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Author's profile photo Jutta Lachenauer

Shortening the Innovation Speed From Days to Hours at Daimler AG

At Daimler AG, simplification and business innovation matter more than ever — they are necessary to stay on top of the latest automotive industry trends and consumer demands.

The Stuttgart-based automobile manufacturer — who has invented the car, the truck, and the motorcycle — is now defining the future of mobility. To do this effectively in a customer-experience driven era, they’ve embarked on a digital transformation journey.

The first step — digitization of the company’s entire value chain — is completed. The next step involves realigning the company and using its new ability to deliver connected customer experiences in a highly competitive and fast-changing global market.

Know your customer and reap the rewards

A better understanding of the customer enhances product development and increases production efficiency. Each day, Daimler gets customer requests from all over the world. These requests shape the company’s processes, procedures, and product development.

In some countries, like the United States, customers prefer same-day delivery; in Asia-Pacific customers value the ability to highly personalize the design of the vehicle, such as unusual color schemes and steering wheels made out of rare woods. In other markets, customers only accept keyless to go cars.

Becoming a more digital and intelligent company helps Daimler create unique mobility experiences for all types of customers with tailored vehicles and services that are manufactured on time and on budget.

Winners in the digital economy are characterized by two unique characteristics: speed and innovation. Daimler recognized early on that a digital make-over was needed for their existing business model. The automotive manufacturer launched a major initiative in 2013 to focus on programs, needs, and capacities (PBK[1]). The initiative fuels Daimler’s mission of becoming the number one in the premium car segment by 2020.

Innovate, communicate, and connect faster

The digitization initiative rejuvenates, integrates, and optimizes the entire process and system environment. The company gained a competitive advantage by using real-time information to reduce operating risks and improve results.

“Breakthrough business value in business processes must be applied across the entire value chain versus just embedding intelligence in siloed line of business applications. This is the basis for innovation and speed”, said Dr. Marco Spohn, Daimler AG. “This integrated and seamless experience is a key enabler to deliver the perfect car for our customers”.

The updated business process and system ensures the implementation from the determining demands, over managing capacities to the planning the programs. “Our digital transformation process has led to amazing insights. I had to rub my eyes when the first results came in. For example, we shortened the new order forecast to four hours from six days, and program planning from eight to four weeks”, added Dr. Spohn.

Daimler can now innovate faster than the competition. Some processes can be completed within hours instead of days.

The digitally connected consumers are revolutionizing the automotive industry. Dr. Spohn compares the new role of the customer to the pole position in the Formula 1. “Having access to a broad range of new technologies and a wide variety of online resources, the customer is always in the epicenter, even if there are regional differences.”

While customer demands vary widely by markets, all markets have one commonality: no customer wants to wait for a car anymore and the experience in the car buying process is crucial. Classic car manufacturers like Daimler also face competition from new market entrants. Rookies from Silicon Valley, such as Nuro, Ghostwave and Cognata, do not want to bring a “classic car” to the market. They focus on business models related to the connected car.

Thanks to its new digital business model and faster innovation capabilities, Daimler can compete with traditional manufacturers and new market entrants.

The data-driven digital platform, solid architecture, and user-friendly frontend help Daimler achieve an unprecedented innovation speed. The company can focus on live digital data, combine solution know-how and industry-specific process expertise with data analytics. Here is where SAP and Hadoop comes in.

The PBK initiative gets insights from more than 50 interfaces of different source systems and has a high computing power for the individual algorithms. SAP and Hadoop are used to support this process at different stages. Calculation results are transferred to SAP HANA for reporting. Based on the defined architecture, the initiative PBK decided to use the most appropriate SAP Software to serve its business processes.

Whereas Hadoop has no direct end user graphical user interface, SAP builds the face to the business departments. The transactional subsystems are based on SAP FIORI and HANA. The reporting on simulation results takes place in the SAP Business Warehouse within one day. Two billion of datasets are processed during each simulation run. SAP Lumira is the frontend.

With the help of hybrid cloud scenarios, especially with SAP’s Cloud Platform and SAP HANA Enterprise Cloud, the department of Dr. Marco Spohn can provide innovative cloud solutions while combining structured and unstructured data. With the SAP Cloud Platform, Daimler can integrate and extend the business processes and enable new innovations. It is the platform for building solutions leveraging Artificial Intelligence, Machine Learning, and Internet of Things.

Significant value for Daimler is the use of SAP HANA Enterprise Cloud as a secure bridge to the Cloud. SAP’s private managed cloud service provides Daimler with SAP HANA expertise to accelerate growth, innovation and business transformation.

“A stable platform and digital business strategy is a must to succeed today. We get amazing insights that help us to outpace competitors and enter new markets”, commented Dr. Spohn.

With new connected car and mobility concepts, future product development will redefine not only manufacturing processes but also what a car is and the value it provides to customers. As more products incorporate digital technologies, they will move from being a bundle of functionality and become platforms for value creation[2] — both for the customer and Daimler.

Bertha Benz, the wife and business partner of Karl Benz, jumpstarted the automobile industry and showed the value of the car and the experience it can give you by being the first person to drive an automobile over a long distance in August 1888.

She was a fearless pioneer. She would be astonished to see how manufacturing, customers and suppliers have shaped the automobile industry since then. But her pioneering spirits remains at Daimler. It’s focus on business innovation is steering the company into the future.

[1] PBK: an abbreviation in German: Programme, Bedarfe, Kapazitäten

[2] SAP SE: Whitepaper, Industry 4.0. What’s next?; whitepaper

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      Author's profile photo George Colten
      George Colten

      Interesting insight into how a perhaps perceived "relic" of industry is actually right up there on the the digital front lines with a focus on fast innovation that proves time certainly has not passed them by and likely won't ever as long as this corporate thought process remains in place.