Stibo Systems - The Master Data Management Company

How to Steer Your Automotive Business Around Scandal

January 12 2016
| 3 minute read

Let's start this blog post with a little exercise: Ask someone to use 30 seconds to think about what they associate with the automotive industry. Have you done it? I bet that at least one of these things crossed their minds: motor vehicle accidents, environmental pollution and unreliable dealers.

Why is that? Well, the automotive industry can often be a difficult vertical to perform in. That is true whether your business operates as an OEM (Original Equipment Manufacturer), in the aftermarket, or everything in between those two. Because of the increasing focus on environmental protection, the automotive industry is constantly developing and replacing their products in order to be as green as possible and to continually meet ever-changing regulations. That puts the automotive companies' adaptability under high pressure.

Also, safety matters, and risks are high. In the automotive industry, a single error or a delay in the supply chain can end up costing lives. I’m sure most people have heard horrible stories about vehicles suddenly catching fire and airbags that didn’t deploy when they should have.

In addition to the highest price of all, human life, defects can also do serious damage to your brand. We regularly receive news about major defects in automobiles. These defects require taking on giant recall campaigns that end up costing businesses tremendous amounts of resources and often permanently damage the brand.

On the contrary, if handled properly, the automotive industry can be an extremely lucrative business. In 2014, 90.6 million motor vehicles were produced globally1 , and in 2015, the worldwide automotive supplier market's estimated size is around 620 billion euros ($673 billion USD)2 . So despite the increasing focus on the environment and the recurring recall scandals, the demand for vehicles as well as the maintenance of these keeps on growing.

Data transparency - a foundation for success in the automotive vertical

Automotive safety recalls have hit an all-time high in the past three years: faulty air bag inflators alone have caused the recall of more than 17 million vehicles worldwide3. Why? The industry is becoming more complex as globalization expands. Assembly plants on one continent are fed by components from others, while regional legislation and standards lead to huge variety in makes and models. The complexity not only results in more errors, it also increases the need for data management and transparency.

By being in full control of your business’ master data and delivering the right item to the right place at the right time, recalls can be kept at a minimum. They cannot be avoided completely, however, further stressing that data transparency must not only include point of origin but also every supply chain touch point up to the end customer. Only by mastering customer data, can you administer a successful recall campaign. And if handled effectively, a recall can actually end up being a positive customer experience.

Recalls perfectly demonstrate the value of operational information. They display exactly how well a manufacturer, distributor or dealer is managing its information, whether that information is sales records, supplier records or part numbers. An organization can only take immediate action if there is absolute data transparency down to every last part and customer.

Unfortunately, many businesses today still have disconnected data sources: information about the end customer, the damaged part, and the replacement part, most often do not exist in the same systems. And often those systems do not talk to one another. Maybe that’s why only three out of four vehicles needing replacement parts due to faulty engineering get fixed. And if they do get fixed, it can take up to 18 months for it to happen.4

Measurable improvements for the automotive industry

A true Multidomain Master Data Management (MDM) solution enables one touchpoint for all data, ensuring that all master data is always up-to-date and accessible when and wherever needed. With the right solution in place, you can easily adapt to new trends and regulations and make sure to react quickly when disaster strikes, offering the best possible customer experience and keeping consumers safe in using your product or service.

That is, however, not the only benefit from an MDM solution. That’s why automotive businesses such as ZF and Winkler already have such a solution in place.

Benefits from implementing a MDM solution

For example, these are some of the wins Advance Auto Parts, the largest distributor of automotive parts and accessories in US, gained when implementing an MDM solution as the single source for all product-related data:

  • Reduced product returns by 10%
  • Increased their customers’ buying ability by 15%
  • Lowered data entry costs by more than 50%
  • Reduced time taken to buy and distribute parts by 20%.

That’s why data should be the foundation for your automotive business. Or should I say, the grease on your business’ motor.

Find out more about MDM in the automotive aftermarket industry





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