New AMR Research Study Shows that 40% of Data Feeding Automotive Related ERP Systems is Sourced Externally
In my previous blog entry I discussed a new research project which was recently conducted by AMR Research and was sponsored by GXS. Yesterday GXS announced a press release regarding this important new research project with AMR Research. The survey was conducted by 121 multi-national companies and the distribution of the respondents can be seen in the following graphic. Further details of the survey population can be seen in my previous blog entry.
From an automotive perspective ERP systems are at the heart of their manufacturing operations and in a previous blog entry I looked at how important ERP systems were to the daily running of an automotive company. Over the past few years automotive companies have globalised their operations, establishing plants in emerging markets and setting up joint venture operations with car manufacturers in China for example. As a result, many global car manufacturers have a number of regionally based ERP systems and in the AMR Research survey 46% of automotive respondents said they had between 2 and 4 ERP instances across their business. Surprisingly only 11% said they had a single ERP instance and over the next three years this figure is only going to increase to 21%. Now this slow adoption of a single ERP instance to manage their global manufacturing operations is different to some other industry sectors where consolidating to a single instance is a priority. It may be that in automotive there is more of a reason to stay with regionally focused ERP instances. This is an area that I will take a closer look at and I will discuss my findings in a future blog entry.
Even though the automotive companies, in this survey at least, were not appearing to be quickly adopting a single ERP instance, they were the leading industry sector to try and establish a common B2B integration platform. In fact 61% said that they were consolidating disparate B2B gateways onto a single, consolidated platform. In addition, 32% of the automotive companies surveyed said that they were planning to standardize on a single B2B vendor.
In terms of data sourced from outside of the organization, 40% of the automotive respondents said that data feeding their ERP systems was sourced from outside the company. This was the highest of the industry sectors surveyed and it demonstrates how much the car companies are relying on external information to keep their own businesses running smoothly. In terms of the sources of the external data, 34% was from customers and distributors, 38% was from suppliers and 19% was from 3PL providers. As mentioned in my previous blog, externally sourced information needs to be accurate and clean before it enters an ERP system otherwise this unclean data could proliferate into other business systems across the enterprise. It was found that 75% of automotive respondents said that they had trouble with inaccurate data entering their ERP systems. This was the highest percentage recorded across the industry sectors which shows that improving the accuracy of information sent in by external trading partners is one of the key areas that needs addressing within the automotive industry. On average, across the industry sectors, nearly 3% of external data needs to be re-worked. Now this may not seem like a large number but if an ERP system was processing 1 million external transactions per year then 30,000 of those transactions would need reworking, this is a significant undertaking especially if a company has limited B2B resources available.
Finding skilled resources to be able to run ERP/B2B integration projects smoothly is a challenge for many companies, not just those in the automotive sector. ERP projects by themselves are a high priority for many automotive companies and this is confirmed by the number of people that are deployed to implement an ERP system. As I discussed in my previous blog entry, additional IT resources will be pulled in from B2B projects to help keep ERP projects on schedule. Leaving B2B projects under resourced can be a dangerous strategy to take especially when you consider that 40% of the data feeding the ERP system will be coming from your trading partners. So ensuring that B2B projects are adequately resourced should be a key priority as well. B2B outsourcing can offer a way to deploy additional resources to manage your B2B infrastructure and quite often third party vendors such as GXS are recognized as an extension to a company’s own IT department. That said, across the automotive respondents 89% said that they had experienced B2B integration issues which in turn had impacted the go live dates for their ERP projects. B2B outsourcing allows a company to keep ERP projects on schedule.
From a B2B connectivity point of view 79% of respondents said that they had lost connectivity to their B2B platform at some point over the past couple of years. Again this was the highest figure recorded across the industry sectors. Many automotive production lines rely on the quick and reliable delivery of ASNs from their suppliers in order to let them know when parts are being delivered to their factories. An interruption in B2B connectivity could prevent these ASNs from reaching their destination which means that the plants will not know when parts will arrive. This is turn means that production lines have to shut down until B2B connectivity is restored. If companies want to improve the reliability and availability of the communications infrastructure to their trading partners then they should consider working with a third party vendor who has a highly available communications infrastructure in place already. GXS has spent millions of dollars upgrading our data centres and network infrastructure to a point now where we are able to offer our customers 99.95% availability. Our high availability infrastructure is built on the latest hardware from the leading network equipment and server manufacturers. 79% of respondents said that they thought it was important to have a contingency plan in case B2B connectivity was lost, but only 43% said that they had an effective plan in place to avoid loss of connectivity.
So improving B2B connectivity is certainly another area that needs addressing across the automotive industry. With so much data coming from outside the organization and such a high number of respondents saying they had lost B2B connectivity it was a surprise to see that 82% of respondents saying they had a no ERP downtime policy. If information is inaccurate, needs reworking or simply cannot get through to the ERP system then this will impact the reliability of the ERP system. This figure of 82% ERP availability highlights the importance of ERP systems to many automotive companies, but the results from our survey clearly shows that they are not as focused as they should be on making sure that these systems are properly
supported by and integrated to their B2B platforms.
So this concludes a brief review of the automotive results from our ERP/B2B integration survey. Outsourcing the management of the B2B integration process is one way in which companies are looking to keep their ERP related projects on schedule and this was the subject of an earlier blog. If you would like to download a copy of the Executive summary report from AMR Research which discusses the results from the survey then please feel free to visit our new ERP/B2B Integration microsite called GXS Insights, within this microsite you will find a number of articles which discusses some of the integration issues highlighted in this blog entry.