December 13th, 2018 | by Radosław Szmit

Digital Transformation for Automotive Manufacturers and Suppliers

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A digital transformation is a must for today’s organizations, especially from the automotive industry. If they’re not on board, they are doomed to fail. If they’re on course, they have to think about a second transformation. Digital changes drive organizational ones and the automotive sector can benefit on multiple levels; from strategy, through the creation of an ecosystem, ending with an ongoing test-and-learn approach.

In recent years we’ve witnessed a wide range of tectonic shifts in the automotive industry. From electric cars to self-driving cars, from the increased number of digital systems implemented in vehicles to artificial intelligence (AI) controlling the whole thing. Managing these revolutions don’t come as easy as expected. People, processes, production lines, software, culture gaps, budget – these factors play a significant role in not only modernizing factories but also elevating businesses. How to steer a digital transformation in your company and how can you benefit?

We have recently wrote on digital transformation and what is the nature of this process. Let’s quote one line: it is not a remedy, it’s simply a very important mean to an end.

Digital transformation for automotive

Here are areas you should focus on in order to upgrade and thrive:

  • Establish a strategy for digital transformation. Start with a classic Simon Sinek’s ‘Why?’ What is the goal, why are you doing that in the first place?
  • Establish measurable targets you want to achieve. Revenue growth, cut costs, etc.
  • Work on organisational structure. Remember that ‘digital’ in the sentence does not equal a perpetuum mobile machine. Digital can’t act as a replacement for human employees – it’s a tool. That means humans have to work it. How do you organize work around new tools is up to your needs and internal expertise coming from the people. Regardless of having a separate digital unit or embedding digital solutions in an already existing traditional structure, you have to think about the workflow and the way you’re working with subcontractors and customers. Delivery and communications have to work as well, in a new way
  • The test-and-learn approach works for cross-functional teams launching a new campaign or a product. Most suppliers have already launched digital pilots meaning that the expertise or at least the experience, is already there

As the volume of connected devices grows, the bigger need for digital transformation. It seems that the only way to keep up with the bandwagon is to join it. The number of connected devices is expected to double between 2017 and 2020, therefore a range on products, services and business models is widening. So does the need for modern factories and assembly lines. The ‘modern’ part of the occasions doesn’t have to end on the software upgrade or the company’s new organisation model.

The scope of work during the digital transformation of automotive company

There is a wide range of work to be done and this is how it’s relevant to the Automotive sector:

  • Managing the corporation. Introducing modern digital equipment will serve not only as a balancing act for company’s finances but also a trigger for employees to manage their task better. It will also allow for building a scalable technology backbone
  • Research and development. Big Data helps with enabling data-driven business models
  • Delivery. Digitalization of manufacturing and assembling makes the ultimate difference, with the enhancement of forecasting and demand planning. Assembling the smooth pipeline for distribution and delivery helps sales. Optimizing procurement is also beneficial
  • Sales department. Like we previously stated in an article about additive manufacturing in the automotive industry, 3D printing and other technologies fuel mass customization options for the end-client. That means more work for the sales department. Big Data can help with presales, digital marketing with direct reach. Thanks to new ways of creative presentation, customer’s experience can be enhanced. Like in this case, where Deloitte created a premium solution for customer experience in automotive. Another good example is FordPass – a mobile app for controlling and monitoring a car
  • Servicing. Customers want exemplary, highly personalized service and care. Time is currency, that’s why managing customer demand is crucial. Managing parts is also less challenging

By introducing new technologies, the margin enhancement (the cost reduction, productivity improvements and efficiency gains) can prove themselves very clear to anyone sitting at a manager’s table.

How successful tech enablement could look like?

  • By establishing data pools a company can enter the digital revolution and with pulling information across multiple ERPs, it can rearrange processes and adjust standings
  • With sensors and full-blown, widely understood industrial Internet of Things (IoT), a company can track parts and entire shipments. The approach also gives very precise information about bottlenecks
  • Overall costs of picking packages, sorting, welding and housing parts and equipment can benefit the company on the delivery level
  • Adoption of Industry 4.0’s technology help enhance productivity in sales, scales e-commerce platforms and channels, boosts transactional sales and deploys analytics to optimize pricing
  • Putting in place a scalable cloud infrastructure ensures backup, possibility to share data and processing power

Tech-enabled business models, products and services and R&D processes rely on field-gathered data. Here’s where it can come from:

  • The manufacturer can depend on a data-enabled warranty, previously generated by the R&D or Service department
  • Cars and trucks can be equipped with the software product capable of gathering data on fuel usage, driving style, part failures and software bugs. Some of the problems can be helped with over-the-air patches and optimization
  • A car dealer can balance the fuel economy and car performance to fit the need of the individual consumer
  • Fleet management can also benefit. By logging and storing car and truck driver’s behaviour, the management can reduce legal costs. By route optimization the team can cut cost on fuel.

Digital Transformation for automotive is on a rising tide. With tools ready to help conscious leaders to make courageous choices, the whole industry can serve its customers with care and on time.

Radosław Szmit

Former VP Business Operations

Former VP Business Operations at CSHARK. Business development and consultant expert with numerous years of experience in IT. Management and business coach, project manager and vision monger.