Automotive industry

The way forward: automating access points in the automotive industry

The disruption caused by the pandemic has impacted virtually every facet of the automotive supply chain. Even before the recent disruptions, it was not easy to manage the huge volumes of invoices generated within the automotive industry, many of which are still paper or PDF and processed manually. As any AP professional knows, processing inbound invoices typically requires a lot of manual effort and time which can be costly and prone to human error or even fraud.

Few industries have as many moving parts as the automotive industry. When dealing with hundreds of different suppliers, it is easy to be overwhelmed by the number of invoices received. On top of that, the industry is currently plagued by a number of supply chain issues. With the global chip shortage and labor shortages, meeting consumer demand in the automotive industry has never been so difficult. By automating the accounts payable process, companies in the automotive industry can ensure maximum efficiency in an industry where efficiency can make or break a business.

Global chip shortage

The typical new vehicle uses approximately 1,400 microchips. But, an unexpected increase in demand for smart devices compatible with chips of all kinds meant that the market needed huge volumes of different types of chips, all at the same time. Industry supply chain planners were unable to predict this scenario, and there was no way to produce enough different types of chips quickly enough to meet growing demand.

With these chips in short supply, many of the world’s major automakers have been forced to cut production and temporarily shut down many of their manufacturing facilities. This, in turn, has resulted in a shortage in vehicle production as well as supply chain problems. Semiconductor chip shortage set to cost the global auto industry dearly, consulting firm AlixPartners says 210 billion dollars in turnover in 2021. Automating accounts payable can alleviate further supply chain slowdowns and prevent further disruption.

Other shortages and rising costs

Chips are just one of many disruptions facing the industry, ranging from resin and steel shortages to labor shortages. Recent labor shortages have affected almost all sectors of the economy. Upward pressure on wages is seen across the automotive sector, with most having to pay higher wages and even provide special bonuses to attract a skilled workforce. The higher starting salaries are expected to be permanent and last beyond the effects of the pandemic. Another impact on labor supply comes from the so-called e-commerce effect, in which online retailers hire a significant amount of skilled labor, resulting in a shortage large amount of labor available for other industries, including automotive related projects.

It’s no surprise that these supply chain issues drive up costs. In order to compensate for these increasing costs and to avoid passing higher prices on to customers, the automation of the necessary business processes is essential. By automating the accounts payable process, automobile brands can reduce the cost of receiving and processing invoices.

How AP Automation can compensate for these problems:

  • The approval process often involves several different people and various stages along the way. Implementation of an AP automation system streamlines this flow and ensures that anyone affected by approval is instantly notified, dramatically reducing approval time.

  • Faster approval and payment of supplier invoices means automakers can take advantage of early payment discounts from suppliers, further reducing costs.

  • After implementing AP Automation software, businesses should see a decrease in the cost of processing each invoice. In fact, the cost of receiving invoices has fallen by 64%. In total, industry experts estimate that the costs of processing accounts payable would ultimately be reduced from $ 4 to $ 8 per invoice.

  • Fewer errors and faster turnaround times improve supplier relationships and could even lead to become a supplier’s priority customer.

Automotive case studies

For ThyssenKrupp, Comarch provided a platform for a highly efficient and reliable electronic document exchange with customers, logistics service providers and authorities. The aim was to systematize and optimize the processes of electronic document exchange between the Thyssenkrupp department responsible for the supply of components and engineering services to the automotive sector and its business partners. Before starting the cooperation with Comarch, the different functions were performed by several different EDI providers to exchange documents, which made optimal synergies impossible. By working with Comarch, ThyssenKrupp was able to harmonize all of their different systems in one convenient place.

Comarch was chosen for a global EDI project with MAN Truck and Bus. Comarch was chosen primarily for its ability to ensure compliance with many different national laws regulating the electronic exchange of billing data both commercially and technically. During the course of the project, various types of partners are integrated into the EDI system and connected to MAN. Therefore, it was particularly important that Comarch was able to implement all technical interfaces and convert any document format to MAN’s preferred standard. With the help of Comarch EDI, MAN was able to facilitate day-to-day operations and significantly reduce the associated administrative effort.

The automotive space is unique when it comes to handling supplier payments. With AP Automation, companies in the automotive industry can increase internal controls and visibility throughout the invoice lifecycle.

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