BITS C489

Project Report on
ERP Implementation in Automobile
Industry

Submitted By:

Group ‘4’

Tarun Kumar 2009H149186P

Puneet Sobti 2009H149196P

Rahul Rai 2009H149189P

Shankar Ramaswamy Iyer 2009H149188P

Raunaq Kothari 2009H149195P

Arjun Mathur 2009H149201P

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Contents
Introduction .................................................................................................................................................. 4

Enterprise Resource Planning ................................................................................................................... 4

Origin of the term...................................................................................................................................... 5

History ....................................................................................................................................................... 6

Integration is Key to ERP Systems ............................................................................................................. 8

The Ideal ERP System ................................................................................................................................ 8

Manufacturing .......................................................................................................................................... 8

Financials .................................................................................................................................................. 8

Human Resource ....................................................................................................................................... 9

Supply Chain Management ....................................................................................................................... 9

Projects...................................................................................................................................................... 9

Customer Relationship Management ....................................................................................................... 9

Data Warehouse ....................................................................................................................................... 9

ERP Systems Improve Productivity, Speed and Performance ...................................................................... 9

Implementation of an ERP System.............................................................................................................. 10

Advantages of ERP Systems ........................................................................................................................ 11

Disadvantages of ERP Systems.................................................................................................................... 11

ERP in Automobile Industry ........................................................................................................................ 12

Automotive.............................................................................................................................................. 12

Common characteristics of the Automotive Industry ............................................................................. 12

Automotive industry challenges .............................................................................................................. 13

How ERP Systems Must Meet the Challenges of Automotive Suppliers .................................................... 14

Working in a JIT environment ................................................................................................................. 14

Reaching Out and Touching Suppliers..................................................................................................... 15

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 Release Management Is More than Letting Go ...................................................................................... 17

And There Are Other Requirements ........................................................................................................ 18

Automotive ERP for Tier 1 Suppliers........................................................................................................ 19

FOR AUTOMOTIVE OEM'S ....................................................................................................................... 20

FOR AUTOMOTIVE SUPPLIERS ................................................................................................................ 21

FOR AUTOMOTIVE AFTERMARKET INDUSTRY ........................................................................................ 21

ERP implementation ................................................................................................................................... 22

SMS Enables Hero Honda Deliver Better Customer Service .................................................................... 22

References .................................................................................................................................................. 24

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Introduction
Enterprise Resource Planning
An Enterprise Resource Planning (ERP) system is an integrated computer-based application used
to manage internal and external resources, including tangible assets, financial resources,
materials, and human resources. Its purpose is to facilitate the flow of information between all
business functions inside the boundaries of the organization and manage the connections to
outside stakeholders. Built on a centralized database and normally utilizing a common
computing platform, ERP systems consolidate all business operations into a uniform and
enterprise-wide system environment.

An ERP system can either reside on a centralized server or be distributed across modular
hardware and software units that provide "services" and communicate on a local area network.
The distributed design allows a business to assemble modules from different vendors without the
need for the placement of multiple copies of complex and expensive computer systems in areas
which will not use their full capacity

ERP, which is an abbreviation for Enterprise Resource Planning, is principally an integration of

business management practices and modern technology. Information Technology (IT) integrates
with the core business processes of a corporate house to streamline and accomplish specific
business objectives. Consequently, ERP is an amalgamation of three most important
components; Business Management Practices, Information Technology and Specific Business
Objectives.

In simpler words, an ERP is a massive software architecture that supports the streaming and
distribution of geographically scattered enterprise wide information across all the functional
units of a business house. It provides the business management executives with a comprehensive
overview of the complete business execution which in turn influences their decisions in a
productive way.

At the core of ERP is a well managed centralized data repository which acquires information
from and supply information into the fragmented applications operating on a universal
computing platform.

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Information in large business organizations is accumulated on various servers across many
functional units and sometimes separated by geographical boundaries. Such information islands
can possibly service individual organizational units but fail to enhance enterprise wide
performance, speed and competence.

The term ERP originally referred to the way a large organization planned to use its
organizational wide resources. Formerly, ERP systems were used in larger and more industrial
types of companies. However, the use of ERP has changed radically over a period of few years.
Today the term can be applied to any type of company, operating in any kind of field and of any
magnitude.

Today's ERP software architecture can possibly envelop a broad range of enterprise wide
functions and integrate them into a single unified database repository. For instance, functions
such as Human Resources, Supply Chain Management, Customer Relationship Management,
Finance, Manufacturing Warehouse Management and Logistics were all previously stand alone
software applications, generally housed with their own applications, database and network, but
today, they can all work under a single umbrella - the ERP architecture.

In order for a software system to be considered ERP, it must provide a business with wide
collection of functionalities supported by features like flexibility, modularity & openness,
widespread, finest business processes and global focus.

Origin of the term

Initially, ERP was first employed by research and analysis firm Gartner Group in 1990 as an
extension of MRP (Material Requirements Planning; later manufacturing resource planning) and
CIM (Computer Integrated Manufacturing), and while not supplanting these terms, it has come
to represent a larger whole. It came into use as makers of MRP software started to develop
software applications beyond the manufacturing arena. However, this does not mean that ERP
packages have typically been developed from a manufacturing core. Many of the major players
started their development of an integrated package from other directions, such as accounting,
maintenance or human resources management. ERP systems now attempt to cover all core

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functions of an enterprise, regardless of the organization's business or charter. These systems can
now be found in non-manufacturing businesses, non-profit organizations and governments.

To be considered an ERP system, a software package should have the following traits:

• Should be integrated and operate in real time with no periodic batch updates.[citation
needed

• All applications should access one database to prevent redundant data and multiple data
definitions.

• All modules should have the same look and feel.

• Users should be able to access any information in the system without needing integration
work on the part of the IS department.

History
Originally, the term "Enterprise resource planning” is derived from manufacturing resource
planning (MRP II). And MRPII had followed material requirements planning (MRP). MRP
evolved into ERP when "routings" became a major part of the software architecture and a
company's capacity planning activity also became a part of the standard software activity. ERP
systems typically handle the manufacturing, logistics, and distribution, inventory, shipping,
invoicing, and accounting for a company. ERP software can aid in the control of many business
activities, including sales, marketing, delivery, billing, production, inventory management,
quality management, and human resource management.

ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K problem in
their legacy systems. Many companies took this opportunity to replace such information systems
with ERP systems. This rapid growth in sales was followed by a slump in 1999, at which time
most companies had already implemented their Y2K solution.

ERP systems are often incorrectly called back office systems, indicating that customers and the
general public are not directly involved. This is contrasted with front office systems like
customer relationship management (CRM) systems that deal directly with the customers or the

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eBusiness systems such as eCommerce, eGovernment, eTelecom, and eFinance, or supplier
relationship management (SRM) systems.

ERP systems are cross-functional and enterprise-wide. All functional departments that are
involved in operations or production are integrated in one system. In addition to areas such as
manufacturing, warehousing, logistics, and information technology, this typically includes
accounting, human resources, marketing and strategic management.

ERP II, a term coined in the early 2000s, is often used to describe what would be the next
generation of ERP software. This new generation of software is web-based and allows both
employees and external resources (such as suppliers and customers) real-time access to the
system's data.

EAS — Enterprise Application Suite is a new name for formerly developed ERP systems which
include (almost) all segments of business using ordinary Internet browsers as thin clients.

Though traditionally ERP packages have been on-premise installations, ERP systems are now
also available as Software as a Service.

Best practices are incorporated into most ERP vendor's software packages. When implementing
an ERP system, organizations can choose between customizing the software and modifying their
business processes to the "best practice" function delivered in the "out-of-the-box" version of the
software.

Prior to ERP, software was developed to fit individual processes of an individual business. Due
to the complexities of most ERP systems and the negative consequences of a failed ERP
implementation, most vendors have included "Best Practices" into their software. These "Best
Practices" are what the Vendor deems as the most efficient way to carry out a particular business
process in an Integrated Enterprise-Wide system. A study conducted by Ludwigshafen
University of Applied Science surveyed 192 companies and concluded that companies which
implemented industry best practices decreased mission-critical project tasks such as
configuration, documentation, testing and training. In addition, the use of best practices reduced
over risk by 71% when compared to other software implementations.

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The use of best practices can make complying with requirements such as IFRS, Sarbanes-Oxley,
or Basel II easier. They can also help where the process is a commodity such as electronic funds
transfer. This is because the procedure of capturing and reporting legislative or commodity
content can be readily codified within the ERP software, and then replicated with confidence
across multiple businesses that have the same business requirement.

Integration is Key to ERP Systems

Integration is an exceptionally significant ingredient to ERP systems. The integration between
business processes helps develop communication and information distribution, leading to
remarkable increase in productivity, speed and performance.

The key objective of an ERP system is to integrate information and processes from all functional
divisions of an organization and merge it for effortless access and structured workflow. The
integration is typically accomplished by constructing a single database repository that
communicates with multiple software applications providing different divisions of an
organization with various business statistics and information.

Although the perfect configuration would be a single ERP system for an entire organization, but
many larger organizations usually deploy a single functional system and slowly interface it with
other functional divisions. This type of deployment can really be time-consuming and expensive.

The Ideal ERP System

An ERP system would qualify as the best model for enterprise wide solution architecture, if it
chains all the below organizational processes together with a central database repository and a
fused computing platform.

Manufacturing
Engineering, resource & capacity planning, material planning, workflow management, shop floor
management, quality control, bills of material, manufacturing process, etc.

Financials
Accounts payable, accounts receivable, fixed assets, general ledger, cash management, and
billing (contract/service)

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Human Resource
Recruitment, benefits, compensations, training, payroll, time and attendance, labor rules, people
management

Supply Chain Management

Inventory management, supply chain planning, supplier scheduling, and claim processing, sales
order administration, procurement planning, transportation and distribution

Projects
Costing, billing, activity management, time and expense

Customer Relationship Management

Sales and marketing, service, commissions, customer contact and after sales support

Data Warehouse
Generally, this is an information storehouse that can be accessed by organizations, customers,
suppliers and employees for their learning and orientation

ERP Systems Improve Productivity, Speed and Performance

Prior to evolution of the ERP model, each department in an enterprise had their own isolated
software application which did not interface with any other system. Such isolated framework
could not synchronize the inter-department processes and hence hampered the productivity,
speed and performance of the overall organization. These led to issues such as incompatible
exchange standards, lack of synchronization, incomplete understanding of the enterprise
functioning, unproductive decisions and many more.

For example: The financials could not coordinate with the procurement team to plan out
purchases as per the availability of money.

Hence, deploying a comprehensive ERP system across an organization leads to performance

increase, workflow synchronization, standardized information exchange formats, complete
overview of the enterprise functioning, global decision optimization, speed enhancement and
much more.

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Implementation of an ERP System
Implementing an ERP system in an organization is an extremely complex process. It takes lot of
systematic planning, expert consultation and well structured approach. Due to its extensive scope
it may even take years to implement in a large organization. Implementing an ERP system will
eventually necessitate significant changes on staff and work processes. While it may seem
practical for an in-house IT administration to head the project, it is commonly advised that
special ERP implementation experts be consulted, since they are specially trained in deploying
these kinds of systems.

Organizations generally use ERP vendors or consulting companies to implement their

customized ERP system. There are three types of professional services that are provided when
implementing an ERP system, they are Consulting, Customization and Support.

• Consulting Services - are responsible for the initial stages of ERP implementation where
they help an organization go live with their new system, with product training, workflow,
improve ERP's use in the specific organization, etc.

• Customization Services - work by extending the use of the new ERP system or changing
its use by creating customized interfaces and/or underlying application code. While ERP
systems are made for many core routines, there are still some needs that need to be built
or customized for a particular organization.

• Support Services - include both support and maintenance of ERP systems. For instance,
trouble shooting and assistance with ERP issues.

The ERP implementation process goes through five major stages which are Structured Planning,
Process Assessment, Data Compilation & Cleanup, Education & Testing and Usage &
Evaluation.

1. Structured Planning: is the foremost and the most crucial stage where an capable project
team is selected, present business processes are studied, information flow within and outside the
organization is scrutinized, vital objectives are set and a comprehensive implementation plan is
formulated.

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2. Process Assessment: is the next important stage where the prospective software
capabilities are examined, manual business processes are recognized and standard working
procedures are constructed.

3. Data Compilation & Cleanup: helps in identifying data which is to be converted and the
new information that would be needed. The compiled data is then analyzed for accuracy and
completeness, throwing away the worthless/unwanted information.

4. Education & Testing: aids in proofing the system and educating the users with ERP
mechanisms. The complete database is tested and verified by the project team using multiple
testing methods and processes. A broad in-house training is held where all the concerned users
are oriented with the functioning of the new ERP system.

5. Usage & Evaluation is the final and an ongoing stage for the ERP. The lately
implemented ERP is deployed live within the organization and is regularly checked by the
project team for any flaw or error detection.

Advantages of ERP Systems

There are many advantages of implementing an EPR system. A few of them are listed below:

• A perfectly integrated system chaining all the functional areas together

• The capability to streamline different organizational processes and workflows

• The ability to effortlessly communicate information across various departments\

• Improved efficiency, performance and productivity levels

• Enhanced tracking and forecasting

• Improved customer service and satisfaction

Disadvantages of ERP Systems

While advantages usually outweigh disadvantages for most organizations implementing an ERP
system, here are some of the most common obstacles experienced:

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 • The scope of customization is limited in several circumstances

• The present business processes have to be rethought to make them synchronize with the
ERP

• ERP systems can be extremely expensive to implement

• There could be lack of continuous technical support

• ERP systems may be too rigid for specific organizations that are either new or want to
move in a new direction in the near future

ERP in Automobile Industry

Automotive
Automakers or automobile manufacturers are companies that both design and manufacture
automobiles. Most of them are based in Germany, Japan, South Korea or the United States.
While automakers are headquartered in a smaller number of countries, manufacturing facilities
exist in a large number of countries. Some countries simply have cheaper labor. Other countries
will encourage or mandate a certain amount of local employment and use of locally-produced
parts before an automaker is allowed to sell in a country.

Common characteristics of the Automotive Industry

Automotive manufacturers share many common characteristics:

• Production based on forecasting.

• Demand driven by economic health and increasingly by environmental regulations.

• Capital intensive.

• Mass production using moving assembly lines.

• Quality control.

• High level of automation in production.

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 • Make-to-order.

• Finish-to-order.

• Engineer-to-order.

• Complex bills of material.

• Just-in-time.

• Just-in-sequence.

• Highly competitive.

• Long lead times from concept to market.

• Planned maintenance of manufacturing equipment.

• Sales through global dealer networks.

• Ongoing research and development.

• Computer Aided Design (CAD).

Automotive industry challenges

The challenges they potentially face are to:

• Reduce forecast error.

• Reduce environmental impact of products.

• Produce energy efficient products.

• Improve time to global markets.

• Compete with increased competition from alternative transport methods.

• Comply with safety and environmental regulations.

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 • Improve efficiency of global product delivery.

• Manage component requirements.

• Manage a large number of component suppliers.

• Control component inventory.

• Manage labor.

How ERP Systems Must Meet the Challenges of Automotive

Suppliers
Being competitive in the automotive industry requires adopting new management
methodologies, such as just-in-time, electronic data communications, and work order-less
scheduling and billing. Packaged ERP systems are now incorporating functionality to support
these new methodologies.

The minimum daily core requirements for business systems used to be financial management,
inventory control, order management, and production scheduling. Competitive pressures over the
past decade have forced the automotive OEMs and suppliers to become lean and mean. Now
more than ever, the industry is run by mandates covering methodologies such as just-in-time
(JIT) manufacturing, electronic data interchange (EDI), order release management, and quality
ratings (QS-9000).

These mandates are more than decrees agreed upon by the participants within the automotive
supply chain. They are really business processes that require unique automotive functionality—a
new minimum set of core requirements—that have not typically been included in enterprise
resource planning (ERP) systems. Here are some of those new requirements being found in the
latest versions of ERP systems.

Working in a JIT environment

ERP systems have roots in the inventory management and work order processing found in
conventional discrete manufacturing environments. However, today's automotive manufacturing

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is more a repetitive environment. This means there's minimal inventory and none of the
conventional order management trappings such as order entry, purchase orders, and work orders.

The latest packaged ERP systems for automotive users would ideally operate without work
orders, while providing all the transactional and planning functionality to support lean
production and flow manufacturing, including planning and shipping schedules releases,
KANBAN (whether manual or electronic), cumulative reconciliation, and advance ship notice
(ASN) transactions.

However, work order-less ERP is unconventional, to say the least. But such systems do exist, in
some fashion. Some ERP systems have been written from scratch with the work order-less,
repetitive manufacturing philosophy in mind. For example, TRANS4M from CMI-Competitive
Solutions, Inc. (Grand Rapids, MI) is a part-number based ERP system that helps provide
complete control and visibility of work-in-process inventory as well as support for pay-point
operations, process work centers, and multiple back flush methods. This ERP system competes
with other ERP systems that have "hidden work orders," says David Schaap, product marketing
manager for CMI-Competitive Solutions, Inc. (Grand Rapids, MI). The hidden work orders help
start and monitor production, but they also require a lot of manual intervention when schedules
are changed after the work orders are released to production. A third group of ERP systems offer
repetitive scheduling functionality, but still require work orders for some functions such as
serial/lot traceability.

Reaching Out and Touching Suppliers

EDI is one of those technologies people refer to as an "enabling technology." Yes, it eliminates
paperwork: purchase orders, release documents, shipping manifests, and other business
documents. Equally important, it creates a real-time communications frame-work throughout the
automotive supplier community that integrates OEMs to suppliers; links OEM and supplier
production, scheduling, and distribution systems together; and establishes an electronic process
to communicate material releases (830), production sequences (866), advanced ship notices
(ASN; 856), shipping schedules (862), receiving notifications (861), payment order/remittance
advice (820), and other transaction sets.

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Ironically, too much paper is still involved in the EDI communications between automotive
supply chain participants. And where there's paper, there's multiple and manual data entry—and
data entry errors. Moreover, EDI communications have mostly been between the OEMs and the
Tier 1 suppliers. That's about to change. Chrysler Corp., for instance, has had several mandates
requiring that its Tier 1 suppliers communicate via EDI. Chrysler Tier 1 suppliers already should
have EDI functionality integrated with their ERP-generated schedules. By July 1998, Chrysler
Tier 1 suppliers were to use EDI to transmit 830s to Tier 2 suppliers. Likewise, Chrysler Tier 2s
are to transmit 830s via EDI to Tier 3s by January 1999.

For this to be possible, EDI and release management instruction sets must be seamlessly
integrated to the financial, production, resource scheduling, and distribution modules within ERP
systems. To date, this hasn't been fully realized because EDI requirements have evolved over
time, and the EDI communications were often managed by service vendors acting as third-parties
to both the ERP vendors and the ERP users. Consequently, current EDI/ERP connections are
mostly customized implementations, requiring additional software development to integrate EDI
data and data fields with the business rules encapsulated in the ERP system.

Newly available, fully integrated, EDI-enabled ERP systems can tie ERP-based data directly to
the EDI transaction sets that require those data. For example, kanban pull signals and the
material requirements planning module within ERP can drive the creation and transmission of
JIT shipping schedules (862s). This ensures that Tier 2 suppliers get JIT schedules and shipping
information in a more detailed and timely manner. Likewise, an ERP system that supports 866
production sequencing operations, including releasing shipment authorization numbers and
number ranges helps suppliers respond to OEM delivery requirements. Other examples can show
how EDI-enabled ERP systems can help shorten production cycles, reduce costs, and ensure QS-
9000 compliance.

Keep in mind, though, that EDI standards are still in flux. General Motors is in the process of
converting from the North American ANSI ASC X12 EDI standards to the European Edifact
standard in the U.S., so packaged ERP systems will need to handle both EDI standards, plus
minor standards such as Odette and VDA.

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Also realize that EDI requirements in general are not monolithic; not all automotive suppliers
need all the EDI functionality that's possible. For example, AlliedSignal, a SAP R/3 user, needs
EDI communications to respond to the requirements of the automakers. But unlike many
automotive suppliers, it also needs EDI functionality to handle a variety of aftermarket
requirements.

Release Management Is More than Letting Go

An outgrowth of JIT, and unique to the automotive industry, is that OEMs and at least the Tier 1
suppliers work according to ERP-generated schedules delivered through EDI and payments
based on ASNs. Again, no work orders, purchase orders, or invoices required.

In doing that, explains Charles Eggerding, vice president, Automotive, for QAD (Grand Rapids,
MI), suppliers don't want to deal with a "three-way match." What he means is that the OEMs or
suppliers don't want to issue purchase orders, receive inventory, and then sit around matching
shipping documents to orders before cutting checks.

Rather, it would be better for the ERP system to track production schedules and generate the
appropriate transaction sets when required. For example, the ERP system matches ASN to
inbound shipments, confirms that the shipment is good, and then remits monies based on an
acknowledgement of the shipment against the contract.

Frankly, some of the flow manufacturing methodologies occurring in the automotive industry
just can't be done manually—or at least not efficiently manually. Release management is a good
example of why computerization, specifically ERP systems, is crucial. For instance, when
working off a blanket agreement based on a schedule rather than on a work order, the OEM will
send a ship-through number to its supplier, such as ship through 15 on Monday, through 30 on
Tuesday, and through 20 on Wednesday. The ERP system must then dynamically calculate how
much product to ship on a certain date based on what was shipped in the past. Any purchasing
agent can do these calculations manually.

Now add to this two other uniquely automotive ordering techniques. First, retro-billing gives
suppliers the ability to go back in time and retroactively change the price of products after they
have been shipped. Second, pay-as-consumed lets the purchaser delay payment for a product
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until it is used, versus when it was shipped. While such ordering techniques are normal, few ERP
systems can create credit debit memos to retroactively bill at a new price for what product was
shipped, let alone used.

According to Brian Finan, Detroit branch manager for J.D. Edwards World Solutions Company
(Southfield, MI), the minimum release management requirements for automotive ERP systems
include cumulative reconciliation, requirement net change reporting, high fabrication and
material tracking, and controlled model year changeover at the part or destination level. Plus,
ERP systems must be capable of managing the variations that all automotive supply chain
participants typically put on the transactions themselves.

And There Are Other Requirements

Bar code labeling and data collection are now ubiquitous throughout the automotive industry.
The Automotive Industry Action Group (AIAG) and the OEMs have labeling standards for
KANBAN, inventory (palletized materials, individual piece parts, subassemblies, and finished
products), release documents, and even labor time and attendance. Some OEMs require bar
coded shipping documents as backup and verification of the shipping manifests and ASNs that
are generated with outbound shipments and sent by EDI. In most situations, standard label
templates are provided, such as the AIAG shipping label.

Many of these mandates—both from AIAG and the automakers—are replacing pre-printed
labeling with the need for both on-demand printing and custom labeling. Because of this,
packaged ERP systems must be able to extract the relevant data for the label directly from the
ERP database. Moreover, because OEM labeling requirements are ever-changing, the bar code
labeling capabilities in the ERP system must be easy to use; that is, the standard label should
only need to be described once in the ERP system.

QS-9000 is another automotive mandate directly affecting ERP systems. Specific QS-9000 tools
are now being included in packaged ERP systems, such as process mapping tools, compliance
tools, supplier analysis, supplier score card, and other types of supplier rating systems. These
tools, driven by the supplier and inventory data already within the ERP system, will help users

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perform qualitative and quantitative checks on inbound and outbound shipments to certify
suppliers for compliance. SAP's R/3 ERP system, for instance has a quality management system
integrated into the purchasing and the shipping portions of the system. This makes supplier
rating an inherent part of doing business.

Of course, this all begs the question: Is specific automotive ERP functionality worth it in the first
place? Absent hard numbers and rigorous research, most ERP user companies feel in their
"virtual gut" that they gain benefits in terms of time, money, and competitiveness. A more
quantifiable response comes from the AIAG. Its Manufacturing Assembly Pilot (MAP) study last
year showed that EDI use at the Tier-2 level would slash lead times and generate savings
estimated at $1.1 billion per year, overall.

Automotive ERP for Tier 1 Suppliers

Requires 12 Specialized Functions

Release Accounting Cumulative records for releases from OEMs and to Tier 2 suppliers

EDI Support: Electronic communication of release and ASN information, both with OEMs and
Tier 2 suppliers.

Lean Manufacturing Production Control Scheduled or repetitive production without work

orders, which minimizes shop floor reporting requirements and supports lot and serial number
tracking.

Bar Code Labeling Shipment Verification Labeling of product to OEM requirements and
ability to explicitly verify shipments and capture serial numbers for ASN.

Sequenced Shipping: Accept "broadcast" for sequencing parts in shipment as they will be used
on assembly line.

Fine Control of Shipments: Tight scheduling of shipment. Delivery windows to customers are
short and there are high penalties for not being on time.

Accounts Receivable Support for Alternate Payment Schemes Evaluated Receipts

Settlement, Pay on Use, Pay on Shipment of Completed Vehicle. Generally no invoice is sent.
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Program Management Support for bidding, estimating, and prototype phases of product.

Feature Based Assembly As Tier 1 players take more responsibility for major subsystems,
they must build and deliver highly optioned products in sequence on progressive assembly lines.

Multi-Mode Manufacturing: Lower volume products, such as heavy equipment parts, as well as
some machined parts do not justify a dedicated production line and are still produced to work
order.

Returnable Containers Track returnable containers sent to OEM or received from Tier 2;
Provisions for "billing" (on ASN) if disposable packaging is used because containers have not
been returned on time.

Global Capability Multicurrency, Multilanguage, and global implementation support.

FOR AUTOMOTIVE OEM'S

• Configured final assembly

• High-volume repetitive

• Sell to dealer and transfer to consumer

• Pricing and promotions management and planning

• Warranty tracking

• Knockdown operational support

• Automotive supplier support

• Quality management

• Centralized and local purchasing

• EDI-enabled release management to supplier

• Prefabricated enterprise data warehouse.

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FOR AUTOMOTIVE SUPPLIERS
• Customer release management enabled through EDI

• Customer releases tied to manufacturing and shipping

• Retro-billing

• Mixed-mode manufacturing (high-volume repetitive and batch process)

• Schedule workbench for simulating, sequencing, and releasing schedules

• Containerization

• Advanced Ship Notices (ASNs)

• Aftermarket support

• Prototyping support

• RAN, DON, and KANBAN support

• Centralized and local purchasing

• Electronic releases to suppliers

• Prefabricated enterprise data warehouse.

FOR AUTOMOTIVE AFTERMARKET INDUSTRY

• Pricing and promotions management and planning

• EDI-enabled release management

• Mixed-mode manufacturing (repetitive and batch process)

• Schedule workbench for simulating, sequencing, and releasing schedules

• Warranty tracking

• Enterprise operations planning

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 • Advanced Ship Notices (ASNs)

• Product/brand analysis

• Quality management

• Centralized and local purchasing

• Supplier schedules with EDI

• Integrated warehousing

• Prefabricated enterprise data warehouse.

ERP implementation
SMS Enables Hero Honda Deliver Better Customer Service
Hero Honda, the world's largest manufacturer of two-wheelers, and a customer base that's over
20 million and counting., was facing trouble to afford real time availability of important
information. An effective ERP system, a unique SMS- SAP implementation solved the problem
of widespread markets for Hero Honda.

If a customer had to lodge a complaint of a defective part for his bike, he would have to walk
into a Hero Honda office. His complaint would then be entered into a SAP system; personnel
from the office would call the relevant distributor or service engineer and tell them about the
defect. It doesn't end there. The distributor or engineer will then check his stock, and revert to the
office. The office will check for replacement stock, and then go back to the distributor or
customer over the phone. And finally the desired part was sent. The whole process used to take a
few days. Hero Honda had to look for a solution to fix this kind of delay.

"The objective was to equip people with information even when they are not in office or where
they are not able to access the Internet," says Vijay Sethi, CIO of Hero Honda. Creating a Short
Cut The solution, as Sethi and his team discovered, lay in an SMS-SAP implementation that
would ensure that the requested information is available in real-time and the speed breakers were
eliminated.

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The SMS-based solution allows a Hero Honda staffer to share information with the company's
servers irrespective of his location. This information is flashed to key personnel's mobile phones
nationwide, removing the need of their logging onto the website. This ensured that
communication needs were resolved quickly. Says Sethi “Now, the moment the complaint is
entered in SAP from anywhere in India, an SMS gets sent directly to the dealer. All the
intermediary people have been removed."

Termed a SMS PUSH-PULL service, the solution uses three main core application elements - a
SAP Handler, a SMS Handler and a DB Handler. "Basically all the transactions happen on SAP
R3, whether it is related to production, sales or anything else. Technically, there is a remote
function service, which goes to SAP, picks up the data from SAP, pushes it onto the SMS server
and using the SMS gateway, we push it to the individual on his or her mobile phone.," explains
Sethi.

Implementing a project of this size was not an easy task, as Hero Honda's sales force and dealer
network is spread in almost every city across the country. The process of integrating with SAP
and fetching on-line data was not a standard function. However, Sethi says confidently, "The
implementation was very smooth.

The biggest benefit from the marketing and sales perspective is that now all the field staff has
real time information. Sethi points out, "Now they don't have to return to ask the back office or
any other department about the status of dispatch. It has helped us a lot in increasing the
productivity."

The solution has helped dealers by assisting them to cull out any information from the database.
Another application of the service is intimation across the board to all the employees in case of
any difference in planned and actual production.

As a company, there are cost pressures coming into the automobile industry and our mantra
would be, given these, how we differentiate ourselves from competitors. This particular
technology is really going to play a major role, even in regular operations today, and also for the
future not too far away," says Sethi. Hero Honda will be proud of the fact that they chose to ride
on a road less travelled. A road, which paved the way for innovation.
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References

1. http://www.cio.in/case-study/sms-enables-hero-honda-deliver-better-customer-service

2. http://en.wikipedia.org/wiki/Enterprise_resource_planning

3. http://www.autofieldguide.com/articles/119808.html

4. http://www.b2bfreezone.com/product-search/erp-automobile-industry.htm

5. http://www.syspro.com.au/industry/automotive/

6. http://www.karkhanisgroup.com/consulting/sap/case-studies/automobile-industry.html

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