VIEWPOINT | INVESTING IN WHAT'S IMPORTANT

Auto suppliers have always been challenged with materials planning, scheduling issues, supply chain management and decisions about when and if to invest in new capacity. The industry's shift toward more technology in cars deepens these challenges. As vehicles become more complex, the supply chain becomes longer and more complicated.

This trend shows no sign of slowing, and it is creating more stress on the supplier community, according to John Flavin, executive vice president of Global Manufacturing Solutions at Infor. He suggests it is becoming even more critical that suppliers think strategically and invest in what's important for the long-term health of the enterprise.

How are demands shifting in today's automotive supply base?

Because supply chains are becoming more complicated, their participants must become better planners. To maximize their efficiency, companies need to know what future products will look like as soon as possible. Asking for earlier exposure to customer product plans has been a familiar refrain from suppliers for years, but now the need is more critical than ever.

Labor costs are another big issue. The industry continues to chase low labor rates around the world. This quest is reshaping the structure of the supply chain. It also adds another pressure point for suppliers, especially the smaller ones. How strongly should you chase business by opening facilities overseas?

Financial pressures raise fundamental questions for all but the largest of suppliers. What level of investment makes sense, especially for vehicle programs whose success won't be known for years? Must smaller suppliers merge to gain enough economic strength to survive?

These are tough questions with no easy answers, but they indicate the fundamental strategic challenges that confront automotive suppliers today. Even if you're the CEO, it can be easy to get bogged down in day-to-day issues and avoid thinking about the bigger picture. Keeping the company running smoothly is no trivial task. Yet focusing too heavilty on operational matters can distract top management from the more important question: How do you ensure the long-term health of your enterprise?

What do you suggest?

The first step is to remind yourself what you're in business for. The ideal company concentrates its energy and resources on its core competencies, and it turns over non-value-add chores to others. It's reminiscent of the thinking that caused your customers to hire you in the first place: You can provide a service better than they can.

These days, the longer a supplier hangs onto functions it doesn't need to do, the more behind it is likely to get. Companies that devote too many of their resources to non-core activities will lose ground to competitors with a more disciplined approach.

What's an example of misplaced resources?

If you're in manufacturing, it's a sure bet your core skills do not include setting up and running a data center. Yes, you need to manage your data. And yes, you want your data to be safe, secure and easily available. But do you honestly believe you can do a better job of securing your company's intellectual property than better-staffed professionals who live and breathe data security?

Equipping, staffing and maintaining your own IT group ties up manpower and financial resources that could be redeployed in more productive ways in hiring engineers who can create more innovative products that better meet your customers' needs. More important, these expensive do-it-yourself data centers often give their owners a false sense of security. By prudently outsourcing this function instead, you'd spend less on data management while significantly increasing the security of your intellectual property. And if you outsource to a cloud-based service, you could gain immediate access to your data through constantly updated and fully integrated software solutions, with none of the downtime and disruptions associated with in-house software updates.

And this is what Infor provides?

In large part, yes. Infor offers deep domain expertise in automotive solutions for planning, scheduling and control. We can provide integrated and always up-to-date tools through the cloud which makes them instantly available to your facilities anywhere in the world. Our expertise is in developing, improving and supporting what we consider to be the best enterprise management tools available.

But we follow our own advice when it comes to data centers. As our CEO says, "Friends don't let friends set up data centers." That's why we partner with Google Inc. and its multiple redundant server farms, which are secured by military grade encryption systems.

We offer manufacturers a lower-cost, more integrated and always-current suite of management tools they can rely on to maximize their data and free up resources to help them improve their competitiveness.

Click HERE to learn more about Infor or visit www.infor.com/automotive.