Automotive Industry
EDI has been in use across the automotive industry for over forty years. Today’s car production lines rely on the seamless exchange of business documents between the car manufacturers and their supply chains to run smoothly. Many of the business processes used in the manufacture of today’s cars were developed from a production system devised by Toyota in Japan. A number of best practices such as just-in-time (JIT) and lean manufacturing were developed around the Toyota Production System.
JIT and lean manufacturing processes are central to the smooth running of many production lines around the world, and EDI provides a fast and efficient way to transfer business documents in order to support these types of manufacturing processes. Visibility of inventory levels and notification of when shipments will be received are critical to making JIT and lean manufacturing processes successful.
The global nature of the automotive industry makes it important for car manufacturers to onboard their suppliers as quickly as possible, no matter where in the world they may be located. For example, many car manufacturers have established a manufacturing presence in Eastern Europe, Brazil and China. It is important to ensure that suppliers located in these regions are able to exchange EDI documents as smoothly as possible. ICT skills across low cost or emerging markets are traditionally very low; therefore, the car manufacturers must ensure they provide simple-to-use EDI tools that enable even the smallest suppliers to trade electronically.
The global automotive industry uses numerous communications and document standards as well as a number of regionally specific EDI networks. The structure of the automotive supply chain and a description of the communication protocols and document standards used are described below.
Supply Chain Structure
The automotive industry has a tiered supply chain structure that is best illustrated in a diagram (shown below). Upstream from the car manufacturer or OEM are the Tier 1 suppliers. These companies supply some of the largest components or sub-systems for the cars (e.g., a suspension assembly or gearbox). The Tier 2 suppliers provide components to the Tier 1 suppliers (e.g., pump units, electric motors, bearing assemblies). Further upstream are the Tier 3–n suppliers that provide the Tier 2 suppliers with various parts (e.g., brackets, seals, machined components, etc.). In addition to the tiered suppliers, raw material suppliers such as the steel manufacturers provide products directly to the car manufacturers.
As the Tier 1 suppliers are the most important to the car manufacturers, they typically have a plants close to the car manufacturers to support JIT production processes. Tier2–n suppliers may be based anywhere in the world. Many companies in this particular sector have established a manufacturing presence in low cost countries such as China and India. Downstream from the OEMs, the third party logistics (3PL) providers will distribute finished vehicles to storage compounds and vehicle distribution hubs located around the world. These are shipped to the dealer networks as required.
Communication Protocols
The automotive industry uses a number of standard communication protocols such as FTP. In Europe the main communication protocol is use today is Odette File Transfer Protocol (OFTP). OFTP has been used across the European automotive industry since the mid 1980s, and most car manufacturers are using this protocol to communicate with their trading partner communities.
With the growing widespread use of the Internet, many car manufacturers have been working with the Odette organization to bring the OFTP standard up-to-date. A new release called OFTP v2.0 was introduced to the automotive market in 2010. This new version of OFTP was designed from the outset to be used across the Internet, and it offers secure exchange of documents using encryption and the exchange of digital certificates. OFTP2 also allows large files such as computer aided design (CAD) files to be exchanged with ease. Exchange of CAD files is a common problem within the automotive industry due to the sensitive nature and large size of the files being transferred.
Document Standards
The more traditional EDI documents are ANSI X12 and EDIFACT. A number of regional standards also have been used to support the car manufacturers in Europe. For example, in France the Odette standard is used quite widely among car manufacturers such as PSA Peugeot Citroen. In Germany the VDA organization has written a set of document standards to suit BMW, Daimler AG, and VW Group. The use of WebEDI solutions is common across the automotive industry as it allows small trading partners to exchange business documents with the car manufacturers.
The Odette organization developed a standard for how the WebEDI forms should be laid out on a web page to avoid car manufacturers establishing individual WebEDI portals. Odette Forms Version 2 is the current standard. WebEDI solution providers typically have to be certified against this forms standard before their solution is homologated by the Odette organization.
Industry Associations
A number of industry associations serve the automotive industry. These associations are tasked with providing standards for how automotive companies exchange information electronically. Due to global expansion in recent years, the industry associations around the world are starting to work more closely with each other to enable the automotive companies to setup new plants and onboard new trading partners as quickly as possible.
The automotive industry associations are located in the main manufacturing hubs around the world such as North America, Europe and Japan. They actively work to get the automotive companies in their respective regions to become members of their associations and to contribute to the various working groups and projects that are undertaken. Projects include Materials Management Operations Guideline and Logistics Evaluation (MMOG/LE), OFTP2 and Materials Off-Shore Sourcing (MOSS) project. The work of the industry associations provides the ideal environment to beta test projects before they are deployed in production across the automotive industry.
Main industry associations and the regions they serve are below:
- Odette serves the European automotive industry
- VDA serves automotive companies based in Germany
- Galia serves automotive companies based in France
- The Automotive Industry Action Group (AIAG) serves the North American automotive industry
- Japanese Automotive Manufacturers Association (JAMA) serves the Japanese automotive industry
Industry Specific Networks
In addition to the traditional EDI VAN providers, a number of regional private networks serve the automotive industry. The most popular networks are the American Network eXchange (ANX), European Network eXchange (ENX) and the Japanese Network eXchange (JNX). These networks provide a very secure method of exchanging information across an automotive community.
Although the networks were originally developed to serve the regional requirements of the automotive companies, their global expansion created a need to provide connectivity to these individual networks. GXS provides interconnectivity between the various private networks allowing the automotive companies to exchange information seamlessly across the world.
