Industry Focus Automotive Supply Chain
Holding the key to global expansion F
Mark Morley, director of industry marketing for manufacturing at GXS, takes a closer look at how automotive manufacturers can expand into new markets via the use of global platforms and cloud B2B
aced with a growing need to expand into new markets such as China, India and Brazil and gain market share as quickly as possi- ble, automotive manufacturers increasingly need to set-up production facilities and onboard trading partners in ever shorter periods of time. Many manufacturers have turned to global vehicle platforms to help meet this demand, which sees them sharing designs, components and production efforts across multiple models and types. This in-turn helps to rationalise suppliers and standardise on compo- nents and other sub-systems used in the manufacture of the vehicles. Uniting vehicle platforms naturally provides an opportunity to consoli- date internal IT, business and associ- ated production systems as well. Having a standard vehicle platform that can be used across multiple mar- kets provides the most cost efficient way of undertaking international expansion projects, and Volkswagen (VW) has been a particularly strong example of this. The company owns more car brands than any other car manufacturer and has achieved a high level of commonality across their vehi- cle platforms and parts, whilst at the same time retaining the individual identity of each car brand. VW’s next generation MQB platform will provide a significant competitive advantage in the market, and is tipped by some analysts to be as significant for the industry as Henry Ford’s pro- duction line and Toyota’s Just-In-Time production system. Even though it has taken six years and $70bn to develop the platform, it is expected to see a $19bn saving by 2019.
Rapid global expansion still pre- sents a number of wider challenges for supply chain, logistics and IT infra- structure professionals supporting new facilities, however. To address this, manufacturers should comple- ment the benefits of a shared platform with cloud-based B2B integration to provide the flexibility and agility their expanded supply chains need. In fact, cloud B2B integration and global vehi- cle platforms are remarkably similar across three key areas.
Increased standardisation Common vehicle platforms allow manufacturers to consolidate parts and hence rationalise suppliers,
10 JUNE 2013 Automation
which also helps to reduce inventory levels but more importantly simpli- fies global supply chains. The only downside with introducing more standard parts across multiple car brands is that it significantly increases the chance of more vehicle recalls if a part fails.
This in turn places more pressure on
Above: Mark Morley, director of industry marketing for
manufacturing, GXS
Below: as globalisation
continues, automotive production and cloud B2B environments will share many characteristics - consolidation, standardisation and reduced complexity
the Tier 1 suppliers to increase the qual- ity of the parts they supply to their cus- tomers. Introducing a cloud-based B2B platform helps to standardise the way in which a car manufacturer engages with its suppliers. A centrally hosted suite of Software-as-a-Service (SaaS) applica- tions can be deployed very quickly across an existing trading partner com- munity and they also help to onboard new suppliers in remote locations. Deploying a cloud-based platform can provide a significant competitive advantage when entering a new market. Companies can also standard- ise in other areas, such as using com- munication protocols such as OFTP2 or even a standard message set. The German automotive industry is cur- rently working towards standardising on a new global message set based on EDIFACT, as they find the traditional VDA message set too restrictive when supporting their global operations.
Reduced complexity
Common vehicle platforms allow vehicle sub-systems to be used across multiple vehicles, which helps to sim- plify the production process. The pro- duction environment itself can also be significantly simplified allowing new production lines to be established in new regions around the world in a rel-
atively short period of time. For example Just-In-Time produc- tion has been used for many years, but common vehicle platforms will encourage more ‘Supply In Line Sequence’ (SILS) production to take place i.e. different vehicles being assembled on the same production line. Cloud B2B platforms help to remove the complexity of managing today’s supply chains. From simpli- fying the management of trading partners to improving end to end vis- ibility of global shipments, cloud B2B platforms offer many advantages over more traditional behind the fire- wall B2B software environments. From mediating between different communication protocols, document standards or even integrating with a back end ERP platform such as SAP, cloud B2B platforms help to shield users from the complexities of both deploying and managing a global B2B platform.
As globalisation continues, automo- tive production and cloud B2B envi- ronments will share many characteristics, consolidation, stan- dardisation and reduced complexity. Cloud B2B allows vehicle manufactur- ers to scale their B2B requirements to meet the needs of their global produc- tion environments and associated supply chain network. Increased adoption of common vehicle platforms will help to drive further widespread adoption of cloud-based B2B plat- forms over the next few years.
GXS
www.gxs.co.uk T: 01932 776 047
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