What could automotive manufacturers learn from supermarkets?
After years of decline, the UK vehicle manufacturing industry is undergoing a welcome resurgence. By 2017 it is expected to be turning out more than two million vehicles per year, a new record according to The Society of Motor Manufacturers and Traders (SMMT).
However, turning such growth into long term revenue and jobs for the UK’s wider automotive sector will depend on the industry’s ability to source more components from within the UK. This essentially means ‘re-shoring’ much of the supplier base that has, over time, been moved overseas.
According to the Automotive Council an extra £2 billion could be brought back into the economy by growing the UK supplier base; a step that could create up to 50,000 new UK jobs, according to a 2014 report by Lloyds Bank into the automotive supply chain.
The majority (70 percent) of the automotive firms surveyed for this report say they are looking to re-shore some of their operations by the end of 2016, drawn back by reduced costs and time, improving UK economic conditions and a desire to support local communities.
However, this willingness is tempered by a number of concerns. Automotive manufacturers are worried not just about a lack of suitable suppliers, for example for high volume electronics systems, but about the ability of those that do exist to deliver components at the speed and volume required by the vehicle manufacturers. There is a perception that UK suppliers lack the technical or processing capability to undertake the business.
What can the UK automotive supply chain do to address these concerns and ensure they can offer the kind of world class, high technology products required by these manufacturers – and offer them quickly, efficiently and cost-effectively?
Software is the key to success
For many years the manufacturing sector has struggled to successfully implement Product Lifecycle Management and Enterprise Resource Planning (ERP) software systems. Despite the fact that ERP was initially developed to help the automotive sector manage increasingly complex supply chains and process automation, many firms can find themselves wrestling with what CIO.com calls one of “the most expensive, time-consuming and complicated tasks an IT department can take on.”
However, in an increasingly IT-enabled, machine-to-machine, big data world, creating and delivering world-class parts and systems relies on the effective use of software at every stage. From research and development through to production, performance and distribution, and even within the parts and systems themselves, software is everywhere, embedded and critical.
Software is the enabler, but when it becomes excessively complex or even fails, it becomes the barrier, halting operations and even growth in its tracks.
Take control through testing and quality
Other sectors have been here before, and have found a way to make it work.
The UK retail sector is today completely reliant on complicated software systems to deliver its business goals and secure a profit from very small margins. Ask any major retailer about their supply chain history, however, and chances are they can recount an incident involving software or technology failure that had a disastrous effect on their business – and the quality assurance processes they have put in place to ensure it doesn’t happen again.
Reducing risk depends on taking control of software systems. It requires applying innovation to tried-and-tested quality assurance methods in order to test and monitor how software is developed and deployed in the business. For a supermarket that can include the software embedded in products and services, in driving ERP systems, powering warehouse logistics solutions, or enabling new digital marketing platforms such as websites, or managing increasingly complex pricing and re-ordering systems.
At first glance, the software needs of consumer online grocery shopping may seem a world removed from the automotive supply chain, but in fact it is not.
The quality assurance and testing approach is just as valid for the manufacturing supply chain; perhaps even more so, as they are not only concerned with the shipping of finished goods but with most of the product development activities as well.
For example, here at SQS we have been helping a large automotive group to boost their software performance to push ever further into new areas, from in-car communication technology through to vehicle finance solutions.
Our experience has taught us that seamlessly embedding quality assurance into the way a company plans, delivers and supports their software systems is the first step towards achieving more, achieving it better, in less time and for less cost than ever before.
Looking to the future
In a 2013 strategy for the growth and sustainability of the automotive sector in the UK, the Automotive Council identified six main areas for action. These include developing process excellence capability, reducing total delivered cost, strengthening supply stability, and improving supply chain flexibility and complexity management – all areas where robust and tested software systems will prove critical.
The message is clear – giving your business the software backbone that will enable it to compete in the global marketplace could make the difference between success or failure. Working with an outsourced UK-based specialist can ensure software systems are delivered faster, more robustly and ultimately more suited to the business need. This independent quality assurance will ensure capable and secure solutions are available to any manufacturer, big or small. And if the automotive industry is to reach and sustain the record-breaking production levels predicted by the SMMT it must ensure that its software is ready to meet these demands.