead time companies: o Demand for more innovative o Managing risk and maintain- given optimised inventory levels, F) Inventory Management • Enhancing visibility to data products from increasingly ing regulatory compliance creating a leaner supply chain, • Inventory turns ratio and data-sharing capabilities sophisticated customers o Reducing excessive warranty reducing spare part inventory lev- • Raw materials availability • Creating information-empow- o Excess inventory and an costs and helping to improve els, shortening the new product • Finished goods in hand ered end users incorrect inventory mix in the product quality design process, and improving • Total costs • Improving planning efficien- distribution channels (which collaboration with suppliers. The cy by using real-time versus can lead to further margin- BI improves business per- typical KPI in automotive indus- Economic downturn has after-the-fact data eroding sales incentives) formance: BI helps automotive try could be: further tested the ability of o Long and inflexible lead times companies achieve a number of A) Efficiency of SCM operations automotive companies to accom- Enhancing visibility to data and for critical parts important business performance • Inventory Turns modate abrupt and steep demand data-sharing capabilities o Warranty and aftermarket improvements, including: • Total costs fluctuations. As the spotlight Large automotive companies demands o Reducing waste and costs • Use of Technology increasingly turns toward supply typically have one or more enter- Automotive companies need o Driving product innovation • Document issues chain performance to enhance prise resource planning (ERP) the ability to continuously move o Improv i ng customer • Supply chain disruptions profitability and competitive- environments. BI helps such manufacturing capabilities satisfaction • Supply/demand imbalances ness, automotive supply chains Continued to Page 33
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  CORPOR ATE Auto Monitor APRIL 16-30, 2010 33 Drive automotive business... Continued from Page 24 discrepancy immediately, not at companies provide information the end of the month or quarter, from different perspectives. BI is so they can quickly adjust their superior to ERP reporting capa- plans and execution activities. bilities because it uses advanced BI also improves the prepara- analytic capabilities focused on tion speed and quality of plans empowering managers to make and plan revisions. If an auto- more effective decisions over maker is using an advanced time. BI reports differ from ERP planning engine, then BI helps reports because they utilise data get the most out of it by improv- from functional areas across ing the input data and enhancing the supply and demand chains, reporting. If the company’s not including suppliers. Reports from using an advanced planning ERP tend to be very function-spe- engine, BI helps improve their cific and siloed. BI’s approach planning cycle by quickly and enhances collaboration and accurately consolidating actual spreads responsibility. sales, production, and shipment data from various sources and Create empowered end users systems. The effectiveness of The automotive workforce planning revisions is directly is increasingly evolving into dependent upon the quality of the knowledge worker model. the actual data. Critical decisions will no long- er be made by an elite group (The author is CEO, of managers. Instead, skilled MAIA Intelligence. His views workers down to the plant floor are personal) level will make important deci- sions, some of which could even result in shutting down the line; mundane activities will be auto- mated. These kinds of decisions, of course, should not be made arbitrarily. Workers need mean- ingful and on-time information that is consistent with what oth- ers in the enterprise are seeing, including predictive analytics. BI creates information-em- powered users by giving them the tools they need to efficiently meet their performance goals. For example, with BI a sales man- ager with KPIs to improve sales and dealer satisfaction receives reports on a daily, monthly, and yearly basis that are specifically designed to address these goals and provide insight into what’s driving the actual results. The reporting is structured to sup- port productive collaboration across and outside the organi- sation, and includes dashboard summaries, data drill downs, leading and lagging indicators, and analytical root-cause analy- sis maps — all focused on helping workers meet their KPIs. Timely availability of data in the required format to enable decision-making becomes a chal- lenge for the operational users. BI gives innovative tools and an agile infrastructure to gener- ate the kind of business insights managers needed. Improving planning efficiency by using real-time data Improved planning efficiency is one of the most significant and quickly realised benefits of BI. An automotive company generates a number of plans based on market forecasts, such as sales, opera- tions, and purchasing plans. However, market changes can render those plans ineffective or obsolete well before the managers realise they’re facing significant or minor execution problems, such as an out-of-stock situation, excess inventory, a quality control prob- lem, or a marketing promotion for a product that’s unavailable or no longer worth promoting. Relying on month-old or longer, after-the- fact data forces managers to play catch-up instead of solving prob- lems proactively. BI closes the gap between planning and execution by add- ing the use of real-time data to the planning and plan revision process. As soon as a plan is complete, BI begins determin- ing whether the actual trend is proceeding according to plan. If it’s not, managers learn about the