The automotive supply chain has always been among the most complex in any industry. The complexity is increasing as operations become more global and vehicles become more connected. Manufacturers want to lead through innovation and they need to work closely with suppliers and partners to achieve this. Increased collaboration across the connected automotive supply chain can only happen within a highly secure environment. Deploying a secure, private B2B network can deliver the instant access, system performance and security that supply chain partners need – not just in automotive, but in all industries.
When Henry Ford modernized the automotive production process, his Model T had fewer than 1500 parts. Today, Toyota estimates that its average car has around 30,000. Creating a vehicle is – unsurprisingly – a much more complex operation, especially as OEMs now rely on suppliers to make the vast majority of parts and be jointly innovative in the development of new parts and vehicles. Even before the advent of the connected car, the idea of simply selecting from a predefined parts list was becoming redundant as automotive manufacturers began to look at the transition from mass production to mass customization.
The connected car demands the connected supply chain
Whether we’re talking about the Internet of Things or Industry 4.0, the line between the modern car or truck and a high-tech device is getting increasingly blurred. There are more lines of code in the Ford GT than a Boeing airliner. Building great, reliable and safe vehicles is no longer enough. When the marketplace demands the technology, OEMs and suppliers must innovate and collaborate quickly to keep pace.
The quickest and most efficient way to make this happen is to work with companies that can provide the skills and resources you don’t have. In the last few months, SEAT, in Spain, has partnered with telecom giant Orange to develop and promote connected vehicles; Huawei, Bosch and Vodafone have partnered to conduct Vehicle-2-Everything (V2X) trials in Germany. It’s not just tech and telco firms with which automotive manufacturers are looking to collaborate. Industry consortia, research institutions, insurance firms are all being brought into this increasingly extended value chain.
In addition, the development of connected and electric cars is seeing the growth of brand new parts – more of which are being invented all the time. Automotive companies now need to collaborate and integrate with suppliers to ensure constant innovation through the flow of communications and ideas between OEM and supplier.
This has led Joern Buss, Global Automotive Practice Partner at analyst firm, Oliver Wyman, to introduce the idea of the ‘Tier 0.5’ supplier. These suppliers work in long term partnership with their customers, often sharing revenue and product development targets.
This is a point emphasized by IDC in its report ‘How B2B Integration Drives Superior Supply Chain Performance’ where it says: “The focus on ‘preferred relationships’ has driven a significant improvement in the quality of IT systems over the years, and 66.7% of automotive companies are exchanging information collaboratively and in real-time with their key trading partners”.
All this intimate communication and collaboration requires a highly secure digital backbone. Opening business processes and workflows to an increasing number of disparate partners – often located across the global – means enabling everyone to share the data and content that they need. Increased data transparency and accessibility must be matched by watertight data privacy and security. The IDC report found that supply chain security has the biggest impact on an organization’s business performance.
The basis for effective digital transformation
Recently, OpenText™ also partnered with IDC to examine the maturity of digital transformation initiatives within the automotive industry. The results showed that almost a quarter of automotive companies save reached the most developed level in transforming their business – compared with an average of 9% across all industries.
At the heart of digital transformation in the supply chain is a secure B2B network that can encompass the organization and its trading partners. The data privacy and security requirements of the automotive sector make a secure, private B2B network an attractive option.
To illustrate my point, I want to briefly look at Intellectual Property (IP). Within the connected supply chain, data and content that contains IP is being exchanged and shared between multiple parties. This is not just in terms of research and development and engineering but IP touches most departments – just think about joint marketing activities. Automotive CIOs are well aware of the threat that cyber attacks represent to vital corporate IP. A 2016 report from Deloitte found that over 63% of automotive companies expected increased IP cyber theft in the next 12 months.
When IP can account for as much as 80% of a company’s value, it is essential to create an IT environment where IP remains fully protected. That’s where a secure, private B2B network has a major advantage. Without ever exposing your data to the Internet, you create dedicated and trusted connections between you and your partners with end-to-end encryption. It is a degree of security and protection several levels above what can be delivered over the public Internet.
As OEMs work with hundreds of suppliers and partners who will be working with many manufacturers, the private B2B network delivers certificate-based authentication to ensure you have advanced and reliable identity management for all your trading partners. Secure access and collaboration is assured to enable a high-performance network for the sharing of key business documents across all business processes – including the largest CAD and PLM files.
Secure, private B2B network: In-house or managed network?
As I work within marketing for OpenText, promoting one of the automotive industry’s leading and most respected private B2B networks, it would be surprising if I didn’t say that working with a service provider was the most beneficial. As the connected automotive supply chain continues to rapidly change, it is going to become increasingly challenging to meet your B2B networking needs internally.
Every organization – manufacturer and supplier – is working with more and more partners, which are increasingly distributed throughout the globe. While the supply chain changes, some things do stay the same. You need to be able to quickly identify and onboard new partners. You need to meet the regulatory and legislative compliance requirements in the markets where you operate. You need to have high performance, secure and continuous communication across your entire network.
Services like the OpenText ANX Network allow you to benefit from a highly secure and scalable private network infrastructure that’s backed by more than 25 years of expertise in global data networking for the automotive industry.
To find out more about how OpenText can help you securely collaborate with your trading partner community, you should attend the “BNX-203-Secure data exchange for your extended value chain” session at OpenText Enterprise World 2018.