ERP Systems and Supply Chain
National Automotive Supply Chain Conference
Automotive Supplier Park, Rosslyn
29 – 30 March 2006
LOUIS LE ROUX
SUPPLY CHAIN MANAGER
NISSAN SOUTH AFRICA (PTY) LTD
1. Brief background on some challenges facing the OEM supply
2. The role that technology can play to overcome these
3. A brief description of ERP systems. Also looking at the
advantages and disadvantages of ERP systems.
4. The Nissan ERP implementation
5. Lessons learnt during the Nissan ERP implementation
“Technology... is a queer thing.
It brings you great gifts with one
hand, and it stabs you in the
back with the other”
Carrie P. Snow
Challenges in the SC
Globalisation is dramatically changing the business environment with
OEM’s competing for business with sister companies in low cost
Total cost of logistics as a percent of cost of goods sold is going up
because of longer distances involved, higher fuel prices, and
The traditional supply chains are inflexible with long lead times –
customers are demanding more flexibility, shorter lead times and
increased customisation (global benchmark).
Very complex supply chains, with a lot of components coming
together from across the globe.
Supply chains are becoming very lean with less and less inventory in
The role of technology
In the automotive industry traditional business models are
transforming into transparent, customerdriven value chains.
Success depends on speed.
To stay on the fast track to success, integration of OEMs, suppliers,
dealers, and customers is essential.
ERP systems enable you to manage multitiered networks of
customers, suppliers, and partners closely.
It facilitates seamless integration and collaboration across multiple
internal and external organizations.
It includes best practices that support critical business processes –
providing full visibility into enterprise data and increasing speed and
Staying in touch with technological advancements has become
crucial to compete in the “global village”.
What is ERP?
Enterprise Resource Planning (ERP) systems provide a single
solution with integrated functions for major business functions from
across the value chain such as production, distribution, sales,
finance and human resource management.
Enterprise Resource Planning System
One intergrated system across the value chain
OLD System 1 System 2 System 3 System 4 System 5
Marketing Finance Manufacture Distribution HRM
Different systems in silos across the organisation
Benefits of ERP
The benefits of ERP sytems include:
Intergration of all internal and external processes resulting in
increased customer value
Better sharing of information within the organisation
Break down organisational barriers
Enable supply chain visibility
Disadvantages of ERP
The main disadvantage of ERP systems is the high cost involved in
purchasing and implementing the ERP system.
Other disadvantages include:
The major organisational change required to implement the system
High demand has given rise to skills shortage
The business often has to change process to fit the way the software
Nissan ERP implementation
Nissan golive on ERP – 1 week in July 2005
One week shut down for implementation
Big bang approach – All functions migrated to an ERP system
Switch on / Switch off – The legacy system was swiched off and SAP
switched on – No contingency plan.
Steep ramp up plan (volume) after implementaion.
Phased implementation instead of Big Bang. Use an approach
whereby different functions are migrated to ERP in a phased manor.
Rigourous intergration testing prior to implementation and then work
through the post implementation issues as best as possible.
There is a 'unique' culture in the motor industry that often leads to
changing SAP to work like the old legacy system and believing that
the tried and trusted mechanisms that were previously deployed are
still the best, resulting in a lot of the standard SAP functionality not
being used to the full benefit.
The vast majority of issues must be resolved by the normal
management of the process, issues and the people. Staff need to
understand the importance/purpose of their role.
Realistic time frames You don't have to go far to bump into lots of
evidence that shows how ERP software has not delivered on the
promises of vendors.
Learning points (cont)
Run the legacy and ERP systems concurrently instead of a Switch
on / Switch off approach.
Don't underestimate the art of "change management“. Ensure that all
participants in the project understand the goals of the project.
Make sure that every vendor involved in the project has "skin in the
game“, sharing in the risks of the venture.
Don't lose sight of the impact on the customer. During any major
transformation of a company's core business processes, all changes
must be absolutely transparent to all stakeholders.
Need to develop/acquire in-house ERP problem solving skills.
Training, training, training ……