How Digital Transformation Is Enriching The Automotive Value Chain

Chet Harter

Evolving technology melds the individual digital pillars of business into a lattice. What was isolation is now spanned by hyperconnectivity. Big Data changes the business pillars, resulting in a complete automotive value chain. Let’s take a walk through the next version of digital transformation in the automotive industry.

Telematics: hyperconnectivity at its best

Imagine an engine or a vehicle system that monitors the efficiency level of its parts. Imagine that these monitors report wear, efficiency levels, and other issues. Imagine that your fleet commander had access to all sensor-reported data. Would that not make managing maintenance and equipment a snap? Well, you no longer have to imagine this scenario, because it is real.

Hyperconnectivity allows systems within fleet vehicles to scan performance, measure efficiency, and note changes. That data is then sent back to your fleet dashboard from vehicle telematics. The result is data-driven remote diagnostics.

Imagine that a fleet vehicle breaks down on the side of the road. Do you dispatch a repair team or a tow truck? Before today, you wouldn’t know. Today the vehicle itself informs you of the issue and you can make an informed decision. Tow the vehicle and send a second truck to offload cargo. Send a repair crew to install a faulty relay switch. Either way, you make the right decision. You base that decision on the data that the vehicle produces and communicates to you. The correct decision helps you maintain efficiency, even if it slows delivery.

Predictive software: driving efficiency

The data from the telematics side of this equation channels into the predictive pillar. Predictive maintenance is a key asset in the modern supply chain.

Imagine that you can see which vehicles need servicing and what services they need. What if you could look at the data and see which vehicles need replacing? What if your system recognized the need for parts for maintenance? What if your system generated a parts list for all maintenance needs? Imagine if your system used data from vehicle telematics to optimize your supply chain? Would that not increase your automotive enterprise resources planning?

You also do not have to imagine this scenario, as technology makes this a reality. This is how technology bridges the distances between the five pillars of business.  With telematics, hyperconnectivity, and Big Data, your system has superior capabilities. Connect a ORNL 3-D printer and print your own parts. The system can track inventory and print certain parts. The results are optimization of parts sourcing, increases in efficiency, and decreases in costs. This also increases your automotive supplier relationships.

What if your system could tell you which routes were the hardest on vehicles? Would that insight give you the correct information to change pricing for that route? Data in this system is key. It allows businesses to make informed decisions rather than guess at the right answer.

Real-time customer interaction

Telematics is powerful. The opportunity is there to work with customers in real-time so that you gather their input. That caveat allows you to customize the system so that your system fits their model like a glove. By delivering unique customer experiences, you differentiate your services from your competitors’ services. Additionally, you have the opportunity to market to the client’s needs. Rather than offer a standard set of services, the new value chain is customizable. This means that services fit the client’s needs and you gain greater sellable services.

That option is more valuable thanks to data about driver behavior. It is almost as though you sit in the driver’s seat, too. Real-time information and smart tech come together to create synergy. Even pay-as-you-drive contracting becomes symbiotic.

Putting it all together

Data is key. It begins with telematics that feed diagnostic and maintenance programs. Big Data via the Internet of Things allows maintenance managers to drive efficiency. Optimization of parts sourcing and supplies increase via outside resources such as 3D printing. With real-time input from customers, services become customized. You gain the ability to create user-specific services that provide value to customers. That value leads to new revenue streams and an increase in customer satisfaction.

The new digital transformation in the automotive value chain drives engagement and efficiency. The real question is how can this model fit your business?

Learn more about digital transformation for the automotive industry.

Chet Harter

About Chet Harter

Chet Harter is a member of SAP's Digital Innovation team. For over 15 years, he has helped many SAP automotive and manufacturing clients apply new technologies to address current business issues and opportunities. Prior to SAP, he spent 12 years in various positions in materials and production management for large tier 1 suppliers in the automotive industry. He can reached at