After suffering for years during and through the aftermath of the global financial crisis, the automotive industry is on a growth track, with 3 percent expansion expected for 2014.
While this certainly is good news for the industry, what does this growth mean for the business processes that underpin the industry, and the enterprise software that underpins those processes?
Here are a few observations…
1. The balance of power is shifting
The world has changed: vehicle sales and the automotive manufacturing sectors are slowly reducing in established markets like the United States, the UK and Japan.
While vehicle sales and the automotive manufacturing sectors in established markets like the United States, the UK and Japan, the world has changed.
In contrast, China, India, /pazil, and Eastern Europe accounted for just over half of the 73.2 million light vehicles sold worldwide in 2010, according to JD Power’s Industry Outlook published last October.
Between this change in car-buying patterns and the fact that even vehicles made for sale in Western economies are sourced from or rely on supply chains in developing nations such as those I mentioned, German automotive manufacturers employ more than 500,000 outside Germany, according to McKinsey.
As much of this production will take place in emerging markets, it’s hard to ignore the implications for management thinking and enterprise software that this has.
There are significant cultural differences between implementing enterprise resource planning (ERP) software in a Westernized economy and rolling it out in a nation like China, for instance.
2. There are potential (and actual) cultural differences
A Chinese implementation team may not warm up to a foreigner coming into their plant and telling them how to re-engineer or streamline their business processes using enterprise software for the automotive industry (like the solution we offer).
There are also language barriers and a certain degree of national pride to consider.
While enterprise software may facilitate new business practices that may not be widely practiced yet in China – Network Material Resource Planning (MRP) , innovative cost control measures, etc – we do not want to appear the “ugly Westerner.”
After all, we’re dealing with one of the most ancient and advanced cultures in the world, and a scholarly or academic approach may not work well.
At IFS, we are working to transfer as much knowledge as possible into our IFS China implementation teams, so we can minimize their reliance on implementation staffs from other regions.
Those planning software implementations in the growing Chinese auto production market may want to consider to what extent they can source their consulting and implementation help from within the mainland in order to make sure they are in the best position for success.
3. Recognize the challenge in implementing ERP for people not for automation
Manufacturing employs more automation in Europe and the US, and more manual work in China. So in planning an implementation, rather than determine which automated program interface (API) feeds what other system, or what Product Lifecycle Management (PLM) drives data into enterprise resource planning (ERP) software, we need to think more about training people to use the system.
In a program of work for implementation, training becomes a more important component than it normally would be. A thorough and aggressive train-the-trainer approach is essential to success here.
And training must be considered throughout the lifecycle of the application; at least, until the employment situation in China stabilizes.
Projected growth in the industry is definitely positive news. But growth today will look different than it has in the past.