Digital supply chain technologies and Automakers !

 Hi, I’m Jithin Sunil- A final year MBA student from Amrita School of Business. Welcome to my Logistics and Supply Chain Management learning room. In this blog I am going to talk about why the automakers need to implement Digital supply Chain technologies. 

A joint report published by CII and Ernst & Young notes that the Indian automotive industry is currently experiencing a paradigm shift and needs to implement digital supply chain strategies to meet the rising complexity of goods and market dynamics. Rather than merely doing digital projects, the organisations need to be digitally operated.

The Indian automotive industry is about to undergo a monumental shift with emerging developments such as wired, automated and electrified cars and shared mobility.

Moreover, it is imperative for automakers to build early potential risk insights and optimise visibility through the supply chain across new technologies, the speed of digitalization and changing customer demand, the report states.

It also states the supply chain is not linear anymore. The interaction between emerging technologies and functional excellence is increasingly being managed, which has become critical for success. Four main components of a sensitive and digitally driven supply chain were also the subject of the study.

These are Procurement 4.0, Logistics 4.0, Manufacturing 4.0 and Control Tower 4.0.

Procurement 4.0 is intended to help shift away from routine activities to become a strategic instrument that allows for better control of quality and costs.

Logistics 4.0 would ensure that paper and process-driven bottlenecks are minimal, contributing to greater consistency in stocking and warehousing, specific storage requirements, redirection of distribution, among others.

Manufacturing 4.0 is intended to achieve greater data-based performance and avoidance of failure, leading to versatility in manufacturing and capacity management in real time. Finally , the three fundamental pillars of planning , data warehousing and intelligence would be affected by Control Tower 4.0 to enable smooth communication in the pursuit of strong strategic and operational controls.

80 percent of global CEOs view technology advancement as a top disruptive force over the next five years, according to the Ernst & Young report, while 57 percent of global institutional investors hold similar sentiments.

The study also showed that about 67 percent of global institutional investment managers want businesses to pursue potentially transformative innovation ventures, even though they are risky and are unlikely to yield short-term returns

It was also found that in the next twelve months, 61 percent of auto managers plan to aggressively pursue M&A operation, with 75 percent of managers anticipating technological advancement as a key factor shaping deal strategy.

In addition, 25 percent of car executives seek M&A to acquire technology, expertise, new manufacturing capabilities or creative start-ups; while 18 percent attribute protecting the supply chain as a key strategic catalyst for M&A in the midst of regulatory changes.

Summing up !!

Adopting a disruptive approach towards building an intelligent supply chain ecosystem is a clear opportunity for automakers in India to stay on par with the mega-trends emanating from the ‘future of mobility. They must build a more agile, integrated, efficient and collaborative supply chain which leverages the diversity of emerging technologies and solutions. Focusing on deploying integrated digital solutions while building a ‘digital DNA’ across the value chain, will help automotive organizations be better positioned to respond to increasing product complexity and market dynamics

With the emergence of a modern mobility ecosystem and the entrance into the market of technology firms, both car manufacturers and OEMs are seeing a shift in the value pool of vehicles and business change, from internal processes to product capabilities to unexploited revenue streams.

Happy Learning ! 😊