The Pain and Gain of Integrated EDI Part Two: Automotive Suppliers Gain
Written By: Predrag Jakovljevic
Published On: March 22 2005
What Are Automotive Leaders Doing?
The global automotive industry is becoming leaner, faster, and less forgiving than ever before. Product life cycles are shorter, customer requirements are stricter, business is dramatically more international, and profits are increasingly harder to squeeze out of any enterprise's day-to-day business operations. Infor Global Solutions Discrete Group focuses on providing deep vertical expertise to the automotive and discrete manufacturing markets.
Infor, formerly called Agilisys, has had over a dozen acquisitions over the last few years, including Lilly Software, and Mercia Software. Its most recent acquisition is MAPICS, which has yet to be finalized. With all of these acquisitions, this active enterprise applications provider has pledged to pursue an "assembler" vendor strategy rather than a "consolidator" strategy. Consolidators provide solutions to disparate customer bases with minimal or no integration between acquired assets. Acquisitions are driven by the desire for a larger scale or a specific, improved financial model and set of metrics. The assembler vendor strategy, however, is driven by specific vertical requirements and a solution model. Acquisitions are driven by the strategy of providing enterprise solutions with "best-of-both-worlds" functionality and domain experience.
Ultimately, the winner in the market will have to provide industry-specific solutions that solve essential problems that others cannot. This includes deep domain experience coupled with industry-specific product functionality to insure successful implementations; an integrated suite of industry-specific products that satisfy current customer requirements; and an enhanced roadmap for customers' potential long-term needs. For more information, see If Software Is a Commodity— Can You Still Win Some Competitive Advantage?).
This is Part Two of a three-part note.
Part One detailed the pain of integrated EDI.
Part Three will discuss the gains of other industries and make user recommendations.
Infor Automotive Essentials
The Infor Automotive Essentials product suite has been developed specifically to benefit manufacturers in the automotive industry. Today, seventeen of the top twenty-five automotive suppliers worldwide apparently use parts of solutions found in Infor Automotive Essentials. The automotive discrete industry is an example of Infor's strategy to combine "best of breed" components into a "super breed" suite.
While recently acquired products like Lilly VISUAL Enterprise are yet to be properly digested and positioned, most of the current automotive suite has come from Infor's earlier successful acquisitions of Future Three and BRAIN AG. Both have long been focused on Web-based software capabilities and domain expertise in automotive supply chain communication and execution, as opposed to traditional enterprise resource planning (ERP) systems in various industries.
The automotive industry has unique characteristics that make it highly conducive to Internet-based supply chain optimization and collaboration. For example, a car's or an engine's bill of materials (BOM) lists many intricacies and entities for building that product. The result is a maze of automotive needs, and manually checking and tracking every detail is a Sisyphus task. To make things manageable, information transparency and supply chain integration are the name of the game, and its e-business technology that enables them. Both BRAIN and Future Three had long helped automotive companies, their suppliers and original equipment manufacturers (OEM) cut through the seemingly endless lists of manufactured parts. They had offered (and sometimes had competing) suites of automotive-focused supply chain communication applications that integrate into multiple ERP systems.
Nowadays the platform agnosticism of Infor stems from the need for stronger market competitiveness and from its customer base's homogenous back-office population. While many existing customers may run on one of BRAIN's ERP solutions (such as Xpert Manufacturing System, which runs on IBM's iServer or TRANS4M, which runs on UNIX and Microsoft Windows server platforms), many others likely have legacy systems or systems from other vendors that will not likely be replaced any time soon. For more information, see How Much Wisdom Will BRAIN Bring to Agilisys? and Examples of How Some Mid-Market Vendors Might Remain Within the Future Three (Dozen)?
Thus, the BRAIN North America subsidiary developed its e-Automotive Suite of B2B communication and collaboration applications. The suite also included SupplyWEB Enterprise, a Web-based system for communicating procurement, shipment, payment, supplier performance, and many other types of information, catering to almost every type of communication an automotive company has with its suppliers. With the SupplyWEB version 6.0, BRAIN expanded the Internet-based product's appeal by merging European and US/Canadian functionality to better support manufacturers with plants on both sides of the Atlantic. The enhancements of SupplyWEB 6.5 furthered and included functionality in key areas such as e-kanban, and added visibility in supplier managed inventories (SMI) and additional application programming interfaces (API).
Consequently, nowadays the Infor SupplyWEB solution also ensures that the user's enterprises suppliers are providing the right materials on time and in a cost-effective manner. It attempts to optimize the entire supply chain and provide more potential for supply chain control and cost savings. The solution gives users near real-time oversight of multiple replenishment methods, such as the SMI, electronic kanban, material releasing, and purchase orders. The solution also incorporates supplier evaluations and shipment tools like bar coding and shipment notification. Both EDI and Internet-based supply chain communications tools are incorporated, automating processes via Web-based communications for suppliers that are not EDI-capable. The idea is that all suppliers share information from the user enterprise's planning and execution functions almost in real time. The open-platform product gives users access to their supply chains from virtually anywhere in the world and is used today by over 20,000 automotive suppliers.
Infor's Automotive SupplyWEB solution thereby aims to help user enterprises to reduce inventories, minimize premium freight costs, reduce administrative costs, and enable lean manufacturing throughout their enterprises. It also works within the users' supplier management criteria to track supplier performance, project future performance, and alert everyone to out-of-bounds behavior. The nature of the global automotive supply chain means that the suppliers must be tightly integrated into the trading partner's enterprise, whose supply chain communications and management capabilities need to be able to manage that critical relationship.
Most recently, on February 21, Infor announced the latest release of Infor SupplyWEB 9.0, with features such as
- Partner participation within the supply chain to view, collaborate, and share key value-added information; use exception-based alerting for key or unexpected events; and track supplier metrics and performance.
- Support the overall operational improvements of companies by helping reduce inventory, premium shipments, inventory stock-outs, quality defects, and EDI communication costs. At the same time it drives facilities to "lean" processes and pull-based replenishment strategies.
- Accommodation for fourteen different languages, standard times zones, user preferences, and other global variables.
Because Infor SupplyWEB is modular, it tends to improve system scalability, flexibility, and performance. It also facilitates faster development cycles, and offers a reasonably quick response to the customer's changing requirements. The product uses a three-tiered framework for user interface (UI), application service, and database management. By separating these layers, code modifications are more controlled and can typically be completed in shorter time frames, and overall solutions become more flexible to implement. Infor SupplyWEB is a thin-client application accessible through a standard browser. It is available in a hosted or enterprise environment.
As for its ERP systems, in 2004, Infor announced the launch of a new product designed specifically to meet the distinct needs of the automotive supplier community: Infor TRANS4M 8.20. This is a comprehensive solution for manufacturing performance optimization that enables lean manufacturing in highly-repetitive environments. Namely, while Xpert is better suited to mixed-mode manufacturing requirements, TRANS4M should appeal to manufacturers with a lean/repetitive production environment. It has work-in-progress (WIP) visibility, pay-point operations, multiple backflush methods, and other automotive industry endemic functionality.
The latest release features a new tool for serialized container and lot management, which incorporates scanning and first in-, first out-based (FIFO) consumption to enable tracking and to control serial numbers and lots from supplier to customer. TRANS4M 8.20 also has enhancements for Sarbanes-Oxley requirements, as well as more than forty customer-driven requests and twenty new trading partners. Another key feature of Infor TRANS4M 8.20 is the inclusion of an enhanced version of SupplyWEB, which enables suppliers to collaborate and share value-added information and use alerting for events and supplier performance. Users should thus benefit from inventory and premium shipment cost reductions. They should be able to reduce stock-outs, quality defects, and EDI costs, while gaining business process enhancements with their supply base.
Other global, multilingual ERP independent solutions coming from pre-acquisition BRAIN include ACmanager, an automotive customer manager portal application; and AutoEx (formerly BRAIN-eX), a transmission control protocol /Internet protocol (TCP/IP) message broker. AutoEx handles the complexities of the two-way communication needs of automotive suppliers and manages the mandates of the OEMs. The module is a TCP/IP-based message server that works with most back-end systems and replaces Bi-sync communications and value-added networks (VAN). It is also Automotive Network Exchange (ANX) compatible, but not ANX dependent, and it moves and routes data to anyone, anywhere, independent of file-type. AutoEx is specifically configured to deal with renowned demanding trading partners including names like DaimlerChrysler, Delphi, EDS, Ford, General Motors (GM), GXS (GEIS), IBM (Advantis), Sterling Commerce. Communication can be accomplished via the many available protocols such as E-5, hypertext transfer protocol (HTTP), HTTPS (secure HTTP), file text protocol (FTP) which are based on trading partner requirements.
From Future Three
On its hand, Future Three had delivered many elements of supply chain execution (SCE), event and exception management (EEM), and collaboration applications and services. It facilitated interconnected supply chains for automotive, heavy truck, agricultural equipment, and vehicle manufacturing enterprises. Within many diverse ERP communities, one will often find Future Three software embedded as a release accounting system, which the vendor had long mastered. All the products are available through a flexible deployment model, either as an enterprise-based system within the customer's facility or in an application service providers (ASP) model hosted and maintained by Infor.
Future Three solutions included both buy-side and sell-side applications offering integrated order management and fulfillment; event management and workflow; collaboration; decision-support and visibility. To that end, former Eclipz is a supply chain management (SCM) solution that enables automotive suppliers to extend and manage the flow of information with their suppliers. It was designed around the proprietary CAR Model (standing for "Connect-Analyze-Respond"), and connected thousands of automotive suppliers to manage the flow of mission-critical demand and transactional information. The product supports a variety of ways for customers to connect with their suppliers, including Internet, virtual private network (VPN), VAN, ANX, and even phone and fax. To aggregate all these multichannel connection methods into a single point of broadcast and to receive information, the system features a strong transaction gateway that can accept and translate many different signal types like X.12, XML, and comma separated values (CSV).
In addition, Eclipz provided tools to help customers manage their supply chains more effectively through event management console (EMC), featuring collaboration, decision-support, and supplier metrics. Furthermore, AutoRelease is an integrated EDI, release accounting, shipping control, and invoicing system that supports over 200 trading partners with the latest EDI transactions sets as mandated by the powerful tier one automotive customers. Seamless integration between demand management processes and ERP applications is provided through the configurable interface. Finally, the AutoScan module, working in conjunction with AutoRelease, provides a barcode scanning, printing, and designing application for customers who can create or verify information on-line for accurate shipping documents and ASNs.
Infor AutoRelease 12.1
At the end of 2004, Infor announced the release of Infor AutoRelease 12.1, with expanded functionality in essential areas for ERP and SCM. Like its siblings, Infor AutoRelease has become part of the Infor Automotive Essentials suite of products developed specifically for the automotive industry. The release of Infor AutoRelease 12.1 aligns with Infor's overall product strategy of expanding product functionality and adaptive agility while continuing to support a wide range of ERP software platforms. Version 12.1 builds upon the IBM OS/400 V5R1 upgrade. It is capable of expanding the library list from 25 libraries to 250 libraries by providing the necessary enhancements to implement this new degree of functionality. The expanded library list will be delivered through electronic support system (ESS) updates. Further, by integrating Adobe Central Pro v 5.5 as the output server, Infor is laying the groundwork for future trading partner requirements. This should enable Infor AutoRelease 12.1 to adapt quickly to implementing the frequent changes in trading partner requirements and to provide even greater value to its customers.
For years many vendors have long preached the advantages of automating demand management and fulfillment through release accounting. However, the culture and complex technology have been major hurdles in promoting EDI and efficient demand management into the lower-tier automotive supply chains. EDI transactions, like the 830-planning/release schedule transaction, have been used to tell suppliers what to produce and when to produce it. Moreover, success beyond tier one automotive manufacturers had long been plagued with the lack of visibility and timeliness of forecasts and customer inventory levels.
However, the pressures on automotive suppliers to streamline manufacturing operations to reduce inventory and costs and to increase the speed of production, has increased during the current economic slump, and these are common issues for Infor users too. With Infor SupplyWEB suppliers can log-on, via the web, to access the suppliers' latest inventory levels, allowing for SMI. They can view releases and purchase orders; view and respond to quality and delivery performance issues like delivery performance reviews (DPR) and production parts approval process (PPAP); view overall supplier ratings; enter invoice detail; and view payment information.
A resurgent interest in release accounting has also emerged in the automotive suppliers' world, since they have begun to be quite careful about their more influential trading partners and consortium's needs. To that end, Infor offers products to manage supplier relations, procurement, performance, and keep manufacturers compliant with automotive industry requirements. Many smaller automotive suppliers have reportedly felt stuck with the traditional methods of using just EDI, which is demanded by their OEMs. Issues like
- "Does the system support my trading partners (e.g., GM, Honda, DCXnet [DaimlerChrysler exchange], etc.)?";
- "If yes, does it have fully integrated EDI, barcodes, payment processing, and other customer mandates?"; and
- "Is it specifically designed to the dictated standards of each of my trading partners?"
have shown up on the radar screen time and again.
Having garnered the astute product suite and install base, including the top one market share in the German discrete ERP mid-market, and having over 70 percent of tier one and two auto suppliers as customers, Infor Automotive should give a pause to the automotive-focused archrivals like QAD (with its eQ and MFGx.net supply visualization collaborative offerings, and flagship product, MFG/PRO eB ERP); SAP; Glovia; and TradeBeam (which recently acquired former SupplySolution and its i-Supply equivalent product).
This concludes Part Two of a three-part note.
Part One detailed the pain of integrated EDI.
Part Three will discuss the gains of other industries and make user recommendations.