it adoption in auto component manufacturing cluster

Copyright © 2004 ACNielsen

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IT Adoption in Auto Component IT Adoption in Auto Component

Manufacturing ClusterManufacturing Cluster


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NASSCOM is focusing on increasing IT penetration in the micro and SMB business segment in India as part of its domestic IT market initiatives. The auto component manufacturing cluster has been identified as one of the initial target clusters.

The following slides contain data that gives key insights on:

• The key business process critical to a firm’ competitiveness • An understanding of the IT adoption in these business processes• Business user expectations from IT deployment

The key drivers to the adoption of IT in auto component manufacturers is the need to have better inventory control, better business process flow & competitive pressure.


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Role of IT in Auto Component ManufacturingRole of IT in Auto Component Manufacturing

Access to

Business

Info

Raw Material

Procurement

Timelines

Product

Quality

Price

Competitiveness

Increased

ValueRaw Material

Cost

Need to

implement

effective IT

Quality

Cost

Scale

Scope

Time

Increase efficiency

Increase competitiveness

Integrate & streamline

processes

Meet customer demands

Meet customer demands

Business Challenges Expected Outcomes


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What are the key challenges for BU heads?What are the key challenges for BU heads?

Ch2.1 . Key business challenges (India – BU)

Key Challenges for BU HeadsAverage

rankRank 1

Fluctuation in raw material costs 11.2 17Maintaining price competitiveness 10 13Meeting customer demand for product quality 10 15Meeting customer demand for timelines 10 5Demand projection 9 5Track production timelines 9 3Track production costs 9 4Quick access to business information 9 4Timely availabilty of raw material 9 5Procurement of raw material 8 6Availability of good IT technology 8 4Training & Development 8 1High attrition rate 7 3Implementing IT technology 7 0Resistance to new IT technology among employees 7 2Infrastructure bottlenecks 6 1

Signifies most critical challenges for the Business Unit heads according to the rank 1 scores


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Base : 88 BU heads

What are BU Head expectations from the IT Deployment?What are BU Head expectations from the IT Deployment?Ch2.2 . Key expectations from IT (India –BU)

BU heads expect IT to provide solutions for –

1) Meeting customer requirements for product quality

2) Tracking production costs

3) Access to critical business information (One of the key challenges in qualitative phase)

Fig are %


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Base : 148 All respondents Fig are actual numbers

Critical Business ProcessesCritical Business Processes

Key business

processes

Ch5.1 . Critical Business Processes (India – All)


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Base : 148 All respondents

Critical Business ProcessesCritical Business ProcessesBy Large/ Medium/ Small firmsBy Large/ Medium/ Small firms

Order receipt & demand mgmt

Production planning & scheduling

Order Processing

Large (16) Medium (86) Small (46)

Material scheduling

Accounting

Costing system

Payment to vendors

Material receipt

Invoice generation / payment colltn

Product data mgmt & engg syst

Traceability compliance reqts

Material Accounting

Customer Service Management

HR & payroll systems

Bank reconciliation

Most Critical

Least Critical



Order Processing

Material Accounting

Accounting

Costing system

Payment to vendors


Material scheduling

Customer Service Management

Product data mgmt & engg syst

Material receipt

Invoice generation /pymt colltn


Bank reconciliation

Material scheduling



Accounting

Order Processing

Costing system

Invoice generation / pymt colltn

Material Accounting

Payment to vendors

Material receipt


Product data mgmt & engg syst Invoice generation /pymt colltn


Bank reconciliation

Ch5.2 . Critical Business Processes (India – L,M,S)

More or less similar trend noticed for critical business processes identified across large, medium & small companies


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To what extent are critical business processes IT To what extent are critical business processes IT enabled?enabled?

Order Receipt and Demand Management

Order Processing

Base : 60 (IT Heads)

Ch5.4 . IT Enabled Critical Business Processes (India – IT)


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Production Planning & Scheduling

Material Scheduling





10

Accounting





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Current Implemented Applications/Systems- 2003Current Implemented Applications/Systems- 2003Auto Ancillary Sector (India – All)

Fig are %Base :148 All respondents

Signifies the most implemented applications & systems


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Implemented Enterprise Application SystemsImplemented Enterprise Application SystemsBy Large, Medium & SmallBy Large, Medium & Small

Ch6.2 . Implemented Enterprise Applications (India – All, L,M,S)

Fig are %Base :148 All respondents

Enterprise Application Systems Large Medium Small

Enterprise Resource Planning (ERP) 88 53 52

Integrating plants / factories 81 34 22

Supply Chain Management (SCM) 63 36 15

Electronic linkages with suppliers and distributors 50 24 22

Customer Relationship Management (CRM) 19 17 24

Sales Force Automation (SFA) 13 21 9


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Base : 60 IT heads All figs are in %

Annual IT budget 2005-06Annual IT budget 2005-06

A significant proportion (90%) are planning to increase IT budget next year

Ch8.1 . Annual IT Budget Allocation (India – IT)

2005-06 IT Budget

Size of Company

Average IT spend 2005-06

(Rs. Crore)

Large 1.39

Medium 0.49

Small 0.28


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Full-time employees handling IT service & supportFull-time employees handling IT service & support

Fig are %Base : 60 (IT heads)

Ch9.1 . IT Employee Strength (India – IT)

Note: The Numbers indicate total number of full time employees across all locations

In a majority of auto component manufacturing companies, less than 10 full time employees

take care of the IT service & support function, across all locations.


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Fig are %

Total no. of servers owned

No. of computers and workstations Number of nodes connected to the LAN across

locations

Current IT infrastructureCurrent IT infrastructure

Base : 60 (IT heads)

Ch9.2 . IT Infrastructure (India – IT)


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The task at hand…..The task at hand…..

You need to design an IT infrastructure portfolio focusing on key areas emerging from the case.

The solution needs to discuss:The application portfolioThe budget requirementsThe manpower and other infrastructure requirementsThe expected improvements in efficiency as against the existing IT

applications

The current IT implementations as well as the existing IT budget and infrastructure deployed need to be considered while providing a solution.


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Finance

Finance


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it adoption in auto component manufacturing cluster

Documents

key business process

better business process

business unit heads

smb business segment

raw material costs11

critical challenges

key insights

bu headswhat