Daimler AG: Shortening Innovation Speed From Days To Hours

Jutta Lachenauer

At Daimler AG, simplification and business innovation matter more than ever—they are necessary to stay on top of the latest automotive industry trends and consumer demands.

The Stuttgart-based automobile manufacturer—which invented the car, the truck, and the motorcycle—is now defining the future of mobility. To do this effectively in a customer experience-driven era, the company has embarked on a digital transformation journey.

The first step—digitization of the company’s entire value chain—is completed. The next step involves realigning the company and using its new ability to deliver connected customer experiences in a highly competitive and fast-changing global market.

Know your customer and reap the rewards

A better understanding of the customer enhances product development and increases production efficiency. Each day, Daimler gets customer requests from all over the world. These requests shape the company’s processes, procedures, and product development.

In some countries, like the United States, customers prefer same-day delivery; in Asia-Pacific customers value the ability to highly personalize the design of the vehicle, such as unusual color schemes and steering wheels made out of rare woods. In other markets, customers only accept keyless to go cars.

Becoming a more digital and intelligent company helps Daimler create unique mobility experiences for all types of customers with tailored vehicles and services that are manufactured on time and on budget.

Winners in the digital economy are characterized by two unique characteristics: speed and innovation. Daimler recognized early on that a digital makeover was needed for their existing business model. The automotive manufacturer launched PBK (Programme, Bedarfe, Kapazitätena), a major initiative in 2013 to focus on programs, needs, and capacities. The initiative fuels Daimler’s mission of becoming number one in the premium car segment by 2020.

Innovate, communicate, and connect faster

The digitization initiative rejuvenates, integrates, and optimizes the entire process and system environment. The company gained a competitive advantage by using real-time information to reduce operating risks and improve results.

“Breakthrough business value in business processes must be applied across the entire value chain versus just embedding intelligence in siloed line of business applications. This is the basis for innovation and speed,” said Dr. Marco Spohn, Daimler AG. “This integrated and seamless experience is a key enabler to deliver the perfect car for our customers.”

The updated business process and system ensures implementation from determining demands over managing capacities to planning the programs. “Our digital transformation process has led to amazing insights. I had to rub my eyes when the first results came in. For example, we shortened the new order forecast to four hours from six days, and program planning from eight to four weeks,” added Dr. Spohn.

Daimler can now innovate faster than the competition. Some processes can be completed in hours instead of days.

Digitally connected consumers are revolutionizing the automotive industry. Dr. Spohn compares the new role of the customer to the pole position in the Formula 1: “Having access to a broad range of new technologies and a wide variety of online resources, the customer is always in the epicenter, even if there are regional differences.”

While customer demands vary widely by markets, all markets have one commonality: No customer wants to wait for a car, and the experience in the car buying process is crucial. Classic car manufacturers like Daimler also face competition from new market entrants. Rookies from Silicon Valley, such as Nuro, Ghostwave, and Cognata, do not want to bring a “classic car” to the market. They focus on business models related to the connected car.

Thanks to its new digital business model and faster innovation capabilities, Daimler can compete with traditional manufacturers and new market entrants.

Its data-driven digital platform, solid architecture, and user-friendly front-end help Daimler achieve an unprecedented innovation speed. The company can focus on live digital data, combining solution know-how and industry-specific process expertise with data analytics.

“A stable platform and digital business strategy is a must to succeed today. We get amazing insights that help us to outpace competitors and enter new markets,” said Dr. Spohn.

With new connected car and mobility concepts, future product development will redefine not only manufacturing processes but also what a car is and the value it provides to customers. As more products incorporate digital technologies, they will move from being a bundle of functionality and become platforms for value creation—for both the customer and Daimler.

Bertha Benz, the wife and business partner of Karl Benz, jump-started the automobile industry and showed the value of the car and the experience it can give you by being the first person to drive an automobile over a long distance in August 1888.

She was a fearless pioneer. She would be astonished to see how manufacturing, customers, and suppliers have shaped the automobile industry since then. But her pioneering spirit remains at Daimler. Its focus on business innovation is steering the company into the future.

Read SAP SE: Whitepaper, Industry 4.0. What’s next?

For more on digital innovation in the automotive industry, see How High-Tech And Automotive Industries Propel The Future.

About Jutta Lachenauer

Jutta Lachenauer is the editor-in-chief and head writer for #devWire, the SAP Board Area newsletter for the developer community. With an extensive background in corporate communications, executive communications, internal communications, and change management, Jutta is a trusted advisor to senior management executives.