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For the JIT model to work, the quality and supply of raw materials, the production of goods, and customer demand for them must all remain in harmony. If any of the links in the chain break, stall, or go out of sync, the impact on supply chains that cross the world can be felt immediately. For companies that fail to deliver orders on time, they risk losing not only productivity gains but also brand credibility, market share and revenue.

Companies are now looking for new ways to manage supply chains that offer greater flexibility and transparency. In the automotive industry, some companies, including Nissan and JIT pioneer Toyota, are increasing their chip stock levels, while others such as Volkswagen and Tesla are trying to secure their own rare metal supplies. But technologies including the Internet of Things (IoT), 5G and business applications are giving companies new ways to prevent disruptions and respond to unforeseen circumstances.

Decay and transformation

The transformation of the automotive supply chain is taking place in an increasingly digital world filled with environmental concerns. As climate change concerns intensify and governments around the world force industries to shift to more environmentally friendly practices, the automotive industry and supply chain networks are undergoing major change. Automotive manufacturers are moving from internal combustion engines and large-scale production to zero-emission, carbon-free electric or autonomous vehicles that focus on electricity or hydrogen as energy sources. For example, autonomous vehicles are seen as “servers on wheels” based on batteries, cables, laser technology and programming rather than internal combustion engines. Tech giants like Japan’s Sony and China’s Baidu have also announced plans for their own electric vehicles (EV), fueling an already heated race in the EV market.

Global sales of electric cars soared, according to the International Energy Agency 6.6 million in 2021it accounts for 8.6% of all new car sales: more than double the market share compared to 2020 and only 0.01% in 2010. business information provider IHS Markit It predicts that the number of electric vehicle models in the US will increase 10-fold, from 26 in 2021 to 276 in 2030. Same time, charging stations alone will have to increase from 850,000 in 2021 to about 12 million in 2030. To meet the growing need for battery-powered vehicles, manufacturers must create a new ecosystem of partners that supply the parts and accessories necessary to successfully manufacture and operate these vehicles. alternative means. According to this Research From Transport Intelligence, “the supply chain for the entire powertrain will be transformed, and the types of components, the logistics processes used to transport them, the markets of origin and destination, and the layered character of automotive supply chains will change.” This has enormous implications for how the automotive supply chain is ordered.

Meanwhile, everything in the automotive industry, from cars itself to entire factories, is becoming more connected with the support of technologies such as AI, IoT, 5G and robotics. In recent months, nissan introduced the “Smart Factory” initiative at its Tochigi factory, north of Tokyo, which uses artificial intelligence, the internet of things and robotics to produce next-generation vehicles in a zero-emissions environment. And Volkswagen has set up a dedicated 5G wireless network at its headquarters in Wolfsburg, Germany, to test out new smart factory use cases.

As production becomes more digital, consumer behavior becomes digital too. Automotive brands offer direct-to-consumer models, enabling customers to complete more of the sales process through digital channels. New players take an online-only approach to the sales model, while established companies are adopting digital initiatives in partnership with dealers, where fulfillment, after-sales and services are still provided through a dealer. in 2020 69% of dealers Added at least one digital step to sales processes in the US. And 75% of dealers agreed that they won’t survive long term without moving more of the sales process online. Both models require greater visibility into the supply chain to ensure inventory and availability are correct.

How do manufacturers respond?

More connected consumers than ever before, factories, automobiles, and supply chains generate a lot of data. Collecting and analyzing this data can help manufacturers reduce business risk and become more agile by identifying potential supply issues, increasing efficiency and providing customers with more accurate timelines. For example, predictive analytics will help manufacturers ask “What if?” It might help answer your question. Proactively mitigate the impact of potential supply chain disruptions. Digital traceability enables companies to track products and goods as they move along the value chain, providing them with precise information about the source of inputs, supplier sourcing practices and transformation processes. “On the demand side, customers expect real-time visibility into when a car will be delivered to them and the status of service, spare parts and accessories,” says Mohammed Rafee Tarafdar, Senior Vice President and CTO of Infosys.

To leverage data and develop greater visibility across the enterprise, manufacturers are using a variety of technology solutions, including business applications, which are software packages designed to support business applications. The right business applications paired with cloud services can give organizations greater access to cutting-edge technologies that can then be managed at scale and meet the need for visibility, analytics and cybersecurity. As everything becomes more connected and more autonomous, “there is a need for technology that can scale with demand. This is where cloud and business applications have crucial roles to play,” said Tarafdar, adding that manufacturers are adopting both private and public cloud to create hybrid clouds with the support of private 5G networks.