Different sectors of the auto industry are finally showing signs they are ready to change their computer automation to a new-generation of software that could seamlessly link manufacturer and supplier computer systems.
The new system - called enterprise resource planning (ERP) -features flexible and multi-functional software linked with electronic data interchange (EDI).
Only 10 percent of the worldwide automotive industry uses ERP. Computer experts say the industry has only begun to accept ERP in the past four years, several years later than most other major industries.
The major obstacle is the incompatibility of ERP with the current specialized and so-called legacy systems that are heavily used by both suppliers and automakers. Industry investment in ERP has also stagnated because of fears existing systems may have millennium bug problems and the feeling those need to be solved before new computer technology investments are made.
'Most OEMs have developed their own unique computer systems and software over the years and their specialization has reached such a high level that new-generation software only covers 30 percent of their requirements,' said Ruud Vossebeld, business development manager at Vanenburg Business Innovation. Vanenburg's company works closely with Netherlands-based Baan, a leading European software supplier to the automotive industry.
Despite the problems, experts predict use of ERP software will grow to cover 50 percent of the industry worldwide over the next few years. The fastest growth is expected in the US, where automakers quickly made the decision to move into new computing technologies and now lead in software innovation.
Japanese carmakers are the furthest behind because they were among the first to use product automation - and so they stay married to the old-fashioned IT systems.
The European automotive industry is somewhere between the two continents. 'In Europe, carmakers are experimenting on a project-by-project basis, country-by-country,' Vossebeld said.
ERP is advanced universal software that appeared more than 15 years ago. It allows many information technology functions to be integrated in one computer system. EDI helps to create compatible interfaces between ERP systems.
ERP has made some breakthroughs in the European supplier industry. CMI, the American-based software supplier to the automotive industry, recently started doing business in Europe. The company said all 400 of its clients already use ERP. A typical ERP software program costs about $15,000, but large installations can cost much more, said Bob Osborne, a spokesman for CMI in the UK.
Often, suppliers switch to ERP because automakers have made the changeover and they need to link up their supply chain systems, said Osborne. Most IT systems in the automotive industry are related to logistics, like order planning, just-in-time and kanban delivery, warehousing or release orders by the OEMs. Accounting, such as retro-billing of suppliers and OEMs, is another ERP function. ERP also has a direct effect on manufacturing processes. It measures zero-defect performance.
'It enables suppliers to monitor themselves. But it also helps to utilize stampings and other tools more efficiently,' Osborne said.
ERP can also be applied as operational production software. But Vossebeld said because of high specialization, the need for special interfaces sometimes does not require full integration of ERP with actual manufacturing operations.
Further applications of ERP can be enhanced by additional functionality. Current applications are configured for use in one location, with EDI serving the interface role. 'The trend is to create new solutions offering a fundamental overview system which will give management information,' Vossebeld said.
Additional systems and programs are also likely to improve overall IT properties. Increased use of the internet in IT is expected to be a major driver for ERP acceptance. 'The Internet and e-commerce will improve compatibility of systems. They will bring a major change by virtue of blending the supply chain with inventories,' said Wilhelm Zwerger, who heads the industry business unit at SAP, a major German supplier of software to the automotive industry.
The internet will allow manufacturers to order parts and components directly without EDI. 'But because of the large number of internet standards and variants, plus the risks of network disturbances, the need for ANX (automatic network exchange) is apparent,' said Osborne. ANX uses internet technology in combination with EDI. 'ANX uses the best of both worlds,' he said.
But Vossebeld cautioned that while the internet opens great opportunities in interactive one-to-one processes, 'in business to business relations, its application might still be early.'