We’ve discussed in great deal on this blog the elements that comprise effective supply chain management and how automotive manufacturers can leverage technology and strategy for lean management of their supply stream across the entire value chain. But what hasn’t discussed in much detail is how manufacturers starting from square one can best structure their supply networks and the decisions and considerations involved in such an enterprise.

The modern automotive supply stream is a variant-rich network of players with inherent risks and volatilities. However, the right supply chain architecture can provide a significant for value proposition for companies in cutting through the complexities of global supply and manufacturing and reducing the risk involved with doing business on such a grand stage. While technological advancements such as Industry 4.0, The Internet of Things, postmodern ERP,  and advanced analytics can streamline supply chain management, the right structure for a company’s goal, outcomes, and objectives is a crucial first step in engineering supply efficiency and productivity.

Ask any automotive supply chain planner or manager about their top priority in supply chain management and you’ll hear the same thing: The need to cut the complexity of today’s increasingly global, interconnected supply stream and enhance the ability to meet the demands and desires of customers across all corners of the world. While the need to cut complexity is perhaps the most important task for OEMs and suppliers, it can also be extremely difficult given the two most common methods of supply chain integration in today’s landscape: vertical and horizontal. 

But in the last few years, a new brand of automotive supply chain integration has developed that allows companies to effectively leverage the most effective, integral elements of both vertical and horizontal integration. Vertizontal integration, or the merging of several aspects of  vertical and horizontal strategies to foster a lean supply and production strategy, has emerged as a key driver in automotive supply chain management and a critical tool for success in such a variant-rich industry.

How does your organization approach enterprise resource planning (ERP)? Not so long ago, ERP was completely absent from supply chain management strategy. Today in many organizations ERP dominates software solutions. But innovative supply chain leaders are adopting a new approach to ERP, one that goes far beyond "best of breed." This postmodern ERP fosters strategic collaboration between business and IT leaders and sets organizations on the path to thriving in the Industry 4.0 environment. 

On a recent cross-country flight, I was seated next to a supply chain manager for Company X who, after furiously typing away on his laptop for an hour or so, expressed concern about his company's current ERP (enterprise resource planning) solution and strategy and whether it was well-suited to meet the demands of today’s global supply chain.

This planner told me his biggest fears about his company's ERP model was its ability to remain lean, agile, and cost-effective in conceiving and implementing planning solutions and strategies. This planner is not alone in his anxiety. A recent Gartner survey indicated ERP efficiency ranked fourth overall among the top concerns of manufacturers and suppliers.