Automobile Industry

Standard Operating Procedures (SOP) Automobile Industry

When we say automobile industry, it includes a wide range of businesses involved in design and engineering, manufacturing, logistics, warehousing, marketing and selling, and after-sales services of motor vehicles comprising passenger cars, two-wheelers, utility vehicles, pick-up vans and trucks, delivery and transport trucks, buses, etc.

In the passenger car segment, Toyota Motor Corporation, Volkswagen, and Daimler are the three largest manufacturers in the world. Tesla is yet to give a tough fight to these companies in terms of market share. Even though the future of electrical vehicles seems bright, the question will be the source of electricity production if climate change concerns emerging from carbon emissions are to be addressed.

In the two-wheeler category, Hero MotoCorp Limited and Bajaj Auto (both from India) are the two of the top three largest motorcycle and scooter manufacturers in the world. In trucks and buses, the global leaders are Daimler AG and Volvo respectively.

From design and marketing to production, supply chain and distribution, the auto industry value-chain encompasses a massive chain of operations, sometimes even spanning across continents. This explains the involvement of multiple businesses playing different roles in the auto industry value-chain. These businesses include auto manufacturers, parts manufacturers, OEMs (Original Equipment Manufacturers), dealerships and service centres, etc. A big challenge for these businesses is building a strong operational network and achieving operational efficiency once the right marketing paradigm is in place. Disruptions caused by innovative business models, novel technologies, regulatory changes, or other external influences could simply wipe out a business but could be envisaged and prepared for. Poor processes and operations management is a slow-killer.

Challenges Faced Due to Poor Processes and Management Systems

Poor inventory Management. Inventory holds different meanings for different businesses in the value chain. But irrespective of what inventory constitutes, businesses have to ensure that the required inventory levels are always maintained. It means inventory tracking and measurements have to be precise, purchase orders have to be scheduled, adequate quality control measures for incoming inventory and outgoing products, etc. When the operations involved in inventory management are not planned and mapped in a systematic manner aligned to business objectives, the enterprises and teams involved will not be able to maintain the required inventory levels with absolute authority.

Heavy HR Costs. The salary bill in the production and supply chain constitutes a massive cost for auto manufacturers. Irrespective of sales volume and profitability, the wages and salaries have to be paid. But as SOP consultants for automobile industry, we reckon that the spiralling cost of HR is an issue not confined to the manufacturers only; suppliers, logistic service providers, and showroom dealers and service centres are equally prone. How the organization is structured and the teams are sized are decisive factors in maintaining an optimized salary bill. But without well-defined HR policies and procedures pertaining to expenses and benefits, overheads can quickly become an unpredictable burden despite the right structuring and team sizes.

Difficulties in Maintaining the Quality Standards. On average, as many as 30,000 parts go into making a complete car. By the time the final product is delivered to customers and ensuring consistent delivery of maintenance and other services, the entire value chain becomes a long and complex journey of maintaining the standards of quality at both product and service levels passing through the supply chain and the channels of distribution. Every business enterprise involved in this value chain has to ensure that the required quality standards are maintained not just for regulatory reasons but also to deliver a superlative brand experience. Deliberate quality checks must be placed at the gates of every process, whether it is related to a product or a service.

Benefits of SOPs (Standard Operating Procedures) to Automobile Industry

Accuracy in Production. Accuracy in production requires strong operational planning and interdepartmental coordination right from marketing to manufacturing and distribution. For example, if an SUV has to be customized for a particular country, the designated line of manufacturing and distribution has to be rationalized accordingly. The product customizations must find the operational definition through SOPs. The inventory requirements may have to be changed. The suppliers will have to be identified and communicated about these changes with specifications. The logistic partners/department may have to make the necessary alterations to their operational schedule and transporting assets. SOPs help to ensure that the product finalized by the think-tanks of the companies find the operational platform necessary to create and deliver the intended value to the market.

Ground for Automation. Automation in the auto industry is not just about the automation of the engineering and manufacturing processes. Business process management (BPM) and the automation of the business processes are equally important to all auto businesses. Big auto manufacturers already use powerful automation solutions to execute their business processes and operations. The other businesses in the value chain also need to level up their automation platform for better integration, stronger operations and higher preparedness for scale. Process automation is very difficult when processes are not planned and mapped towards the higher goal of achieving the shared objectives of the value chain and that of the business and its functions. SOP is the tool with which business processes and operations can be defined to every necessary detail with every necessary connection to another process or business entity serving as critical inputs for finding or developing the right automation solution whether it is a machine or a software application.

Better Quality Control. With SOPs, businesses can establish the operational provisions necessary for effective quality control. With quality control (QC) SOPs in place, it also becomes feasible to assess the performance of suppliers or the quality of the supply. The QC SOPs can be used to define the procedure for carrying out the quality checks, the employees/teams designated to this task, tools/equipment to be used, safety measures to be adopted, feedback and reporting, supervising, etc. Any business in the auto sector can use SOPs to improve the quality of inputs and outputs they are dealing with and notice many remarkable changes.

Why BPX as SOP Experts for Automobile Business

We are a management consulting firm specialized in SOP writing and development with over eight years of experience across a multitude of industries. Our team comprises engineers, MBAs, financial experts, business process consultants, SOP consultants, and SOP writers who help us bring diverse perspectives to the table in finding the best solutions to problems. And in delivering our process consulting and SOP writing services, we follow planned, systematic, and proven ways of working while observing the highest standards of business morals and truthfulness.

Drop us a message and we shall be happy to reach out to you for a scheduled appointment.

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