Manufacturers rely on ERP systems like SAP, Oracle, Infor, QAD and WMS/TMS systems like JDA and Manhattan Associates to streamline their business operations for maximum efficiency so they can stay profitable and competitive.
These systems are vital to keeping up with an industry where change is a constant. ERP systems are the “Swiss Army Knife” of the software world, with multiple modules that handle functions like finance, HR, logistics, marketing and sales. They include everything from sourcing through the supply chain on through to shipping and payment.
When it comes to shipping operations, ERP and TMS systems deliver important business benefits for OEMs, such as:
- Track & Trace – As the OEM supply chain becomes increasingly global and distributed in nature, OEM firms rely on ERP systems to track parts and components and trace them back to their original source. This helps to isolate and resolve problems.
- Quality Improvement – The ability to trace parts and components as they move through supply chains and manufacturing systems is crucial to improving quality and improving processes, especially if there is a product recall of parts or components.
- Documentation – ERP and TMS systems centralize the complex documentation requirements of managing the freight requirements of a global business, from orders and invoices to manifests and billing. This improves efficiency and reduces labor costs.
But as the industry begins shifting away from traditional distribution models, OEM companies are discovering there’s a problem with their ERP. These systems are great at handling freight. They’re not so great at handling small shipments to individual customers via parcel or express shipment.
The OEM Industry Is Changing
Although growth in the DIY parts market has contributed exponentially to the growth of channels like Amazon and eBay Automotive (now the world’s two largest sellers of parts and components), DIY e-commerce is a relatively small niche of the automotive market. Automotive OEMs like Volvo, GM or Toyota have continued to sell parts primarily through traditional distribution channels such as dealerships and authorized repair shops.
However, several factors have contributed to a growth in parcel shipping for OEM firms. First is the need to send more parts to more places as the automotive industry has become more global in nature. A report by McKinsey indicated that OEM sales in emerging economies such as the BRICs and RoW (Rest of World) rose 65 percent between 2007 and 2012, outpacing growth in Europe, North America, Japan and South Korea. More than half of BRICs growth came from China.
Another factor contributing to the growth in parcel shipping is that in the last decade, vehicles have become significantly more complicated. This means more individual parts that dealerships and repair shops might have to replace as part of a repair. It isn’t feasible to maintain every part in stock at every dealership or repair location, so the urgency of repairs – particularly for revenue generating vehicles – will necessarily require OEMs to send more parcel shipments of individual parts rather than large shipments of freight.
A third factor? People are keeping their vehicles on the road longer, repairing rather than replacing them. According to Automotive News, the average age of a vehicle in 2016 increased to 11.6 years, compared to 9.2 years in 2002. This is good news for OEM aftermarket suppliers; it’s also good news for the parcel shippers that move small parts shipments to the dealers and repair shops that need them.
Many OEMs are finding that their ERP or TMS systems aren’t equipped to handle these changes. Existing TMS solutions are focused around managing fewer, larger shipments going to fewer destinations via fewer carriers. They’re not equipped to handle the requirements of high-volume shipping, managing global carrier networks or finding the optimal price and route for large numbers of small shipments heading to customers around the world—even dealing with multiple currencies and customs requirements.
As the OEM business becomes increasingly global and oriented around higher volumes of smaller sales, companies need a way to leverage their ERP systems to manage parcel and express shipping.
Precision Software can help.
How Do I Use Global Parcel Shipping Software to Leverage ERP?
Precision Software helps companies leverage ERP to handle increased volumes of parcel shipping. All of our parcel shipping software solutions—from Multi-Carrier and Enterprise Shipping to Global Trade and Export Management—are tightly integrated to all the ERP systems that OEM manufacturers typically use, including SAP, Oracle, Infor, QAD and JDA.
PRECISION Multi-Carrier and Enterprise Shipping allows you to analyze and select the best shipping rates and routes from more than 500 global carriers around the world, so that you can reduce costs and optimize delivery regardless of where your package is going. Our multi-carrier shipping software also can manage both parcel shipping and the heavy freight part of your business, so you can centralize all your shipping operations on a single, integrated platform.
Because global parcel shipping has become so important, PRECISION Global Trade and Export Management allows you to reduce the risk of selling to unauthorized entities or individuals, streamline paperwork and reduce border delays to improve the efficiency of your global shipping operations. Our solutions also offer unmatched support for multiple currencies, including Latin America, Asia, Europe and the United States.
These are just a few reasons that some of the world’s biggest automotive firms choose Precision Software to help them leverage ERP to keep up with the pace of change in the OEM industry.