TRENDS IN THE AUTOMOTIVE INDUSTRY

The Journey of Automotive Industry with Information Technology

In the Indian context, while computers made their mark in operations as much as half a century ago, there has been a profound shift in their role in business. Earlier they were confined largely to processing data in commercial areas such as payroll and purchase where their utility was seen in number crunching operations. On the other hand, today they are integrated to such an extent into the operation that the line separating business and Information Technology, is fast disappearing.

If we were to broadly analyze the impact of Information Technology on business in the automotive industry, we would see the following phases. In the opening phase, the role of IT was almost exclusively to save clerical effort. This was marked by applications such as payroll and billing in large organisations, where large mainframe systems could compress the time for such documentation and bring high levels of accuracy in mass scale work. The style of doing business was however, completely unaffected. Next, with the advent of desktop systems in the eighties, the emphasis shifted to empowering individual users to create their own local applications, which would bring relief to the user. This was based more on individual creativity and hence users developed applications more from the viewpoints of their interest and ability. Typical applications revolved around information that had to be submitted periodically to some authority such as daily material receipt or cash collection data. Some relief was available to individual users but again, these were in pockets and did not materially alter the business scenario or the overall working environment in any significant way.

"Information Technology is a very powerful tool and the ultimate benefit can be extracted only when the application directly impacts business"

In the nineties, the emphasis shifted to the use of IT over a wider horizon, marked by the introduction of larger applications such as Enterprise Resource Planning and the use of advanced software in technical areas such as planning, design, quality and manufacturing. These helped to tackle some of the chronic issues such as, suboptimal decision through the use of inappropriate local applications, or, difficulty in churning out drawings and developments expeditiously, with changing customer requirements. In addition, with the shift to larger servers with wide area connectivity, it became possible to give access to large number of users at different locations and all could share information from the same database. Real time systems became the norm and across the organization, the integrity and consistency of information were enhanced substantially. 

IT WOES IN SUPPLY CHAIN MANAGEMENT

What is supply chain management? Most of us have come across the following two words very frequently – Supply chain management (SCM) & Operations management (OM). Do they mean the same thing or are they totally different from one another. These are some of the questions that need to be answered before we find out the ‘IT Woes in Supply chain management’. While there are many definitions of Supply chain management, my favourite definition is that of Cooper & Ellram - “SCM is an integrative philosophy to manage the total flow in the distribution channel from the supplier to the ultimate user”. Operations Management is responsible for supplying the products or services of the organization and managing the transformation process that converts inputs into outputs. On the other hand, SCM is a melting pot of broad based functions which encompass all of the business and operational processes involved in Logistics (transportation), Operations Management, Materials distribution management, marketing, as well as purchasing and information technology (IT). Thus, OM encapsulates SCM.

Over the years, SCM as a concept has evolved at a rapid pace simply because it plays such a significant role in the firm's performance. Earlier it was the manufacturer who decided the pace at which products were manufactured and distributed. Now, the customers demand various styles, designs, features in their products within a shorter time period and with better quality. Earlier quality of the products used to be a critical factor but now meeting customer’s specific demands for product delivery has also emerged as the critical opportunity for competitive advantage. Overall demands for increasing transparency of corporate activities, sustainability of business, corporate social responsibility and corporate governance has led to large number of researches on topics - ‘Sustainable Supply Chain Management’ and ‘Green Supply Chain’. 

In the current competitive scenario SCM assumes a significant importance as companies are challenged with finding ways to meet ever-rising customer expectations at a manageable cost. To do so, businesses must search out which parts of their supply-chain process are not so competitive, understand customer needs which are not being met, establish improvement of goals, and rapidly implement these necessary improvements.