A few short months ago, I wrote a blog predicting the top tech trends for manufacturing and automotive for 2020. Then everything changed with the COVID-19 pandemic. Now that we’re halfway through the year, I thought it might be a good idea to take a second look at my 2020 predictions.
Accelerating digital transformation puts more focus on data
In January, my top prediction was that manufacturers would be faced with a data tsunami. This has only increased as responses to the pandemic have meant accelerating digital transformation initiatives. McKinsey comments that digital initiatives that may previously had a three-year timeline are now truncated into months or weeks. Top of McKinsey’s list of transformative activities is using multiple sources of customer data to assess unmet needs. With a major focus on cashflow, understanding demand signals and addressing customer needs has never been so important. Fully exploiting AI and analytics is now an even greater focus for automotive companies as they look to better balance operations and production to meet customer demand.
Connected vehicles will create new partner ecosystems
This, of course, is far from a new trend. We’ve said for many years that the major competition that automotive OEMs face isn’t just each other but big tech such as Apple, Google, etc. Automakers and their suppliers still struggle to deliver the software skills themselves. In the post-COVID environment, companies need to continue to deliver smarter and better vehicles but control all spending. The answer will be to optimize the breadth and depth of supply chains to include non-traditional and technology suppliers. A truly scalable enterprise platform is required to build and manage multi-dimensional, multi-skill partner ecosystems.
The autonomous world may be further down the road
Right now, liquidity is most certainly a top priority. With demand uncertain, a focus on operational excellence is crucial. The result is that many automotive companies will reconsider investment in developing areas –such as autonomous vehicles – to ensure that there is no extra cost or wastage in what they currently do. In my previous blog, I wrote about the smart factory. This trend will accelerate as companies look to optimize and automate as much of their operations as possible while trying to create production facilities capable of responding quickly to demand signals. Manufacturers will continue to exploit AI-assisted analytics to deliver value into all aspects production and product development. Longer term, there’s likely to be renewed interest in autonomous vehicles as they provide another good alternative for social distancing.
Sustainability will continue to power electric vehicles
April and May saw major improvements in air and noise quality as much of the world went into lockdown. For many town and city dwellers, the effects were so dramatic that it’s difficult to imagine that there will not be a long-term change to customer behavior around sustainability and environmental performance. We’re already seeing some results in Europe where the increased development of low carbon vehicles is a part of its COVID-19 economic recovery package. Figures show that, while the rest of global auto sales fell off a cliff, the sale of electric vehicles stayed at their 2019 levels through the height of the pandemic.
Adaptability and resilience are watchwords for the new auto supply chain
In my previous blog, I wrote that some manufacturers were being forced to unravel global sourcing strategies and near-shore production back to domestic markets. I’m going to count that as a win! The disruption to global automotive supply chains when China virtually closed demonstrated the dangers of putting all your eggs in one basket. Industry Week has suggested that COVID-19 shows us that auto companies need to think about a ‘buy where you make and make where you sell’ model. At the very least, OEMs must have a supply chain that can quickly change shape to handle this type of major disruption. In my opinion, this will accelerate the trend towards the adoption of cloud-based supply chain platforms that enable flexible and scalable ways to trade, collaborate and grow digital partner ecosystems.
Innovation and agility point to the digital twin
Just prior to COVID-19, EY explained why the ability of digital twins to monitor, simulate and optimize product performance delivered a real-world advantage. Today, the digital twin offers a critical tool for a proactive, strategic response to a post-pandemic world. It drives business agility as it gives organizations the ability to anticipate stress points, enable more efficient model adaptations and more quickly rework its processes. More than this, it provides a fast and cost-effective route to continue product innovation when many funds are diverted to direct revenue generation.
Changing work practices place focus on automation
Last time, I wrote about industry skill shortages leading companies to focus on automation. Here again, change has been sudden and dramatic. Rather than skill shortages, some estimates that the UK car industry alone could lose one in six jobs due to COVID-19. In addition, the introduction of socially distanced production lines puts pressure on companies to operate with the least amount of people necessary to complete operations. Automation is required to meet these new work requirements. Automotive companies need to augment roles with automation and retrain staff to handle the requirements of digital production and supply chains.
Nothing could have prepared the automotive industry for the first half of 2020. Most companies have been in survival mode – both for their business, their employees and their suppliers. As we come out of the pandemic, we all face tough and uncertain times. I’ll be keeping a close eye on how these trends develop and will report back later in the year.
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