Transforming the 21st Century Automotive Supply Chain

For the JIT model to work, the quality and supply of raw materials, the production of commodities, and customer demand for them must be consistent. If any link in the chain breaks, stalls or gets out of sync, the impact on the criss-crossing supply chain can be felt immediately. For companies that fail to deliver orders on time, they may lose not only efficiency gains, but also brand credibility, market share, and revenue.

Now, companies are finding new ways to manage their supply chains to provide greater flexibility and transparency. In the auto sector, some companies, including Nissan and JIT pioneer Toyota, are raising chip inventory levels, while others, such as Volkswagen and Tesla, are struggling to secure their own supplies of the precious metal. But technologies such as the Internet of Things (IoT), 5G and business applications are also giving companies new ways to avoid disruption and respond to unexpected situations.

Disruption and Transformation

The transformation of the automotive supply chain is taking place in an increasingly digital world and beset by environmental concerns. The automotive industry and its supply chain network are undergoing a profound transformation as climate change concerns intensify and governments around the world force the industry to shift to greener practices. Automakers are moving away from combustion engines and mass manufacturing to zero-emission, carbon-neutral electric or autonomous vehicles, with a focus on electric or hydrogen as an energy source. Self-driving cars, for example, are seen as “servers on wheels,” relying on batteries, wires, laser technology and programming rather than internal combustion engines. Tech giants such as Japan’s Sony and China’s Baidu have also announced their own electric vehicle (EV) plans, adding to the already fierce competition in the EV market.

Global sales of electric vehicles take a hit, according to IEA 6.6 million in 2021, accounting for 8.6% of all new car sales: the market share has more than doubled compared to 2020, compared to just 0.01% in insight provider IHS Markit The number of electric vehicle models in the U.S. is estimated to increase more than 10-fold, from 26 in 2021 to 276 in 2030. Simultaneously, charging station That alone would need to increase from 850,000 in 2021 to nearly 12 million in 2030. To meet the growing demand for battery-powered vehicles, manufacturers must establish a new ecosystem of partners to provide replacement vehicles with the parts and accessories needed to successfully build and operate these vehicles.according to Research According to the report from Transport Intelligence, “The entire powertrain supply chain will change, with changes in the types of components, the logistical processes used to transport them, the origin and destination markets, and the hierarchical nature of the automotive supply chain. “This has a huge impact on how the automotive supply chain is ordered.

At the same time, everything in the automotive space, from the car itself to entire factories, is becoming more connected, powered by technologies such as artificial intelligence, the Internet of Things, 5G and robotics. In recent months, Nissan The “Smart Factory” initiative has been launched at the Tochigi plant north of Tokyo, which uses artificial intelligence, the Internet of Things and robotics to manufacture next-generation vehicles in a zero-emissions environment.and Volkswagen A private 5G wireless network has been deployed at its headquarters factory in Wolfsburg, Germany, to trial new smart factory use cases.

As manufacturing becomes more digital, so does consumer behavior. Auto brands are rolling out direct-to-consumer sales models, enabling customers to complete more and more of the sales process through digital channels. While new players are taking an online-only approach to sales models, incumbents are working with dealers on digital initiatives, where fulfillment, after-sales and service are still provided through dealers. In 2020, 69% of dealers In the US, they have added at least one digital step to their sales process. 75% of dealers agree that they will not survive long-term without moving more of their sales process online. Both models require greater visibility into the supply chain to ensure inventory and availability are accurate.

How manufacturers are coping

Consumers, factories, vehicles, and supply chains are increasingly connected, generating vast amounts of data. Collecting and analyzing this data can help manufacturers reduce business risk and become more agile by identifying potential supply issues, improving efficiency, and providing customers with more accurate timelines. For example, predictive analytics can help manufacturers answer the “what if?” question and proactively reduce the impact of potential supply chain disruptions. Digital traceability enables companies to track products and goods as they move along the value chain, providing them with accurate information about input sources, supplier sourcing practices and conversion processes. “On the demand side, customers want to know in real time when a car is delivered to them, as well as the status of service, spare parts and accessories,” said Mohammed Rafee Tarafdar, Senior Vice President and Chief Technology Officer at Infosys.

To leverage data and increase visibility across the business, manufacturers are adopting a variety of technology solutions, including business applications—software suites designed to support business functions. Combined with cloud services, the right business applications can give organizations greater access to cutting-edge technologies, which can then be managed at scale and meet the need for visibility, analytics, and cybersecurity. As everything becomes more connected and autonomous, “there needs to be technology that can scale with demand. That’s where cloud and business applications can play a big role,” Tarafdar said, adding that manufacturers are adopting private cloud and public cloud to create a hybrid cloud, backed by a private 5G network.

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