ERP in Automobile Industry

Group 4
Mantri Ankit
Nayeem T G
Paul George
Rahul Mashru
Khushboo Garg
Maria Varghese
Nancy Nathan
Poornima Saikumar
Agenda for the Day …
 Automobile Industry  Nayeem
in General
 Role of IT in Auto  Khushboo
Industry
 ERP, Its Benefits &
 Poornima
Need of ERP in Auto
Industry
 Case Study – Maruti
 Rahul, Ankit, Paul &
Maria
Udyog
 Nancy
 Future Trends
Automobile Sector
The Automotive Sector is one of the key segments
of the economy having extensive forward and
backward linkages with other key segments of the
Economy.
India holds huge potential in the automobile sector
including the automobile component sector owing
to its technological, cost and manpower advantage.
India has a well developed, globally competitive
Auto Ancillary Industry and established automobile
testing and R&D centers.
Automobile Industry in India
9th largest automobile industry .
2nd largest two-wheeler market.
11th largest Passenger Cars producers.
4th largest in Heavy Trucks.
2nd largest tractor manufacturer.
Annual production of over 2.3 million units.
The monthly sales of passenger cars in India exceed
100,000 units. 
 Indian Passenger Vehicle Market

Passenger
Cars 52% 17% 19% - 1% 5% 2% 2% 2% 1% - <1% <1%
Utility
Vehicles 2% 18% 1% 42% 21% 1% 10% 1% <1% - 4% - <1%
Multi
Purpose 100% - - - - - - - - - - - <1%
Vehicles

4th largest Passenger Vehicle

Market in Asia
 The Key Players …
Others, 5.8%
Yamaha, Honda Others, 5.73
3.8% Motors, 8.5% Honda, 5.33

TVS Motors, Tata Motors,

17.19
17.7%
Maruti, 50.37

Hero Honda,
39.8%
Hyundai, 19.17

Bajaj Auto,
24.4%

Two wheeler Passenger vehicle

Commercial TATA Motors, Ashok Leyland, Swaraj Mazda, Mahindra & Mahindra ,Force
vehicles motors, Eicher Motors

Passenger TATA Motors, Maruti Udyog, Honda Motors, Toyata, Skoda, Mahindra &
vehicle Mahindra, Daimler Chrysler, Hindustan Motors

Two Wheeler Hero Honda, Bajaj Auto, Honda Motors, TVS Motors, Yamaha , Kinetic Motors

Three Wheeler Bajaj Auto, Piaggio India

Automotive Trends
 The Indian automobile industry, though in its
nascent stage, is expected to set the ball rolling in
the Indian Economy as well.
 With the emergence of the financially sound middle
class, the four-wheeler segment is set for
tremendous growth and one can expect of more
impetus to the economy from this sector.
 No wonder that this industry has become the centre
of attraction for most of the global automotive giants
the world over.
 IT in Automobile Industry
 Information technology has an increasingly transparent
financial sector have become key driving forces in business
-- operations, strategies, structures, ownership, and
performance.
 The ability of traditional firms to achieve competitive
advantage is predicated, in part, on their capacity to develop
efficient, internalized information systems to provide market
coordination and linkages between their operations and
global commodity & financial markets.
 The role of information technology (IT) in this process has
never been in the foreground: it has always been
infrastructural, making possible subtle but profound changes
in nearly every aspect of the industry.
 Mapping Path to Innovation
 Innovation in product and service design, business process
execution, and demand-chain planning & execution.
 Companies, across the board, are implementing multiple
initiatives to shorten the order-to-delivery time
 Companies are pursuing product development process
efficiencies while implementing collaborative product design
and engineering within divisions and among their partners
for efficient Supply Chain.
 Joint planning, aggressive budget allocations, and a flexible,
standards-based infrastructure that makes back-office
information accessible to partners -- regardless of their IT
infrastructure -- will enable the IT organization to achieve its
business purposes.
 SWOT Analysis
STRENGTHS WEAKNESSES
 Development of Just-In-  Lacking Infrastructure
Time Inventory Methods  Slowing pace of growth
 Automotive Supply Chain  Companies are not
 Assembly Line improving after sale
Manufacturing services.
OPPORTUNITIES THREATS
 Increasing Consumer  Global Crisis
Demands, Technology  Company not focusing on
Development, Globalization R&D under great risk
 Usage of Alternative Power  High Competition from
Trains Foreign Players
 Hydrogen as Automotive  Lack of Technology for
Fuel Indian Companies
Enterprise Resource Planning (ERP)
 Enterprise resource planning (ERP) is an
Integrated computer-based system used to manage
internal and external resources, including tangible
assets, financial resources, materials, and human
resources.
 It is a software architecture whose 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.
Components
 Transactional Backbone
 Financials
 Distribution

 Human Resources
 Product lifecycle management

 Advanced Applications
 Customer Relationship Management (CRM)
 Supply chain management
 Purchasing

 Manufacturing

 Distribution

 Warehouse Management System

 Management Portal/Dashboard
 Decision Support System
Benefits
 Reduction of Lead – Time
 On - Time Delivery to Customers
 Reduction in Cycle time
 Effective utilization of resources
 Satisfaction to Customers
 Improved supplier performance
 Increase flexibility
 Reduced quality costs
 Improved information accuracy & decision making capability.
 Help reduce operating costs.
 Facilitate Day-to-Day Management.
 Support Strategic Planning.
 Order Tracking
 Reduces risk of loss of sensitive data
Necessity of ERP in Automobile Industry

 Quick access to reliable business information.

 High costs in inventory due to lack of visibility of
the stock in work-in-progress stage.
 Visibility into strategic information at every
juncture .
 To gain operational excellence.
Benefits of ERP in Automobile Industry
 Increase Operational Efficiency
 Gain Business Visibility
 Improve Customer Relationship
 Streamline Production
 Monitor & Control Expenses
 Reduce Errors
 Get accurate, timely information
 Global reach, better inventory visibility, reduced
distribution costs
Case Study – Maruti Udyog
 Maruti Suzuki India Limited has led India’s car
market for more than a quarter of a century.
 First established in 1981, the company is now a
fully-fledged subsidiary of the Suzuki Motor
Corporation.
 Its principal activities include the manufacture and
sale of motor vehicles and spare parts via a 300-
strong dealer network scattered across India.
Case Study – Maruti Udyog
 The year 2002 saw Maruti add finance, leasing,
insurance, and pre-owned car businesses to its
portfolio, increasing the scale of its operations and
prompting a review of its processes and systems.
 Oracle Consulting was engaged to install a number
of Oracle E-Business Suite modules and integrate
them with Maruti’s existing systems.
 Oracle also assisted Maruti with change
management, a critical part of the process to ensure
quick user acceptance.
Need To Strengthen Management Control
 Complexity of the IT environment and reliance on
certain people to maintain the systems, as the
business is undergoing a period of rapid expansion, it
was important to have a system that could scale
easily.
 To minimize the impact of the system change on its
business, Maruti decided on a phased migration to
Oracle E-Business Suite. As a first step, the company
decided to replace its financial, purchasing, and
human resources systems with Oracle Financials,
Oracle Procurement, and a range of Oracle Human
Resources applications.
Need To Strengthen Management Control

 Addition of 4 new business sectors in 2002 created

further pressures, requiring constant monitoring &
human intervention to keep the system operating
across the hundreds of locations Maruti serves
within India.
 To support this growth and improve efficiency, the
company decided to revamp its information
technology systems to provide end-to-end visibility
into the organization.
 Integrated HR Systems Smartens
Workforce Management
 A period of rapid growth saw Maruti’s workforce
expand to 5,000 people across India, and the
company discovered that using mismatched systems
to manage human resources was inadequate. What
the company needed was a single, integrated system
to manage its employees.
 After implementing a range of Oracle Human
Resources applications, Maruti reported better
control over HR functions such as recruitment,
payroll, compensation management, leave
management, competency assessments, and staff
development.
Standardization Improves Financial Insight

 The problem with using multiple systems to manage

finances was the lack of control over processes and
information quality.
 With Oracle Financials, Maruti was able to
standardize on a single financial management
platform.
Standardization Improves Financial Insight
 Each office followed different workflows, which
often meant one division lagged behind another in
delivering information.
 Differing data formats required tedious
consolidation, preventing real-time access to critical
statistics.
 The company achieved tight control over accounts
payable and accounts receivable, and gained a
comprehensive general ledger that assists in the
management of all financial information.
Streamlined Procurement Costs

 Some subsidiaries of Maruti had a rudimentary

system, while others relied on basic spreadsheets to
manage the process.
 This made it difficult for the organization as a
whole to have control over capital and services
purchasing, leading to escalating costs and excess
inventory.
Streamlined Procurement Costs
 With Oracle, Maruti now has a standardized
platform to oversee procurement.
 The company has set up a list of preferred suppliers
to cut down on the number of vendors it deals with
and ensure it has control over costs.
 An automated workflow sends purchase orders
along the approvals chain and keeps staff in the
accounts payable department aware of all
procurement activity.
Why Oracle??
 Maruti has a successful history of Oracle
implementations
 The open interfaces of Oracle E-Business Suite
offered the best integration with Maruti’s legacy
systems
 Standardizing on Oracle technology and
applications would also lower support costs and
ensure easy upgrades in the future.
 By engaging Oracle Consulting, they had an easy
access to technicians with an in-depth
understanding of the product and consultants with
extensive project management experience and
business understanding
Oracle Implementation Process

 Oracle Consulting deployed the Oracle Human

Resources modules.
 Oracle Consulting provided three months of post-
implementation support, and also assisted Maruti
for one month in the lead-up to the company’s year-
end closing.
 Other Benefits Gained by Maruti
 Gained deep insight into financial performance by
using Hyperion to analyze budgets and consolidated
accounts
 Ensured a smooth rollout by engaging Oracle
Consulting to supervise the design and deployment
of the solution, and manage the implementation
team
 Achieved seamless integration with legacy systems,
ensuring senior managers have visibility into
business performance
 Promoted user acceptance by developing extensive
training programs to help staff transition to the new
system
 Future Trends & Processes in Automobile
Industry

 Automobiles today resemble “computers on

wheels” because of the increasing number of digital
systems under the hood and inside the passenger
cabin.
 Vehicle manufacturers offer more sophisticated
electronic systems addressing vehicle safety,
telematics, and infotainment.
 Hybrid Vehicles wherein combination of Gas &
Fuel to run vehicles to be used.
Future of IT in Automobile Industries
 Companies that spend more than 3% on I/T (as a
percentage of revenue) are significantly more likely
to view I/T as an investment (79% investment vs.
21% cost) than companies that spend less than 3
percent (57% investment vs. 43% cost).
 Tier 1 parts suppliers and Tier 2 systems suppliers
were the only sectors to not cite "investment" more
frequently than "cost." Vehicle assemblers were the
most likely to believe that their executives support
the investment perspective (82%).
Future of IT in Automobile Industries

 Linking systems and supply chain partners

 Redesigning business processes to enhance
information flow
 “Reengineering business processes through IT"
cannot be accomplished without an organization
structure (environment) that supports change and
investment in process analysis and improvement
tools/techniques such as Six Sigma.
Powertrain & Safety Convenience & Vehicle Controls

Engine Management Dashboard

Electronic Suspension Lights/Seats
Braking Systems Climate Control
Power Steering Voice Recognition
Airbags Remote Keyless Entry
Gearbox Security Alarm Systems
Wiper/Window Control
Driver Assistance Infotainment & Communications

Night Vision Telematics

Lane Departure Warning Navigation/GPS
Collision Warning Multimedia Systems
Park/Reverse Assist Audio Systems
Tire Pressure Monitoring Rear Seat Entertainment
 More Technology Oriented Automobile
Products
 Evolution of Platform Concept
 Cat Model Differentiation is provided with one
basic diagram
 Fast Automotive Innovation Cycle
 A typical Automotive Design Cycle is
approximately 24 to 36 months
 Quick Prototypes

 Increasing Digital Content

 NavigationSystems, Rear Seat Entertainment
Systems, & Driver Assistance Applications
 More Technology Oriented Automobile
Products
 Driverless Cars
 Fully Autonomous Vehicle
 Already Exist as prototype

 New Energy Source & Materials

 A Variety of Alternative Fuel Vehicles includes
Electric cars, hydrogen cars, and compressed air
cars
Thank You