The automotive supplier industry has been transforming over the past few years. Consumer preferences and behaviors have strengthened the demand for electric vehicles (EVs), connected mobility, and sustainable business models. The automotive supply chain COVID-19 impact caused industry disruption that magnified the need for OEMs and suppliers to rethink their business models. However, this scenario presented an opportunity for many companies to embrace a digital transformation of their planning capabilities and leverage automotive supply chain solutions throughout all aspects of their organization.
Joao Guarisse, Vice President Sales at o9 Solutions, and Jesus Beas, Vice President Supply Chain at Marelli share insights on the key planning capabilities OEMs and suppliers will need to develop over the next decade to stay competitive and thrive in a rapidly changing industry and showcase Marelli’s digital transformation journey.
Capabilities OEMs and suppliers need to strengthen
There are four main areas where automakers need to focus their efforts over the next 10 years to keep pace with evolving customer expectations and industry changes.
- Developing a deep understanding of your customers
Companies that have a digital-first mindset and are more mature in their digital transformation process emphasize gathering customer data. From this, OEMs can glean what products customers are purchasing, how they are using the product, drill down into customer behaviors, and anticipate future patterns and activities, so that they can best serve customers going forward.
- Embrace digital factories
To stay competitive in the age of AI, companies need to develop digital factories to help map out all activities that deliver value and automate as many of the processes and activities as possible. This will allow employees to focus on improving the algorithms and deal with any exceptions that came up.
- Use data-informed and distributed decision-making
By leveraging digital factories, employees will be able to access more data points that can help improve decision-making and planning processes. Additionally, this approach can help reduce silos by shifting the decision-making to become more distributed so that there isn’t only one group of decision-makers and instead a larger number of employees have a say in what happens.
- Be willing to experiment and pilot new functionalities
Innovation comes from encouraging employees to challenge the status quo and possibly rethink the core aspects of their business. Encourage concepts to be piloted and measured to see if they address key business needs or pain points and are viable to implement on a larger scale within the business.
Another area of consideration is sustainable business models that encompass financial aspects as well as the ecological impact of streamlining the use of resources, developing technologies that are eco-conscious, and reducing the organization’s overall carbon footprint.
“If you want to survive, you have to have this connection and you cannot see sustainability anymore as a standalone, unique kind of side part of your business…” says Jesus. “If the event that you want to grow your business, now you have to be integrated.”
Throughout Marelli’s digital transformation Jesus learned many insights. For OEMs and suppliers who want to enhance their digital transformation here are three aspects he thinks they should keep in mind:
Assess the maturity of your transformation journey
Before a company embarks on a digital transformation process, it’s important to gauge where they are from a maturity perspective (low-maturity vs. high-maturity) in how they are currently capturing and using data. This will help determine what components are necessary during a digital transformation (i.e., transferring from Excel spreadsheets to an AI-powered platform). Knowing your business’ maturity level can also help build out a stronger case study for getting buy-in from necessary stakeholders.
Never waste a good crisis
The COVID pandemic caused automotive companies–including Marelli–to shift how they do business. Marelli took this as an opportunity to reinvent their business. They changed how they were looking at demand and worked with an electronic data interchange to aggregate data in a bigger way and pull insights from a global view. They were able to predict the uptime or downtime of a specific factory, etc., within a 1% discrepancy. “We were able to capture the attention of everybody and we were able to give meaningful feedback to the sales community, to the purchasing community, and to suppliers to keep us up and running,” Jesus says.
Leverage technology to take your business model to the next level
While COVID was the catalyst for Marelli to transform their supply chain, the changes didn’t stop there. The company also assessed its business model’s scope which was also evolving and realized that technology could help them to get to the next level of control and understanding. With factories throughout the globe and an international customer base, Marelli wanted to gain a better view of what aggregated demand would look like and have a better understanding of customer orders and their capacity installed in the supplier base. “At the end of the day, you have to get the business view of your enterprise. You have to get all of your different businesses,” Jesus says. “Marelli has a total of nine divisions, different products… so we need to consolidate that bill and understand what the business looked like in order to guide it properly.”
In summary, no matter where an OEM or supplier is on their digital transformation journey now is an opportune time to start assessing current capabilities and tools to be able to proactively respond and adjust as the industry continues to evolve over the next ten years. As the automotive industry still grapples with the challenges stemming from semiconductor shortages, Jesus believes that tools will help OEMs and suppliers navigate the situation and hopefully mitigate supply chain disruption. “Semiconductors will still be talked about in 2022 and part of 2023, so obviously the ecosystem has changed,” he says. “Your typical way of doing business is not going to cut it anymore. You have to arm yourself with different tools and your tool belt will have to be super different depending on your industry, size of your business, and product.”
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