SAP Watch

Nov 20 2008   3:00PM GMT

Can Silicon Valley help bail out Detroit?

JackDanahy Jack Danahy Profile: JackDanahy

Many of you, no doubt, are watching closely what happens with the proposed bailout of the U.S. auto industry because SAP is so dominant in the manufacturing sector here.

While most of the talk around technology’s  role in saving the industry has centered on making greener vehicles, the “big three” might also be well-served considering how technology can better optimize their supply chains.

Making its perennial appearance on AMR Research’s best demand-driven supply chains list this year was Toyota, running seventh. The report concluded that companies with demand-driven supply chains all approach supply chain management (SCM) more as a way to add value than a way to cut costs. By extension, they’re also among the most successful companies in the world.

The big three U.S. automaker makers — Ford, GM and Chrysler — aren’t on this list.

There are undoubtedly many factors that are contributing to Detroit’s problems. But would better supply chain management help?

Have the lean manufacturing principles that Toyota pioneered really been applied in the U.S.? Or, as this IndustryWeek article points out, have they been limited to the plant-floor? The article, written two years ago, says that U.S. automakers were in deep trouble unless they applied lean manufacturing principals across the entire organization.

Have they maximized visibility into business processes? This is where an SOA-enabled platform can make the difference and where, for SAP customers, NetWeaver enters the picture. The potential value of NetWeaver, SAP’s service-oriented application platform, is in its ability to maintain data integrity in the transaction system, while providing many specific, scalable business functions at a process level that link back to that core set of data definitions, according to a 2007 interview with AMR’s Kevin O’Marah on that years’ best demand-driven supply chains.

“Companies can basically forget about doing (demand-driven SCM) unless they’re willing to invest in the technology that provides process integrity, transaction reliability, data visibility and intelligence for decision making,” O’Marah said in the article. “Every single one of these rests on an IT infrastructure that’s robust and scalable.”

There is a demand for Detroit’s cars. Detroit Free Press reporter Mark Phelan, in his column “6 myths about the Detroit 3,” reveals that this is indeed the number one myth surrounding the industry. According to his column, GM outsold Toyota by about 1.2 million vehicles in the US and is still outselling them this year. And the other big two performed well against Honda, Nissan and Hyundai.

Can some of the wisdom from Silicon Valley help Detroit transform supply chains in demand-driven supply networks?

Courtney Bjorlin, News Editor

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  • Cameron
    business objects I can't believe I missed this! I'm going to have to do some more reading me thinks.
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