Traditional Intermediaries - Systems

Traditional Intermediaries
Logistics Outsourcing

Systems Designed to Gain Efficiencies

The automotive industry has been developing Supply Chain Optimization practices for a long time.  In their search to increase business efficiency they have implemented material requirements planning (MRP), enterprise resource planning (ERP), and advanced planning and scheduling (APS) system.  These “traditional” systems have provided them with higher levels of financial control and have allowed them to optimize activities such as, planning, scheduling, and resources. However, these systems have not provided enough functionality to assist companies in optimizing resources across the entire supply chain. 

Communication Tools

The automotive industries early on recognize the need for collaboration with their suppliers in order to reduce production inventories and improve vehicle design to market.  OEMs began sharing strategic design and production information, and exchanged tactical purchasing data with key suppliers via telephone, fax and/or electronic data interchange (EDI).  EDI relies on rigid communication protocols and standards that did not support the exchange of the wide variety of documents required, such as planning schedules and engineering drawings, neither the level of information exchange required for real-time collaboration.  Additionally, implementing EDI requires the purchase and maintenance of expensive software and systems, as well as a contract with one of the value added network providers (VANs).  None of these requirements makes EDI conducive to support communications with the entire supply chain.