We have been working with many electronics manufacturer who are doing job work for large Brands who outsource the repetitive assembly processes and also sometimes specialized manufacturing operations too. These companies work for multiple brands and each of the brands different ways of coding, numbering, packaging, reporting and compliance needs.
The contract manufacturing is generally a low margin business and players are smaller sizes. The business processes many times are found being handled in multiple systems and even manual /Excel Sheet based processes exists. The data is lying many times in individual machines thereby creating organization risk. The plight of manufacturers is so much that they are sometimes required do data entry in their customers system beyond whatever data they maintain at their end. Some of typical challenges in the industry are being provided below;
Challenges for ERP Implementation in Autocomponent Industry
- Customer wise coding and numbering systems of products
- Customer wise data management needs
- Data entry in multiple systems
- Isolated database lying in individual machines
- Customer wise packaging and handling needs
- Customer wise data/reporting needs
- Duplicate data entry requiring manufacturers to enter data in customer systems also.
- Lack of visibility of customer supplied materials
- Handling inventory at count level but not to be included in valuations.
- Costing of products and traceability with respect which piece/batch used company purchased material and which used customer supplied materials.
The challenges are many and I listed few most common ones. Many times these manufacturers don’t realize that there is any problem unless they come across major issue. Think about providing value of goods lying in premises to insurance agencies when customer supplied material is not handled by system. Think about person having data suddenly not being available thereby risking the business. Think about customer running away or not accepting manufacturers as partner due to lack of good business practices.
Why SAP S/4HANA is best ERP for Autocomponent Industry
In market there are many small-big ERP solution providers but SAP S/4HANA is call apart and one can be sure to be able to handle all the business if SAP S/4HANA is deployed implemented suitably. Some of the key capabilities of SAP S/4HANA which can be used to manage business needs of Autocomponent Industry are:
- Handling of Inventory as Valuated and Non Valuated allow complete visibility to manufactures and their customers.
- Capability to purchase components to be used in manufacturing for customers and track the inventory.
- Capability to use own material or customer supplied materials production Bill of Materials.
- Capability to define multiple manufacturing routing based on volume and process needs.
- Capability to define Batch/Serial levels details of inventory transaction with options to associate numerous extra details like customer serial number, production date, customer, IMEI Numbers etc.
- Capability customer PO data to create Sales Order and Production Bill of Materials.
- Capability to define Sales Bill of Materials and kitting operations
- Capability to provide Customer/Product Line/Product Wise profitability analysis
- Capability to calculate process charges based on labor, machine and overhead expenses incurred.
- Capability to interface with Customer and other logistic service providers of customers.
- Handling of Purchases, Inventory, Sales, Invoicing, Pricing, Plant Maintenance, HCM and Finance Processes.
- Possible integration:
- PO created by customer to end up creating sales/production orders in manufacturers system.
- Components supplied by customers can be viewed received direct without manual data entry.
- Consumption of components can be passed to customer systems
- Visibility of stock at manufacturers provided to customers
- ASN Details to be used by customers and their logistics providers
- Product Warranty Details to be updated into customer systems
We have been helping may Contract Manufacturers in deploying robust applications like SAP S/4HANA to make them efficient and responsive in serving their customers.
Contact us in case you need to know more about practices and controls in Electronics Manufacturing Services (EMS) business. Do let us know in case you are looking for service partner to advise on system needs and implement SAP S/4HANA in your organization.
Virendra Rai
Director- 2ioslutions
Cell Number: +91 8800592601
Email: virendra.rai@2isolutions.com
