Stefan Issing, Global Automotive Industry Director at IFS, answers questions from Automotive Industry Magazine on “ERP systems in IoT environments” while attending CeBIT 2017.
The Internet of Things (IoT) and the complete digitalization of economic sectors create a ton of so-called “big data,” but this huge amount of data must be analyzed. One of the headlines at this year’s CeBIT was, “How do companies in the automotive industry handle this?” Below are my answers to a Q&A on how companies in the automotive industry are managing IoT.
The information that companies can access is increasing from day to day. How does this change the demands made on ERP solutions?
Issing: Enterprise resource planning (ERP) systems need to offer mechanisms and functionalities that can use information in a proper way. It’s not sufficient to simply process the information—it must be operationalized. ERP systems must be able to transform the information into actions so that business processes can be improved. The IFS IoT Business Connector fulfills those requirements. It can be used to receive enormous amounts of data from assets, machines or mobile devices in the cloud, transforming this data and transferring it to IFS Applications, which then uses it to run processes such as user-defined, semi-automatic or full-automatic workflows.
Does big data make sense in every case? Because more information means higher planning accuracy. What sort of feedback have you received from your customers?
Issing: In itself, big data will not solve all problems that companies have. At first, you need to define which data should be analyzed and how it should be used. After that, you can verify how the new data and information influences planning accuracy and how you can use this to improve your processes.
Are mid-sized companies investing in new ERP systems to benefit from the advantages of big data or are they still holding back?
Issing: Many companies are investing, but in my experience, a step-by-step approach is better than short-lived solutions that are ‘flavor of the month’. One of our customers said, “We did not set up an IoT task force because we want to handle the issue pragmatically instead of doing things for the sake of doing them.” The customer also said that it didn’t all start with this much-hyped IoT term — for him long-established, production data acquisition processes are also part of the IoT concept.
Do your customers operate their ERP systems on their own servers or do they use “Infrastructure as a Service” or cloud solutions? It there a recognizable trend?
Issing: At the moment, German mid-sized companies still prefer to run on their own servers. But, we have some customers in our region that are already using “Infrastructure as a Service.” The cloud is not as big of a talking point in Germany as it should be. In other regions, for example in the US, cloud usage is far more developed. But I’m sure we can expect a change in this trend over the coming years.
Just-in-Sequence processes are very important for the automotive industry. New digital concepts in the supply chain are integrating the delivery process more and more: when the truck leaves the supplier’s site or the current traffic situation, etc. How can ERP solutions keep up with these trends? Does it make sense to expand the functionality in those areas?
Issing: ERP systems can fulfill requirements like delivery chain matrix, routes for transports or different logistic calendars. For other functionalities like the integration of traffic information or load optimization, only highly specialized best-of-breed solutions exist that can cover quite a lot more requirements than an ERP system can. It’s more efficient and cost-effective to integrate those systems via an interface than it is to implement parts of those functionalities directly into the ERP system. Nevertheless, we have done some customer-specific modifications in this area, but they are not currently integrated into our core solution.
Does IFS Applications cover engineering, logistics and manufacturing processes? Is the system fully integrated—vertically from PLM to shipment and horizontally in respect of the value chain?
Issing: Our ERP software covers the complete value chain from the initial engineering assignment all the way through to production. Furthermore, it offers additional functionalities like quality management and assurance and workflow management. With each update, a specialized team within our research and development (R&D) department, IFS Labs, takes new trends into account and provides new functionality that matches them. A current example is demand-driven MRP.
What type of customers in the automotive industry use IFS Applications and what modules do they use?
Issing: Around 90 percent of our automotive industry customers are typical Tier 1–Tier N suppliers. The other 10 percent are a mix of OEMs, service workshops and dealers. In general, our customers use the complete ERP business suite of IFS Applications—finance and controlling, human resources (HR), supply chain management (SCM) and production.
What differentiates IFS Applications from other vendors?
Issing: One of the key differentiators is our user-friendly interface with IFS Lobby. IFS Lobby provides users with a customized view of all the content and information they need for their daily work. IFS Lobby can be defined by the user and no coding skills are required. Furthermore, we offer a completely new and innovative layered application architecture (LAA). It separates core from localizations, extensions and customer-specific modifications, making it possible to install upgrades and extensions very quickly, efficiently and cost-effectively. For the automotive industry, IFS Applications provides fully integrated package management, which covers the complete supply chain from procurement to internal logistic process and manufacturing to final shipment. Furthermore, our industry experts and global presence are a major benefit to the automotive industry.
What are your plans, technologically and commercially, for the next 5 years?
Issing: We want to help companies to benefit from the full potential of IoT. To this end, we are investing in new products, managed services and specialist know-how. A merely simple connection between IoT and assets or equipment is not enough. The goal must be to become an “intelligent company.” That means you can make informed decisions and connect corporate strategy with operational performance. IFS provides a special solution for this: IFS Enterprise Operational Intelligence (EOI). Combining IoT and EOI with our ERP software and enterprise service management (ESM) solution is one of our medium-term objectives. From a commercial point of view, we want to continue to grow, and we are in the process of increasing headcount.
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