This interview was originally shared in a blog published by Salesforce France.
The pandemic-induced economic crisis has multiplied the challenges faced by auto suppliers and has forced them to adapt to stay in business. We spoke to Gary Brown, Manufacturing Industry Subject Matter Expert at Acumen Solutions, to find out what impact the crisis has had on sales forecasting in the automotive industry, and how Acumen Solutions and the Manufacturing Cloud platform are helping auto suppliers plan and achieve their recovery.

Q:  The current economic crisis has unsettled the entire automotive industry. Is it true that this has had a particularly devastating effect on auto suppliers, when it comes to demand and supply, as well as their activity and resilience?

A: Tier 1 auto suppliers have been hit hard by the global crisis, on both the demand and the supply side, as a result of high market volatility. This has only been made worse by various plant closures, program delays and cancellations, and a heavy reliance on struggling Tier 2 and 3 suppliers. The crisis has also made it hard for Tier 1 suppliers to ensure reliable delivery to original equipment manufacturers (OEMs). Suppliers that are seen as unreliable to OEMs are at the risk of losing business. Unreliable suppliers have less bargaining power vis-à-vis OEMs when it comes to asking for price increases, which in turn lowers their profits and reduces their ability to add capacity.
 

Q: Forecasting has always been a difficult craft. Has it become all but impossible for OEM suppliers? Do they still have their sights set on the future? Or is their main strategy instead to find security in the present? 

A: Sales forecasting has become increasingly difficult during the crisis. Long-term demand models that depend on IHS Markit production projections, historical data, and time-series forecasting are less reliable for long term planning today. OEMs have therefore pivoted to a shorter forecasting window, placing greater emphasis on more frequent communication with their customers on sales projections. Sustaining the business over the long run and keeping the operations running smoothly in the short run are both important priorities. When it comes to strategy, OEM suppliers have their eyes firmly set on the future. Many suppliers have initiatives focusing on reducing costs and enhancing programs over the lifecycle of their sales agreements. As a result, suppliers continue to invest in additional capacity to ensure that they can meet the demands of the market. Accurate forecasting is essential here, as cost modeling and capital investment decisions depend upon accurate volume, revenue, and profitability assumptions.

 

Q: Some OEM suppliers such as Faurecia do not expect global vehicle production levels to return to normal before 2022-2024. How is Acumen Solutions helping them, and is there a generic recovery plan for all suppliers or do you act on a case-by-case basis? How does Acumen Solutions help them to better analyze data to plan for the future? 

A: Acumen Solutions works with OEM suppliers to help them get back on track. By leveraging the Salesforce Manufacturing Cloud platform, we have developed an accelerator that allows sales, finance, and operations teams to align on the sales and operations planning process and improve forecasting accuracy. We are also helping OEM suppliers optimize their request-for-quotations response process, when it comes to prioritization, efficiency, accuracy, and follow up. While there are common challenges that can be addressed by the Salesforce Customer 360 platform, we recognize that every company has their own unique business processes, systems and KPIs. Keeping this in mind, we have designed our accelerator to have the flexibility to accommodate these differences. To help our clients analyze data better, we focus on making the data accessible when and where it is needed by helping them develop and implement an integration plan. Then, once the data becomes available, we help them make better business decisions with this data, using the various analytics functionalities of the Manufacturing Cloud platform.

 

Q: In your opinion, is it possible to transform certain challenges linked to the current context into opportunities? How can this be done? What strengths do OEM suppliers have to help them get back on their feet? 

A: The crisis has indeed magnified the challenges faced by suppliers, but it has also forced companies to reevaluate business processes and systems in areas like forecasting and demand fulfillment. OEM suppliers are investing in digital transformation to drive operational excellence in areas like forecasting accuracy and optimized product fulfillment. Companies are also consolidating and updating enterprise resource planning (ERP) systems. There is great potential for business intelligence and AI to make more informed decisions, faster. Companies that invest in these areas will emerge from the crisis stronger and faster than their competitors.

 

Q: How does Manufacturing Cloud help you secure access to data and use it in the most efficient way? 

A: Manufacturing Cloud provides a unified view of the business and, when integrated with back-end ERP systems, maps actual sales results against forecasts in real time. The platform automatically sends notifications to the finance team and the team working on demand planning and helps them visualize revised forecasts, coordinate, and plan accordingly. Manufacturing Cloud saves time and resources by automatically consolidating information on a central, intuitive, and actionable platform.

 

Q: What are the next challenges for Acumen Solutions? 

A: We are working closely with our Tier 1 auto supplier clients to develop solutions on the Salesforce 360 Platform that will help them solve the many challenges they face—achieving global standardization and operational excellence, becoming a connected supplier, attracting and retaining talent, and activating analytics across the business.
 
Click here to view the original blog from Salesforce France.