Notes from Detroit: Not only Best but also Innovative Practices in Automotive Industry
In the long-run, any technological invention, no matter how threatening it appears to the labor force, can create a new set of opportunities. Technology empowers us to focus on doing “new things” instead of worrying about “repetitive things”
To summarize in a sentence: “Technology doesn’t compete but complements”
In many ways, technological evolution resembles the human evolution professed by Charles Darwin, wherein the technology continues to evolve and new methods & inventions replace the old ones, to achieve the objectives in a better, efficient and sustainable way. Thanks to the internet (technology again!!), in today’s world, it’s easy to get overwhelmed and excited about the technology itself, which focuses on the “means”, rather than on the “objectives”. This conversation here is not about the means (The technology) but rather about the objectives (the tangible & measurable business outcomes).
Around a month back, I attended the “Best Practices for Automotive” conference. It was one of the best showcase of how technology is changing the Automotive Industry by delivering the tangible business outcomes. For three days, we had leaders of automotive industry (375 people from 10 countries representing 97 companies) sharing their experiences using Information technology to improve the overall function of “Conceptualizing ->Designing-> Developing-> Selling-> Delivering world-class customer experience.” Here are some of the examples form the conference:
A Race to Insightful, Contextual and “Digital” Engagement!!!
A sport needs to have a fan base to thrive and when it comes to a sports like NASCAR’s the fan base is huge. It’s one thing to have a huge fan base but, it’s also a challenge to keep such a large fan-base engaged. Thanks to the unprecedented adoption of social media, today sport administrators can “listen”, to what fans are saying, what are their needs and understand their likes or dislikes.
NASCAR is harnessing their fan’s social data to deliver a constant “digital engagement”. The “Fan and Media Engagement Center” application of NASCAR, eloquently partners on what consumers are saying and performs real-time social data collection to influence and guide sports broadcasters. In addition, this application can pose simple questions to fans when conversations fade to track and maintain the race-day excitement.
“Back to the future” Of Mobility
Tesla recently released a new “software-upgrade”, thrilling the consumer with an experience of semi-autonomous vehicle. Keeping euphoria aside, what is it that making technology stalwarts to experiment & challenge the automotive pioneers in mid-west? Why is the concept and realization of an autonomous and connected vehicle so significant? Professor Larry Burns of the University of Michigan explained the new gold-rush in auto world that is making Silicon Valley technology leaders commit so much energy and money to this initiative. Some of the benefits of autonomous vehicles, he talked about:
- Potential to dramatically reduce fossil fuel consumption because cars that don’t crash can be lighter-weight, the researchers say.
- Possibility of new city layouts because shared fleets of self-driving cars wouldn’t spend as much time in parking lots.
- With a computer at the wheel, passengers would have more time to safely text, work, read and converse.
- Making transportation safer by removing humans from the control loop possibly saving as many as 3000 lives per day.
Professor Burns shared the findings of the “Ann Arbor Project” about the autonomous vehicle, where the research team concluded that 18,000 driverless/shared/tailored vehicles can
- Provide the same mobility as 120,000 conventional vehicles
- Reduce out-of-pocket costs by 75%
- Respond to trip requests in < 2 minutes
- Minimize empty miles to 0.02/loaded mile
He also explained the impact of “free time” that a traveler gains, on productivity (and its economic value), economy and other sectors, such as potential growth in e-commerce. According to Professor Burns, the biggest short-term opportunity may be in goods movement (and in other sectors – such as mining) vs people movement
There is indeed an unprecedented transformational opportunity redefine the “very means of mobility”, which we know for all these years. Once again, technology is in the front seat to drive this transformation. The realization of transformation is complete, when vehicle is:
“Autonomous + Connected + Coordinated + Shared + Tailored”
Driving Mobility thru Innovation – Car has more line of code than a F-35 Fighter Jet!!!!!!
Jeff Owens – CTO & EVP, Delphi Automotive talked about the insights from an interesting project where a team of Delphai engineers along with an autonomous driving car they call Roadrunner, have completed their nearly 3,400 mile cross country journey. The trip spanned across the southern United States with the car successfully traveling from San Francisco, California to New York City, New York. With sensors, intelligence and mechanics working in tandem, The vehicle is turning into a platform and functions more like a central nervous system. With their experience from Roadrunner project, this group learned that cars tend to be more polite then humans (Road rage is over by 2025!!!!!) and there is a need of regulatory and ethical guidance before autonomous vehicle becomes day to day reality.
Connected Manufacturing – It’s time to Ride
To support the connected manufacturing process, and eliminate paper processes, Harley Davidson leveraged both SAP MII and SAP ME, resulting in the following process improvements:
- Significant reduction of operating cost at the York plant alone (efficiencies, lower labor cost, lower inventories, etc.).
- Ability to make any bike in any order on the same line (used to build a special line for each model)
- Elimination of paperwork
- Quality improvements, and reduced rework
- Digitization allowed them to move from a 21 day fixed production schedule down to 6 hours.
- With new solutions, now a dealer order can get to the plant in the same day
Furthermore, connected manufacturing works on big data collected from the shop, drive real time predictive analytics and provide immediate visibility into reality. You can read more about the project here
Digitizing the “Buying Experience”
According to a recent survey:
“75% consumers would prefer going digital on the entire purchase experience of a car, including finance, pre-negotiation, the back office paper works and even delivery”
Stacey Coopers – CEO, Ford Director explained how the recent trends in consumer behavior and growth in mobile-phone economy, propelled them to build a new platform: FordDirect.com to deliver superior and coordinated end user experience. Once, consumer used to visit at least 20+ dealers before buying a car but over the years, visit to dealer has been decreasing. Almost 67% people surveyed said that they use digital tools to zero-in on manufacturer and dealer, so in many ways, the sales + experience begin well before the customer steps-in to a show room.
With their new platform, Ford enabled a tight collaboration with dealers and reduced the unnecessary conflicting information exchangeamong Dealers, OEMs and Consumers. The un-coordinated process of information exchange was streamlined and data, existing on a same platform, was accessed and used by multi-party involve in the overall sales. The challenge has been providing online / offline capabilities. The future plans are to integrate this platform with DMS solutions to further streamline the buying experience. SAP offers solutions to help customer digitize the overall buying experience for consumers as well as B2B partners. You can hear, how Pirelli uses B2B Commerce solution by SAP that gives business customers a multi-channel shopping experience and provides Pirelli with a complete view of customers, products and orders.
These are some, and not all, examples of the conversation at the conference. If you want to learn more about the best practices shared at the conference, Visit the Best Practices for Automotive Resource Center.
Like invention of combustion engine changed the face of mobility, similarly rise of IOT is bringing “intelligence” into machines. Making them more responsive, connected, smart and above all safe. The established horizontal manufacturing processes are becoming intelligent with the “insights” gained at every juncture of entire life-span of a product. Customer feedback are becoming important and as we move more into “a-service” model, the very definition of customer engagements and after-market service need to be redefined.
This is a new “first-mover advantage” world. As processes across industry more or less standardize, willingness to innovate to differentiate from competitors will set the leader apart from the rest. Furthermore in this new world of “Big Data”, merit of insight gain from analysis will highly depend on the merit of question asked, therefore “tailored innovations” catering to “business challenges” specific to organization’s need, will be in demand more than ever. Standardization will have to be more on platforms and process frameworks than the process itself. Instead the more innovative you are in your business process, more advantage and edge you will have over your competitors.
Information technology is outpacing many sectors in terms of growth and development. However, it has also helped us in making tremendous strides by complementing with offerings from other industry. For example, this convergence of Detroit and Silicon Valley will ensure the “newness” on our cars. (While hardware remains year old, the regular software updates will continue to deliver new exciting features).
Today, automotive industry is at the cusp of digital transformation of not only the processes, but the product itself and as I said in the beginning technology is not competing by complementing to achieve this.
If you have any ideas or interested in knowing further, how SAP is delivering tailored innovations for specific business challenges, feel free to contact me at email@example.com
**Amit Sharma is based out of SAP’s Silicon Valley campus. In his role, he is globally responsible for Discrete Manufacturing Industries (Automotive, Aerospace & Defense, High Tech, and Industrial Machinery) for SAP Custom Development organization. You can follow him here