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How industry 4.0 will disrupt automotive supply chains

Industry 4.0 is set to shake up current automotive supply chain models in three important ways – and those involved in the sector need to get ready for the impact

George Whittier, COO, MoreyFrom Henry Ford’s assembly line to the emergence of electric cars decades later, the automotive industry has always been defined by change and industry 4.0 – the fourth industrial revolution – is poised to bring the next big wave.

Having already taken over the manufacturing space, this surge of automation and data exchange improvements will deliver a series of new developments – including a restructured supply chain, more competitive pricing and smaller, more automated equipment.

Supply chain restructuring
More than 80% of organisations agree that data should be at the heart of every business decision. Too often, however, companies fail to take advantage of the data they already have. Forrester estimates that 60-73% of data goes unused by businesses. Industry 4.0 will turn this on its head, as linear supply chains give way to a more dynamic set-up.

Improved connectivity between each part of the supply chain allows stakeholders to adjust to customer demand more quickly and ultimately reduce time to market. If, for example, customer engagement data indicates a feature is in high demand, other parts of the supply chain can adjust accordingly. This real-time access to both new and existing data sources promises to increase efficiency while also opening the door to additional revenue opportunities.

With greater transparency and collaboration comes the chance for more profitable decisions. Instead of wondering how a particular innovation is being received by customers, stakeholders throughout the supply chain can use available data to inform future production plans.

More competitive pricing
Personalisation hasn’t always been part of the car-buying experience. Ford’s original Model T was about as basic as it gets, with just one colour and engine type. But times have changed, and the cost of customisation presents a new challenge.

Many innovations sparked by industry 4.0 can help OEMs satisfy the needs of different customers without breaking the bank. Rather than guessing which combination of features will draw the most interest, reference data collected throughout the supply chain can show what’s selling. Resources spent developing less popular features can be reallocated to ensure top options remain in stock. Even if customers want to pay extra for a feature that isn’t often sold, industry 4.0 technologies like 3D printing can help keep production costs down.

Focusing on customisation options that are in high demand can, in turn, lead to less spending, and those savings could be used to push prices down. As more distribution partners enter the automotive industry, competition promises to heat up. Keeping prices competitive across the supply chain can help you stay a step ahead.

Reshaping future vehicles
Major automotive manufacturers have also suggested that industry 4.0 could reshape future vehicles. Earlier this year, GM proclaimed self-driving cars without steering wheels would find their way onto the roads in 2019. While this remains to be seen, the impact of industry 4.0 is already being felt throughout the automotive supply chain.

Instead of relying on human intervention, suppliers can leverage industry 4.0 advances to introduce automated equipment. Not only does such innovation stand to free up time for workers across the supply chain, but it also paves the way for the development of more efficient equipment.

In the mining industry, Internet of Things (IoT)-controlled vehicles are being redesigned with automation in mind, for example. Components which once seemed crucial to the operation of a vehicle – such as a steering wheel or cockpit – are no longer a necessity. The result? An opportunity to create equipment that takes up less space without sacrificing performance. Automotive manufacturers throughout the supply chain can reap similar rewards by embracing the automation industry 4.0 can deliver.

There’s seemingly only one constant in the automotive industry – change. And in the same way as visionaries like Henry Ford redefined the space, industry 4.0 is set to leave its mark on automotive supply chains everywhere. So make sure your organisation keeps pace with the competition by planning for industry 4.0’s impact sooner, rather than later.

George Whittier is COO at electronics and communications specialist, Morey