Software adds value to automotive manufacturer supply chain

8th February 2019 By: Thabi Madiba - Creamer Media Research Assistant and Reporter

Software adds value to  automotive manufacturer supply chain

ON DUTY An employee holds a metal casing for an automotive steering system
Photo by: Bloomberg

Software company Syspro Africa’s Enterprise Resource Planning (ERP) software enables automotive manufacturing and distribution companies to manage supply chain and financial processes.

Syspro Africa professional services manager Doug Hunter explains that the ERP software assists automotive completely knocked-down (CKD) and semi knocked-down (SKD) manufacturers and parts distributors in managing their inbound logistics transactions – often from overseas suppliers – by tracking and giving visibility through landed cost tracking linked to procurement.

“The software then manages the inventory movements for parts distributors through their outbound logistics, from central warehouses to retail outlets, where it controls countersales or point of sale to allow for trade promotion and selling. It also controls pricing or discounts per customer and items while maintaining visibility of order profitability.”

In terms of manufacturing assembly, Syspro ERP allows for production planning, as well as the progress of production orders through the factory, in detail or using just-in-time processes such as back flushing.

The Syspro ERP Inventory Optimisation allows for detailed parts demand forecasting linked to the optimisation of inventory mix and holding quantities, whereas the Syspro Manufacturing Operations Management allow for more detailed scheduling and production operations monitoring where required.

Syspro has automotive manufacturer clients in East and South Africa that assemble vehicles from CKD and SKD kits, which originate from overseas original-equipment manufacturers. It also has a number of automotive parts distribution clients who buy or import stock and distribute in bulk or through automotive parts retail outlets to clients.

Meanwhile, Hunter points out that the current weak rand will help South Africa to be a low-cost automotive supply chain for low-volume vehicle categories, but countries, such as China, India and Brazil, are “eating into” the markets that South Africa serves. “If South Africa does not manage production and logistics costs and the rand strengthens, it could have a negative effect, as these countries may take this small-volume business – the right-hand-drive vehicles built for Europe’s non left-hand-drive markets, for example, the UK – away from South Africa,” he adds.

South Africa has a large and growing number of cars with one occupant, which creates traffic congestion and a need for many parking bays. Hunter says that this is influenced by inadequate public transport. However, he states that the growing Uber-type and shared-vehicle traveller process, where a car is called or shared using the Internet only when needed will reduce the number of vehicles on the road, hence, affecting the shrinking automotive industry demand.

Hunter says, to combat this, automotive manufacturers may move into the service provision business where they own and operate pay-as-you-go vehicles to protect their market share.

However, Syspro says there are technological advances in the automotive industry, including hybrid-vehicle manufacturing, three-dimensional (3D) printing or manufacturing of components and Internet of Things (IoT).

Hybrid-vehicle manufacturing is leading to more electronic components and, hence, the demand for the electronics industry, while 3D printing or manufacturing is leading to faster design to manufacture and to stock being minimised.

Further, on-board vehicles are one of the IoT opportunities, such as insurance industry-led driver style – tracker type – monitoring devices that collect data from the engine management computer and other on-board IoT devices. “These pass information using WiFi or the Internet to central servers, where analytics determine insurance rating and premium. These network devices could also be used to plan the next service or order a spare part.

Hunter explains that ordering parts is done not only “over the counter” but also through the Internet, where a Bot “asks” new clients a few interactive questions to determine their needs, after which the part/s will be ordered and processed through the ERP system.

Previous sales linked to economic and other indicators are feeding machine learning and predictive analytics as part of the ERP system, he says. “These help optimise demand forecasting, procurement, manufacture and distribution – the whole supply chain – to help automotive manufacturers and parts distributors provide the best customer service through minimum investment in inventory and, hence, profitability.”