Standardization: Reengineering The Automotive Industry’s Future One Part At A Time

Klaus Berghoffer

Part 4 of the “Uncovering the Potential of Digital Investments” series

Every model cycle brings passenger cars, light commercial vehicles, heavy trucks, buses, coaches, and minibuses that are more sophisticated than the year before. And now that electronics are beginning to outweigh and outnumber mechanics across product lines, automakers and their suppliers are adopting software and connected services to deliver designs and features that wow consumers.

“For parts suppliers, this reality is increasing the complexity of their operations as they deliver the right part at the right time in the right sequence,” says Fritz Onnasch, service offering manager for manufacturing industries at SAP. “Even though their products and promises are unique, automotive suppliers encounter the same challenges, which can be quickly resolved with standardized processes, best practices, technologies, and interfaces.”

Fritz’s insights are especially meaningful for automakers and their suppliers as product designs become more digital. In 2017, 899 recalls affected more than 43 million cars in the U.S. alone, according to charts and graphs from the National Highway Traffic Safety Administration – some of which injured people and, in some cases, caused death.

Recently, Fritz and I met to examine how suppliers serving the automotive industry can continue to deliver on consumer expectations for all things digital while overcoming the risk of product failure.

Klaus: Increasing reliance on digital technology is creating an entirely new future for the automotive industry. But there’s also a high degree of risk involved. How can industry players take on new opportunities with digital technology while protecting their business?

Fritz: Transparency has become critical to the automotive industry. Pinpointing which parts are performing poorly, where they’re embedded, and how a malfunction can impact driver safety can dramatically reduce the impact of recalls. Plus, this same information can generate insights that can help open new revenue streams and industry-disruptive differentiation.

An implementation project requires more than choosing technology that matches current business needs. Suppliers also need to consider the latest processes and best practices to trigger alignment and visibility across the supply chain. The faster vehicles evolve year to year, the more essential these alignment and visibility requirements become.

To keep up, suppliers must reorganize their supply chain as quickly and consistently as possible. For example, shop floors need to synchronize with automakers’ demands, such as shorter product lifecycles, faster production time, and new requirements for parts and materials. Yet, the IT landscape and business culture need to stay flexible enough to accept new technologies, processes, and user experiences. I know this scenario is easier said than done; however, standardized and streamlined processes and interfaces can prove tremendously helpful.

Klaus: Is it possible for suppliers to maintain their uniqueness while embracing standardization to address the pressures of the automotive industry today and for years to come?

Fritz: The uniqueness of an auto brand comes from products, supply chain connections, and business processes, not from technology alone. With standardization, suppliers can reduce their implementation time and cost dramatically, as well as learn from proven practices to improve the quality of their operations.

Because they don’t have to reinvent the wheel, suppliers can ramp up quickly and avoid many of the mistakes their competing predecessors may have made in the past. This approach reduces the total cost of implementation and enables the IT environment to scale up or down as business needs change.

Klaus: The choice of IT environments to deploy technologies has become as diverse as the industry automotive suppliers they serve. Obviously, not all are created the same. Is there one landscape that best complements the use of standard processes, practices, and technology?

Fritz: The public cloud is designed for standardization, providing a stable foundation for businesses when adopting resources such as virtual machines, applications, and data storage. Because more than one organization or business can access the environment, subscribers must stick to the processes and interfaces that the cloud provides without any customization.

This fundamental principle of the public cloud gives businesses the foundation they need to accelerate their move to the cloud and innovate new ways to mitigate risk. For example, capturing and integrating shop-floor data in the cloud allows automotive suppliers to track and trace any product – from their factory and warehouse to the vehicle using it. With great detail and visibility, suppliers can determine if malfunctions are caused by design flaws, production errors, in-transit damage, or misuse by the customer. Or better yet, they can discover if a product fulfills a different use case, opening up new opportunities that may have otherwise remain hidden from plain sight.

Get to know the preconfigured processes, capabilities, and delivery approach that can help your business flourish now and for years to come. Explore SAP Model Company services for Automotive.

Klaus Berghoffer

About Klaus Berghoffer

Klaus Berghoffer is a Marketing and Communication Senior with 31 years of working experience in the IT industry and a technical university background. Klaus has contributed to large IT companies as well as 15 years for startups in fast-growth markets. He brings a history of cultural diversity from living in different countries as well as diverse working experience from different fields.