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Mid-Market Automotive ERP Grows Up

Six months ago, when we last examined enterprise resource planning(ERP), we discovered that it was expanding beyond its conventional ERP roots—“expanding its footprint,” the pundits would say—to include customer relationship management (CRM), product lifecycle management (PLM), supply chain management (SCM), and other three-letter acronymic initiatives.

Six months ago, when we last examined enterprise resource planning(ERP), we discovered that it was expanding beyond its conventional ERP roots—“expanding its footprint,” the pundits would say—to include customer relationship management (CRM), product lifecycle management (PLM), supply chain management (SCM), and other three-letter acronymic initiatives. Nowadays, this expansion is not just the province of mega-ERP systems aimed at the automotive Tier 1 suppliers. Even the breadth of capabilities in mid-market ERP systems is broadening.

Why? One answer, from Gary Flum, general manager of automotive for QAD (Carpinteria, CA), is: “The abdication of responsibility by the OEMs—the responsibility of program management, sourcing, and engineering, planning, and supply information—things like that—are entirely new and being pushed down the automotive supply chain.”

So these new requirements beget more sophisticated software functionality.

[ eReaching out ]
QAD is complementing traditional electronic data interchange (EDI) with a variety of Internet-based systems. For instance, QAD eQ is an order management hub—really a private, Internet-based trading exchange—with links directly to QAD’s ERP system, MFG/PRO. Through this hub, you can make the sales, purchase, and replenishment orders issued by MFG/PRO, even advance ship notices (ASN), available to your entire supply chain.

The latest version of eQ includes eQ Replenishment, which lets real-time consumption about material usage drive the flow of material through production to customer sites. This means customer usage—not the receipt of purchase orders, not min/max economic order quantities—is driving replenishment. Similarly, real downstream demand, not forecasts, triggers production and procurement processes. In short, this is automated “pull” capabilities leading toward real-time vendor managed inventory and kanban processing.

QAD also has MFGx.net, a manufacturing-based network already integrated into QAD. MFGx.net includes hosted Internet application services such as basic alert-based PLM and QAD’s Supply Visualization (SV). SV lets suppliers see all the information regarding the items they supply to you and that you have authorized them to see. SV gets this information for inventory, purchase orders, supplier schedules, and receipts from a customer’s ERP system using an XML interface called “the poller,” which sends the ERP information to the SV web server. Suppliers can also load information for shipping forecasts and ASNs directly into SV, as well as export information from SV to their external systems. Suppliers without EDI can import their shipping forecasts and ASNs into SV using spreadsheet. The result of this, ideally, is streamlined material replenishment up and down the supply chain.

[ Extend & integrate ]
Acquired two years ago by Invensys plc (London, England), a production technology and energy management conglomerate, Baan is very much alive and well, Fred Thomas, industry director of global automotive for Baan Company (Holland, MI), excitedly assures all listeners.

As proof, last summer Baan upgraded its automotive ERP package, iBaan Automotive, with a service pack. No great shakes here, just an overall upgrade covering all the bases of iBaan, including its EDI functions. The result was twofold, according to Thomas. First, the “Baan automotive footprint has become far more complete.” Second, one iBaan automotive solution now exists for use worldwide.

But there are some gems here medium-sized manufacturers will appreciate. Fully integrated into the ERP side of iBaan is the iBaan SCM suite. This includes advanced planning and scheduling, thus giving users the ability to monitor actual supply chain process plans, simulate scenarios, consider constraints and analyze results, and quickly respond to customer queries and changes—all using data from ERP and CRM.

Last June, Baan extended its PLM with a host of capabilities. For instance, iBaan Product Data Management (PDM) links an organization’s computer-aided design (CAD) to ERP. iBaan Lifecycle Analyzer lets users determine the effect of a change on key factors such as cost, stock, production line schedules, time to market, and product quality.

Nowadays, Baan is working on yet another level of integration, named “OpenWorldX.” This data infrastructure is the “intelligent glue”—Thomas’ term—for creating a much better, tighter, integrated product that melds disparate software pieces together. The first step in that is to further solidify the world-of-acquisition that makes up Invensys today, which includes the Wonderware InTrack manufacturing execution system and the Advantis enterprise asset manager. Such integration is Invensys’ search of manufacturing’s Holy Grail: “real-time visibility” from the shop floor level to the executive suite.

OpenWorldX is also focused on integrating Baan applications with various third-party and legacy information systems. Last April, Baan reified its any-to-any application connectivity by announcing plug-and-play compatibility with SAP. This connection is one result of a deployment at Foxboro, a process control company (also an Invensys acquisition), integrating iBaan E-Sales with an SAPR/3 ERP system.

[ Middleman services ]
Despite all the accolades about the Internet, EDI is still very much alive. So are other electronic highways. So too are the various document specifications that travel across those highways. Because of that, Made2Manage Systems, Inc. (M2M; Indianapolis, IN) offers a “hybrid hosting” service called EDI-XML Link. You tell M2M about a document exchange specification and M2M will maintain that specification, maintain the document exchange, and guarantee the document’s delivery to a trade exchange, some sort of electronic supply chain, or your M2M ERP system, or all three. This service is a mix of traditional EDI service provider and application service provider. However, customers get to keep their business systems inside their four walls—and under their control.

“EDI-XML link is between you and your trading partners, and we become the facilitator,” explains Chris Lenzo, M2M’s director of product management. This lets you move information into and out of M2M ERP, “enforcing all the traditional business logic that M2M proper has. At the same time, it takes away a lot of the complexity of getting systems to talk to each other.”

This goes further than traditional EDI because it allows some degree of integration between M2M ERP and the business system of your trading partners. Covisint has something like this, but, explains Lenzo, “Covisint doesn’t know how to talk to M2M or any of the other ERP systems that the Tier 2, 3, and 4 suppliers have.” Suppliers, through Covisint, can push requirements onto individual business systems, but somebody—the ERP supplier, an enterprise application integration vendor, or some sort of information technology services company—has to step in and map out the transaction sets so that business systems can talk the same “language.”

M2M, acting as middleman, provides this service so that hundreds of automotive M2M customers don’t have to struggle with this same problem individually. Cost is based on each user and the transaction sets that they need support for.

M2M has also been upgrading its ERP system over the past year. In addition to a bunch of multi-site capabilities, the upgrade offers support for multi-dimensional inventory control, which lets users specify bills of material (BOM) requirements in multiple dimensions and transact inventory in alternate units of measure. The latest version also supports progress billing, while letting users track, report, and invoice specified amounts based on date, time spent, materials used, or percent completed.

More recently, in late October, M2M announced Mobile Manager. Built upon Microsoft .NET technology (Microsoft’s web-centric technology for software) and WiFi wireless network technology (802.11b standards), users get real-time, secure, mobile access to M2M from a PocketPC, tablet PC, or vehicle-mounted device.

[ Competing on low lifecycle cost ]
Visual Enterprise from Lilly Software Associates (Hampton, NH) supports a variety of constraint-based scheduling techniques from finite (and infinite) to forward/backward scheduling, including Theory of Constraints and Drum-Buffer-Rope. It also includes a product configurator that will automatically create BOMs, AutoCAD links, and modules for plant and equipment maintenance, CRM, and warehouse management.

The release of this ERP system in March 2002 was really the first major automotive ERP release from Lilly Software, according to Rick Lombardi, its automotive product manager. This release provides support for AIAG label compliance and ISO/QS-9000 certification. It also includes an add-on module called “Visual Price Book.” This is a flexible pricing and commissions tool that lets companies work outside of “standard” methods by selecting any level of “creative pricing” to determine prices, discounts, commissions, and order terms. Users can define price breaks based on cost or quantity and adjust figures “across the board” to eliminate redundant adjustments.

A major differentiator separating Visual Enterprise from the rest of the ERP pack is, according to Lombardi, that Lilly Software is not looking for a “high-end price for the product—or for its implementation. Total cost of ownership is low.”

[ The 800-lb gorilla ]
Competing on price may get very nasty very soon.

Five years ago, Steven Ballmer, now CEO of Microsoft Corp. (Redmond, WA), was telling everyone and anyone that Microsoft was not going to enter the ERP market. Not enough volume (sales). My, how the times they are a’changin’. Ballmer was quoted in Fortune magazine (November 25, 2002) that “the market for applications for small and mid-market businesses is tens of billions of dollars per year.” Ballmer is not the only one to figure this out, as recent marketing programs from J.D. Edwards, Oracle, SAP, and other ERP companies would attest. But let’s talk about Microsoft right now. In late December 2001, Microsoft purchased ERP vendor Great Plains Software (Fargo, ND). This past summer, Microsoft purchased another ERP vendor, Denmark-based Navision (U.S. headquarters in Duluth, GA). Not too long ago, Microsoft created a new division, Microsoft Business Solutions (MBS), which focuses on small and medium business. MBS starts off with about 250,000 customers, most in the mid-market.

In addition to the normal little bug fixes and functional trinkets that are usually included in ERP updates, MBS recently announced Microsoft Customer Relationship Management (available in January 2003). While this is Microsoft’s first foray into CRM, meaning the application is not as feature-rich or as polished as, say, Microsoft Office, it is intriguing for its integration into Microsoft Outlook, which has become a product information management standard for many enterprises. The long-term goal for Microsoft is to migrate itsERP (and CRM) products onto .NET technology.

Given Microsoft’s previous competitiveness in such categories as operating systems, web browsers, office applications, personal accounting software, personal data and e-wallet functions, back-office servers, software pricing, and more, mid-market automotive suppliers might find the availability of powerful shrink-wrapped ERP quite stunning in the future—both from Microsoft and its competitors, the traditional suppliers of ERP.