Transforming the automotive supply chain for the 21st century

For the JIT model to work, the quality and supply of raw materials, production of goods, and customer demand for them must match. If any link in the chain is broken, disrupted, or out of sync, the impact on supply chains around the world can be felt immediately. For companies, unable to deliver orders on time, they risk losing not only efficiency but also brand reputation, market share and revenue.

Now, companies are looking for new ways to manage their supply chains that offer greater flexibility and transparency. In the auto sector, some companies including Nissan and JIT, pioneer Toyota are increasing chip inventories, while others including Volkswagen and Tesla are trying to secure their own supply of rare metals. . But technologies, including the Internet of Things (IoT), 5G, and business applications are also giving companies new ways to avoid disruptions and respond to unforeseen circumstances.

Disruption and Transformation

The transformation of the automotive supply chain is happening in an increasingly digitalized world, with environmental concerns raised. As concerns about climate change grow and governments worldwide force industries to shift to more eco-friendly practices, the auto industry and supply chain networks Its is undergoing a profound change. Automakers are transitioning from internal combustion engines and mass production to zero-emission, carbon-neutral self-driving or electric vehicles that focus on electricity or hydrogen as an energy source. For example, autonomous vehicles are considered “servers on wheels” that rely on batteries, wiring, laser technology and programming rather than internal combustion engines. Tech giants like Japan’s Sony and China’s Baidu have also announced plans for their own electric vehicles (EVs), fueling an already heated race in the electric vehicle market.

According to the International Energy Agency, global sales of electric cars reached 6.6 million in 2021accounted for 8.6% of total new car sales: more than doubled market share from 2020 and up from just 0.01% in 2010. Business insights provider IHS Markit It is estimated that the number of electric vehicle models in the US will increase tenfold, from 26 in 2021 to 276 in 2030. At the same time, charging station alone will need to grow 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 supplies the parts and accessories needed to successfully manufacture and operate alternative vehicles. Based on search from Transport Intelligence, “the supply chain for the entire powertrain will be transformed and the types of components, the logistical processes used to move them, the origin and destination markets, and the decentralization of the automotive supply chain will change”. This has huge implications for how the automotive supply chain is organized.

Meanwhile, everything in the automotive sector, from cars to entire factories, is becoming more connected with the help of technologies like AI, IoT, 5G, and robotics. In recent months, Nissan announced the “Smart Factory” initiative at its Tochigi factory north of Tokyo, using AI, IoT and robotics to produce next-generation vehicles in a zero-emission environment. And Volkswagen deployed its own 5G wireless network at its factory with headquarters in Wolfsburg, Germany, to test new smart factory use cases.

As manufacturing becomes more digitized, so does consumer behavior. Auto brands are rolling out direct-to-consumer sales models, allowing customers to increasingly complete the sales process through digital channels. While new players are taking an online-only approach to the sales model, incumbents are adopting digital initiatives in partnerships with dealers where the Performance, after-sales and service are still provided through an agent. In 2020, 69% dealers in the US added at least one digital step to their sales process. And 75% of dealers agree they won’t last long without moving more of the sales process online. Both models require deeper visibility into the supply chain to ensure inventory and availability are correct.

How are manufacturers responding?

More and more consumers, factories, cars and supply chains are connected generating a lot of data. Collecting and analyzing this data can help manufacturers reduce business risk and become more agile by identifying potential supply issues, increasing efficiency and delivering to customers. more precise schedule. For example, predictive analytics can help manufacturers answer the question “What if?” questions and proactively minimize the impact of potential supply chain disruptions. Digital traceability allows companies to track products and goods as they move along the value chain, providing them with accurate information on the origin of inputs, sourcing practices and conversion process. “On the demand side, customers expect real-time visibility into when cars will be delivered to them and the status of service and parts,” said Mohammed Rafee Tarafdar, SVP and CTO, Infosys. and accessories,” said Mohammed Rafee Tarafdar, SVP and CTO, Infosys.

In an effort to mine data and develop greater visibility across the enterprise, manufacturers are using 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 more access to cutting-edge technologies that can then be managed at scale and addressed. needs for network visibility, analytics, and security. As things become more connected and autonomous, “there needs to be technology that can scale on demand. This is where cloud and enterprise applications come in, says Tarafdar, adding that manufacturers are adopting both private and public clouds to create new clouds. hybrid cloud, with the support of a private 5G network.

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