For the JIT model to work, the quality and delivery of raw materials, the production of goods and customer demand for them must remain consistent. If any of the links in the chain are broken, stopped or out of sync, the impact on the supply chains that cross the world can be felt immediately. For companies that fail to execute orders on time, they risk losing not only efficiency gains but also brand confidence, market share and revenue.

Companies are now looking for new ways to manage their supply chains that offer more flexibility and transparency. In the automotive sector, some companies, including Nissan and pioneer JIT Toyota, are increasing chip inventory levels, while others, including Volkswagen and Tesla, are trying to secure their own supplies of rare metals. But technology, including the Internet of Things (IoT), 5G and business applications, also offers companies new ways to avoid disruption and respond to unforeseen circumstances.

Destruction and transformation

The transformation of the car supply chain is taking place in an increasingly digitalized world obsessed with environmental issues. As fears of climate change intensify and governments around the world force industries to move to greener practices, the automotive industry and its supply chain networks are undergoing profound change. Automakers are moving away from internal combustion engines and large-scale production to electric or autonomous vehicles with zero emissions and neutral carbon emissions with a focus on electric or hydrogen energy sources. Autonomous vehicles, for example, are seen as “wheel servers” that rely on batteries, cabling, laser technology and programming, rather than internal combustion engines. Technology giants such as Japan’s Sony and China’s Baidu have also announced plans for their own electric vehicles (EVs), fueling the already fierce race in the EV market.

According to the International Energy Agency, global sales of electric cars have hit 6.6 million in 2021representing 8.6% of all new car sales: more than twice the market share since 2020 and an increase of only 0.01% in 2010. Business information provider IHS Markit predicts that the number of EV models in the US will increase 10 times, from 26 in 2021 to 276 in 2030. At the same time, charging stations will only need to increase from 850,000 in 2021 to nearly 12 million in 2030. To meet the growing need for battery-powered vehicles, manufacturers need to create a new ecosystem of partners that supplies the parts and accessories needed to succeed. production and operation of these alternative vehicles. According to research by Transport Intelligence, “the supply chain for the whole drive unit will be transformed and the types of components, the logistical processes used to move them, the markets of origin and destination, and the multilevel nature of automotive supply chains will change. This has huge implications for the way the car supply chain is arranged.

Meanwhile, everything in the automotive sector, from the cars themselves to entire factories, is increasingly linked to support for technologies such as AI, IoT, 5G and robotics. In the recent months, Nissan has unveiled its Smart Factory initiative at its Tochigi plant in northern Tokyo, which uses AI, IoT and next-generation robotics to produce zero-emission vehicles. And Volkswagen deployed a private 5G wireless network at its headquarters in Wolfsburg, Germany, to test new cases of intelligent factory use.

As production becomes more digital, so does consumer behavior. Car brands are introducing direct sales models to consumers, which allows customers to complete more and more of the sales process through digital channels. While new players are applying an online-only approach to the sales model, existing operators are adopting digital initiatives in partnership with dealers, where performance, after-sales and services are still provided through a dealer. in 2020 69% of traders in the US added at least one digital step to the sales process. And 75% of dealers agreed that they would not be able to survive in the long run without moving more than the online sales process. Both models require greater visibility in the supply chain to ensure that inventory and availability are accurate.

How manufacturers react

Increasingly connected consumers, factories, cars and supply chains are generating a lot of data. Collecting and analyzing this data can help manufacturers reduce business risk and become more flexible by identifying potential supply problems, increasing efficiency and providing customers with more accurate deadlines. Forecasting analyzes, for example, can help manufacturers answer the “What if” question and proactively reduce 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 raw materials, supplier practices and transformation processes. “On the demand side, customers expect real-time visibility of when a car will be delivered to them, as well as service status, spare parts and accessories,” said Mohamed Rafi Tarafdar, senior vice president and chief technical officer, Infosys.

In an effort to use data and develop greater business visibility, manufacturers are using a variety of technology solutions, including business applications – software packages designed to support business functions. Combined with cloud services, the right business applications can give organizations greater access to cutting-edge technology, which can then be scaled up to meet the need for visibility, analysis and cybersecurity. As everything becomes more connected and autonomous, “there is a need for technology that can scale with demand. This is where cloud and business applications play a very important role, “said Tarafdar, who added that manufacturers are adopting both private and public cloud to create hybrid clouds with support for private 5G networks.

https://www.technologyreview.com/2022/05/12/1052201/transforming-the-automotive-supply-chain-for-the-21st-century/

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