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Automotive:With Change Accelerating, Procurement Must Stay Ahead

The automotive industry has been facing unprecedented changes. There have been fundamental shifts in customer demand coupled with rapid technological advances and innovations. Add in new market entrants, and automotive manufacturers are now searching for opportunities that will give them a competitive edge.

Autonomous vehicles, electric cars, mobility as a service, and hyperconnected consumption are just some of the cutting-edge innovations that will help achieve this competitiveness. Ever-increasing complexity and choice across the supply chain will necessitate highly efficient, integrated, and future-proof product sourcing and procurement to make them a cost-effective reality.

automotive

Four Key Focus Areas

Supplier and Risk Management, Sourcing, and Contract

Reduce exposure across the automotive supply chain by managing supply chain risk and rising material costs, securing alternate sources of supply, and monitoring supplier performance and product quality.

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Planning and Forecasting

Ensure that procurement is agile, flexible, and constantly improving by increasing supply chain visibility, balancing supply and demand, and understanding supplier capacity.

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Buying and Delivering

Boost efficiency across the entire buying and delivery process by automating indirect procurement processes, managing the external workforce, and optimizing inventory.

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Invoice and Paying

Improve invoicing efficiency and optimize cash flow to ensure the business pays and gets paid the right amounts at the right time.

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Key Business Outcomes

In a highly inflationary operating environment with heightened geopolitical risk, it is vital to ensure an adequate supply of materials to support production needs.

This takes:

  • Accurate, real-time visibility into supply chain constraints
  • Cost transparency to control costs of purchased materials
  • Reduced exposure to sole sourced parts
  • Increased supply chain resiliency, with new sourcing strategies to ensure alternate sources of supply
  • Management of supplier performance and compliance

With fast-changing events able to affect the supply chain in days, accurate and agile forecasting and planning will help ensure that production is adjusted to maintain efficiency. Integrated, transparent, and real-time data collection and analysis give your business:

  • Better visibility into supplier’s ability to deliver on time despite disruption at ports of entry
  • Better balance of supply and demand, ensuring resilient planning and management of supply chain mismatches
  • An agile and flexible supply network with better visibility empowering improved supplier capacity

Leverage digital transformation to gain better visibility, control, compliance, and collaboration across all spend-related processes, from procurement to personnel and inventory.

  • Reduce manual and inefficient indirect procurement processes and drive more compliance across all buying channels.
  • Improve visibility of the external workforce and better manage and control related services spend.
  • Reduce supplier delivery variability to drive lower safety stocks.
  • Deploy inventory processes for MRO spare parts, such as vendor-managed inventory and consignment, to improve working capital efficiency.

Maintain margins and increase profitability in times of high inflation by driving more efficient invoicing and optimizing cash flow management and planning.

  • Reduce manual paper-based accounts payable invoice processes and automate invoice workflow exception handling.
  • Make sure suppliers have sufficient working capital by offering supply chain financing and dynamic discounting.
  • Accurately predict cash flow over extended periods to facilitate better decision-making and planning.
  • Create plans to access liquidity from within your supply chain.
  • Offer an expanded choice of payment methods and follow up on invoices quickly.
  • Convert short-term debt to long-term debt, eliminate unnecessary expenses, and renegotiate supplier terms to minimize cash outflow.

How Customers Are Achieving Value from SAP Solutions

Yokohama Rubber

Transforming procurement for one of the world’s leading automotive tire and rubber producers

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Digital Transformation of Automotive Procurement

Agile procurement insights research by SAP, in collaboration with Oxford Economics

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Procurement Software and Solutions From SAP

180k

Automobiles are manufactured each day by SAP customers4

+7.1k

Automobiles companies in 106 countries innovate with SAP solutions5

95

Of the top 100 automotive OEM suppliers in the world run SAP solutions6

9 Of the top 10

automotive infotainment suppliers in the world run SAP solutions7

8 Of the 8

most innovative automotive companies in the world run SAP solutions8

8 Of the top 10

automotive franchises in the world run SAP solutions9

Learn more about how SAP procurement software and solutions can help you

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Sources

  1. “The Imperative for Procurement Digital Transformation for Automotive,” SAP in collaboration with Oxford Economics, 2021.
  2. “Close Collaboration That Goes Beyond Transactions: Direct Spend Leaders Engage with Essential Suppliers to Improve Performance,” agile procurement insights research, SAP SE in collaboration with Oxford Economics, 2021.
  3. IBID
  4. SAP Point of View: Public | The Intelligent Automotive Business |The Future of Procurement | SAP Internal Data
  1. IBID
  2. IBID
  3. IBID
  4. IBID
  5. IBID