Critical Investment: IoT In Auto Manufacturing

Mukund Rao

While today’s automotive manufacturers continue to face incredible challenges, they also come across many opportunities for enhanced growth and development. There’s little doubt that manufacturers are facing increasing pressures to innovate, better engage with their own customers, and improve profitability. Yet, only a few will succeed – and it all comes down to how well they implement a digital transformation.

Critical implementation of IoT will define automotive manufacturer success or failure

Take a moment to consider today’s automotive manufacturing industry, which seems to be changing at a rapid speed. For example, analysts believe fully autonomous vehicles will be commercially available by 2020. Even Forbes reported that, by 2020, there will be 10 million self-driving vehicles on the roads. Elon Musk, the owner of Tesla, also raised $1.5 billion in August of 2017 to mass market electric vehicles. All of these innovative changes hinge on one key factor. Can manufacturers implement digital transformation fast enough to remain competitive?

Implement IoT in automotive manufacturing or struggle with the competition

Technology investments by auto manufacturing companies will ultimately define whether or not they can step ahead of their competition. Even current best-in-class business performance is likely to be outdated within a matter of years, not decades. In the IoT and Digital Transformation: A Tale of Four Industries whitepaper published by IDC, it was found that at least one-third of every industry’s top 20 companies will fail to reach digital benchmarks and that 33 percent of all industry leaders will struggle against their already-digitally-enabled competitors in the next few years.

Design and ideation in manufacturer enhanced by true IoT implementation

Implementing smart manufacturing and Industry 4.0 is critical to any automotive manufacturer today. The key benefits are numerous, often creating a dramatic impact on the way a business operates, while also creating a stellar opportunity to achieve several key goals. What value can IoT implementation offer the automotive manufacturing industry from a specific area of design and ideation? Let’s take a closer look.

Faster engineering cycles

First, consider the value that IoT offers from an engineering cycle standpoint. This is a key value opportunity. By creating a connection of information between products back to the design and development team, it is possible to move the product engineering cycle further at a faster rate. Ultimately, this offers the key benefit of being able to get new products – something today’s consumer has an insatiable appetite for – to market sooner.

Customer satisfaction improves

Another key area is in customer satisfaction. Though auto manufacturers of 50 years ago knew that any new product that rolled off the market would be seen with enthusiasm from consumers, today that is no longer the case. Consumers have many vehicles to choose from, with new technology and advancements in place. Domestic and international options are easily within reach – often at affordable price points. In short, pleasing customers is important and even essential, yet difficult.

By implementing IoT within the design and ideation phase, there is an opportunity to provide better customer service. That is, products developed by the manufacturer are a better fit for the consumer. They solve the consumers’ concerns. And, most importantly, they are instantly beneficial to the consumer. By addressing real performance requirements and needs, the manufacturer is able to create instant satisfaction, build the brand, and enhance the company’s long-term opportunities to continue building brand loyalty.

Reducing overhead costs

Every manufacturer has a focus on reducing costs. The cost of labor is rising rapidly. Compliance continues to be a constant concern. It is more expensive to market. One way to reduce costs from the design and ideation phase of the automotive manufacturing sector is simply to remove what isn’t working and what is no longer beneficial.

By having a constant stream of information from customers and other value points streaming into the automotive manufacturer, it is possible to remove all non-value components. This streamlines operations and helps the company zero-in on what is going to drive profits the most.

While all of this sounds beneficial, many of today’s automotive manufacturers do not have the tools in place to gather, organize, and use this data from IoT to create such prominent benefits. The benefits, though, make moving in this direction not only ideal but necessary.

Creating the framework and beginning to implement these solutions is a critical step forward in every automotive manufacturing business. It is no easy task, though.

How to move towards IoT for design and ideation

Current teams can be modified to begin pulling in these areas of data and information. It is key to focus on the areas that are the most likely to create the biggest win first. In this case, it may be a bit more simplistic to pull in IoT data to use for building new products, but it can later be just as effective as modifying past products.

To start, organizations must align their business goals with the most likely disruption coming: IoT. From there, it becomes necessary to determine how digital-ready the organization is and then begin working on the digital transformation journey with a trusted solutions provider within the IoT sector.

Learn how to bring new technologies and services together to power digital transformation by downloading The IoT Imperative for Discrete Manufacturers: Automotive, Aerospace and Defense, High Tech, and Industrial Machinery. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?

Mukund Rao

About Mukund Rao

Mukund Rao is Director of the Automotive Business Unit at SAP. He has been a key contributor to the business unit for over 18 years, focusing on both OEMs and suppliers. Mukund earned his MBA from University of Michigan and M.S. degree in Mechanical Engineering from Oklahoma State University.