Local innovation key for growing automotive industry

Key to realising the growth potential of South Africa’s automotive sector is local innovation, albeit with due consideration to conditions and operating environments, as local companies are not always able to use international innovations and technologies, says enterprise resource planning (ERP) software provider SYSPRO chief product officer Paulo de Matos.

The Department of Computing Sciences at the Nelson Mandela Metropolitan University, in Port Elizabeth, is conducting research on smart factories, in collaboration with automotive producers Mercedes- Benz, in East London, and Volkswagen, in Uitenhage. This follows Mercedes-Benz’s introduction of a paperless smart factory, which has been created by leveraging the Internet of Things (IoT) and providing every factory worker with a smartphone.

This paperless approach provides online, real-time information provisioning, ensuring that staff are always working with the most up-to-date information. Meanwhile, Volkswagen has introduced collaborative robots (cobots) on their production lines, allowing for human-computer collaborative assembly line production and component assembly.

Headquartered in Johannesburg, SYSPRO provides a suite of software solutions for the automotive industry and, subsequently, support across company functions, including research and development, quoting and order management, material sourcing and acquisition, forecasting and planning, inventory management and distribution, production and work-in-progress management, quality management, sales and customer support, as well as finance and administration.

In addition, SYSPRO released capabilities last year – specifically to improve collaboration among supply chain participants and to reduce waste through improved manufacturing operations management. The social-ERP platform, called SYSPRO Harmony, leverages machine learning algorithms, presenting data entity trends that might not have been visible to the company. Harmony enables users to communicate among their peers or “follow” data entities meaningful to them, similar to social media platforms, transitioning operators’ behaviour from traditional systems of record to systems of engagement.

Harmony promotes collaboration while manufacturing operations management promotes the reduction of waste, turning every manufacturing hour into a productive hour through the convergence of machines, people and systems.

“South Africa is no laggard when it comes to the uptake of new technologies, especially in the automotive sector where economies of scale, waste minimisation and efficiencies are top of mind. The aforementioned innovations, introduced in the past two years, have all been in direct response to international trends and demonstrate how Industry 4.0, smart factories and the IoT directly contribute to improved production output, reduced costs and improved management of the manufacturing process,” says De Matos.

He notes that South Africa plays a small role in terms of global automotive production, accounting for less than 5% of the overall global market, and adds that local market growth continues to be sluggish, with indications that 2018 will fare no better.

Given its propensity for job creation, South Africa’s focus on growing the local automotive industry is not new, with the drive to 2020’s likely adoption of a 60% local-content policy, the country’s main vehicle for stimulating growth in the sector.

Critical debate around the policy has, however, highlighted that the policy has greater implications for component manufacturers and suppliers to foreign- owned original-equipment manufacturer’s (OEM’s) with local assembly lines. Further, while local industry benefits from consumer preference or tradition, selecting locally manufactured vehicles over competing imported brands, the same cannot be said for the rest of Africa – which forms the largest market opportunity for the South African automotive market.

In light of this less than certain future, De Matos highlights that a continued focus on the development of technology for the South African automotive market may, thus, prove to be the key differentiator for locally produced automotive components, enabling the country to attract new market opportunities while balancing the adoption of disrupting technologies and new regulations.

“To shift local content production from about 38% to 60% is no mean feat – all participants in the South African automotive value chain will need to assess their effectiveness and supply chain velocity.”

He points out that, while automotive OEMs have implemented all the international manufacturing trends and, in many cases, improved on them, the South African market must recognise that it has a diverse multi-skilled workforce that is unionised and requires continuous upskilling. “We must, thus, ensure that innovations in the sector continue to be applicable to local conditions,” concludes De Matos.