There’s a good deal of buzz in the automotive industry around the autonomous vehicle. Analysts predict healthy profits and revenue growth from rapid market growth. But, as consumer confidence dips, is there another element of an automotive business that can benefit from becoming more autonomous?
By 2024, it’s estimated that there will be over 60 million autonomous vehicles in use worldwide – creating a market worth around $566 billion. Today, it’s not the technology that may pose a barrier to achieving these figures. Consumers are becoming more wary of the concept of the self-driving car, with the majority of respondents to one survey saying ‘they would actually feel less safe sharing the road with a self-driving vehicle while walking or riding a bicycle.”
While the market for autonomous vehicles might take a little longer to develop, technologies are quickly maturing to enable companies to move towards the self-driving or autonomous supply chain.
What is the autonomous supply chain?
Automotive supply chains are among the most complex in the world. They are also among the most advanced. Companies have invested heavily to digitally transform their production and supply chain activities. We’ve now reached a point where the convergence of disruptive technologies – such as predictive analytics, IoT, blockchain and AI – can integrate with traditional supply chain management systems and business network processes to deliver new levels of efficiency, productivity and efficiency. This is the Autonomous Supply Chain and my colleague, Mark Morley will explore the potential of the autonomous supply chain in a series of blogs to come. And if a picture tells a thousand words, then this 2-minute video is a great introduction.
McKinsey has called this development Supply Chain 4.0. At OpenText™, we talk about the intelligent and connected supply chain. Whatever terminology you prefer, it’s describing pretty much the same thing: the application of new technologies to fully automate your supply chain processes.
For example, an autonomous supply chain will have the capability to identify the need for a component, order it, pick it from the warehouse and have it delivered to where it’s required without any human intervention. Of course, in the real world, there will be thousands of requests happening all the time and multiple components being delivered to multiple locations.
Through the combination of IoT, AI and analytics, you gain access to end-to-end supply chain data that highlights where inefficiencies in your supply chain lead to excess inventory, late deliveries, and lost sales and customers. It delivers the capability to measure and analyze all the aspects – internal and external – that are critical to effectively predicting supply and demand.
Your supply chain becomes self-learning and self-healing to give you the ability to predict supply chain issues and changing customer demands, and the agility to quickly alter how you operate to meet these challenges. Progress towards this situation is rapid. Gartner predicts that by 2023, at least 50% of global companies will be using IoT, advanced analytics and AI within their supply chains.
The autonomous supply chain isn’t just possible – it’s quickly becoming a reality.
The benefits of the autonomous supply chain
For automotive companies – in fact, organizations in any industry – there are a wide range of benefits that the autonomous supply chain brings to their business:
The movement and delivery of goods can add a great deal of time, cost and waste into the manufacturing process. The quicker and more efficient delivery, the more cost-effective the operations will be. McKinsey suggests that you can reduce as much as 50% of your transport and warehousing costs through the reduction of inventory, minimal touchpoints involved and optimized delivery routes created through full automation.
Increased efficiency and productivity
By automating end-to-end processes within your supply chain, you create a resilience that is not possible where manual input is a significant factor. Autonomous systems don’t need breaks and don’t waste time and operate at optimum levels. This increases productivity within your manufacturing operations and also means that your make better use of your resources. According to McKinsey, leaders in autonomous supply chains can expect to reduce inventory levels by up to 80%.
Supply chain planning has often been a highly manual process. However, 90% of supply chain planning tasks can be automated. You can increase the speed and quality of your supply chain decisions while reducing costs and taking the pressure from your planning team. For example, Costa coffee, a UK coffee chain, has automated its planning process and now has a single planner handling over 5500 outlets. The accuracy and granularity of data that the autonomous supply chain brings to planning help improve other aspects of your supply chain operations, including costs, inventory and customer service.
We may still be a little distance away from the autonomous car – or autonomous delivery vehicle for that matter – but we are getting very close to being able to deploy technologies like IoT, AI and analytics to fully automate your supply chain process. The autonomous supply chain can be a game changer for the automotive industry. It offers the potential for an almost seamless journey from raw materials to the final product and on to the customer, with humans involved only where decisions have to be made.
If you’d like to know more about the intelligent and connected supply chain, read our white paper.