Digital in Automotive Supply Chain

Transcription

1 Digital in Automotive Supply Chain Kevin Hogan Executive Director, EY Automotive Advisory September 2017

2 In each era, digital technology has played a different role now the role is to drive new business models Automation Digitization Electronic fuel injection Electronic windows Electronic transmission controls Doing the same thing more efficiently Since the 70s Digitalization Doing new things with new technology Now Converting analog to digital or physical to virtual using new technologies Since the 90s Keyless vehicle Navigation systems New generation ticketing and booking system Fleet management suites (New business models) Shared mobility, autonomous driving models and decentralized transportation Personalized relationship management Analytics-driven revenue models Smart manufacturing Zettabytes of data every year Page 2

3 The exponential growth of digital technologies has generated several forces of business disruption Dematerialization Decline of transaction costs US$1 million An average mobile phone today houses over a million dollars worth of technologies from the 1980s. Four forces of business disruption US$550 billion Blockchain technology could save global businesses US$550 billion a year. Decentralization of decisionmaking Through its intuitive platform, Uber ensured that drivers and customers retain control over the key terms of the interaction, including the ability to determine the nature and quality of services. Forces breaking down the silos of the pre-digital era 2 trillion searches 5 million years Information availability and accessibility 2 trillion searches are made in google each year. It would take an individual over 5 million years to watch the amount of videos that will cross global IP networks each month in Source: CoinDesk, Big Think, CISCO Visual Networking Index Page 3

4 Collaboration in the ecosystem is the new normal and is replacing traditional automotive value chain dynamics Traditional value chain Collaborative ecosystem OEM OEMs Telecom Dealer Tier 1 supplier (system supplier) Tier 2 supplier (module/component supplier) Tier 1 Collaborative ecosystem Mobility players Tier 3 supplier (Raw materials, intermediate goods, component supplier) Tier 2 Tech players --- Traditionally tier 1s interacted with their OEM customers and tier-2 suppliers. OEMs interacted with dealers, and dealers interacted with the customer. In the collaborative ecosystem, there is intersection of many different stakeholders with the customer at the center. Page 4

5 These variables faced by the automotive industry have resulted in low supply chain synchronization Challenges arising due to variables Ineffective collaborative planning High risk of out-of-stock situations Variables across the automotive ecosystem Difficulties in managing inventory costs Inability to integrate mass customization Low OEE in manufacturing Bullwhip effect noise adding cost and complexity to operations End result: Low Supply Chain synchronization Lag in responding to competitive pressures with limited resources Page 5

6 thus requiring a high degree of integration of both internal and external processes Internal function 1 Synchronize planning across different nodes to reduce work-in-process inventory Use sophisticated models and analytics to optimize demand forecasting Internal function External function Improve supply chain efficiency External function 2 3 OEM collaborates to optimize supply chain transparency and reduce risks Enable supplier management External function Streamline the supply chain by reducing the number of suppliers for each part Reorganize supply chain network consolidation centers Localize production Page 6

7 Digital technologies will be integral for achieving a high degree of integration of the core processes Advanced analytics Multi enterprise and predictive analytics would aid in an improved demand sensing, thus resulting in the reduction of bullwhip effects and an efficient production scheduling. Supply chain synchronization 3D printing Customized and complex products can be manufactured to meet changing customer preferences. Blockchain Blockchain improves provenance in supply chain, reducing counterfeiting issues. Blockchain will empower organizations to successfully sync supply chain management, supply chain finance and audit boosting efficiency and agility of the value chain. Integrated supply chain operating model Automation technologies would aid in reducing manufacturing cost and also improve throughput speeds. Supply chain network and flow optimization Robotic automation Software bots would auto-check shipment documents ensuring up-to-date information. AI technologies are evolving, thereby enhancing productivity, consistency and accuracy, resulting in better compliance across the system. Supply chain resilience AR/VR AR and VR technologies would enable enhanced visual picking of products as well as reduce errors in picking. IoT cloud IoT aids in developing a fully connected and monitored supply chain to improve efficiency and agility, along with improving interoperability between entities. Page 7

8 However, supply chain transformation should always be backed by optimized supporting processes Key business challenges Digital technologies that can improve operational efficiency in the automotive industry Business benefits 1 2 Difficulty in information sharing Error-prone processes Cognitive technologies RPA Blockchain People Ubiquitous availability of expertise Incessantly connected resources Productivity increase through augmenting humans 3 4 Ineffective reactive approach Uninformed decisionmaking Advanced search engines Digital technologies IoT Process Highly scalable and flexible Highly efficient and automated 5 6 Disconnected data sources Time-consuming processes Mobile Advanced visual technologies Data Advanced analytics Cloud Selflearning systems Data Centralized data repository Easy and efficient information sharing Effective monitoring systems Page 8

9 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com EYGM Limited. All Rights Reserved. EYG no. XXXXXX BMC Agency GA 0000_08020 ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com