The Critical Business Challenges that Saphran Addresses

Forecasting Challenge

Forecasting, for automotive suppliers and custom manufacturers, requires combining three key elements to produce a comprehensive report unique to that supplier's business and using that report to develop an effective strategic plan. The elements include:

Market intelligence in the form of a volume forecast, which describes the number of assemblies (for example, vehicles, engines, and transmission) that will be built by OEMs for a given period of time.
The supplier's own parts information, including costs, prices, and the relationship of the parts to the assemblies described in the volume forecast.
Reporting and analysis of the combined data that provides views of future expected revenues, costs or margins under various "what-if" scenarios. Forecasters traditionally have had to spend months cutting and pasting and manually combining these elements, to produce a limited set of forecast reports. Market intelligence and internal information constantly change, so the reports are often obsolete by the time they are completed.

This frustrates executives' need for timely and current market information and efficient decision-making support tools to identify and take advantage of every profitable business opportunity.

Business Planning without the Benefit of Good Data and Fast Enterprise Reaction Speed
Creates Wasted Effort, Lost Profits, and Higher Business Risk

Learn more about Saphran PartBase and how it solves the forecast challenge.

Cost and Quoting Challenge

To begin with, responding to a request for quote involves a number of people within a manufacturing company. They must collaborate to assess and approve the design, process, capacity, investment, logistics, strategy, cost, and pricing of a new project. Often the contributors and approvers are separated by geography; or there is no central repository for quotation data. Furthermore, even if it exists, this data is usually not linked to the forecasting process.

Suppliers are often challenged to complete accurate quotations within required timeframes (usually 10-14 days). This process is made more difficult due to information from past quotes not being easily accessible. To further complicate issues, costs, capacity, quality and design complexity differ between projects.

Inaccuracies or inconsistencies in the quotation process can have negative financial results, especially with long-term contracts, common in the automotive industry. Misquoting on the high side (over-quoting) may cause the loss of potential contracts, while misquoting on the low side may lead to manufacturing parts at a loss, creating significant financial burdens on manufacturers in this already highly competitive, thin margin industry.

Even after the quotation is submitted, the challenge continues. In long-term contracts, prices may change occasionally, but costs will change constantly. Successful companies must manage the margin to preserve profitability but are often limited to financial accounting, or budgetary reports. This makes it difficult for companies to manage programs and improve margins.

Learn more about Saphran QuoteBase and how it solves the cost and quoting challenge.

Forward Profit and Risk Optimization

Many decisions to optimize an active quote, RFQ, response are contingent on the best real time understanding of key commercial areas that today take man-days or man-weeks to assess. Thus most commercial teams make very rough guesses around areas like these, which puts future profits at risk:

Other business with this customer and current or past terms.
Future loading of machines, cells, lines and plants to reduce or increase real capital cost.
Ability to commonize to reduce tooling, component or material costs.
Understand full global manufacturing and supply chain capabilities in the future with potential commercial scenarios, like acquiring capabilities, add new plants, or viable outsourcing options.
What are all of the Engineering options to meet the customers needs and which will provide the lowest total cost with the best price justification.
Instead of working on just inbound RFQs, what future customer programs or projects exist where we have a competitive advantage to maximize margin and reduce risks and this targeting could be substantiated with facts.
Evaluate global manufacturing options to optimize profits and reduce risks with understanding of relative total delivered cost to the customer.
How did the last customer volume estimates, forecast estimates and actual shipments compare each month to improve future cost estimates.

Without real-time up-to-date intelligence on these key commercial scenarios, automotive and other manufacturers are giving up the ability to reach best Return on Capital Employed (ROCE %). With only ERP and PLM systems and no Predictive Margin Optimization (PMO) system, manufacturers are giving up hidden profit improvements of 0.25% to 5% of sales annually that is only available by having a closed loop commercial process. Best practice manufacturers have seen this level of improvement, while supporting increases to sales growth and diversification.

Learn more about Saphran Center of Excellence and how it solves the
forward profit and risk optimization challenge.