New Automotive Technologies Threat Your Long-Term Visibility

Automotive New Tech Blog Article

The automotive industry is evolving. New disruptive technologies are changing the way automotive companies are planning scenarios in the future. Nobody really knows how far the electric vehicles or autonomous vehicles hype can go, whether locally or globally. There are many industry influencer forecasts in the coming years, however, no two industry forecasters have the same projections when looking ahead five or even 10 to 20 years. As Akio Toyoda, CEO of Toyota, stated, “This is an era in which the correct answers are unknown.” Automotive supply chains will need to plan and analyze for different scenarios in both the medium and long-terms. The survival of every organization in the automotive supply chain will depend on it.

This new era of technologies and mobility requires organizations to consider “what if” scenarios for long-term planning. Supply chains will need to take into account the following:

  • The rise of autonomous vehicles
  • The impact of ride sharing
  • The global economy
  • The adoption of electric vehicles
  • The volume scale down of the internal combustion engine
  • The impact of Industry 4.0 in areas such as using additive manufacturing to produce parts

Companies that do not have relevant and accurate long-term planning could face extinction. It may seem exaggerated, but if we just look at one point, for example the electrification of vehicles. “75 percent of the world’s top 100 automotive suppliers will not survive the industry shift unless adaptation plans are made now,” according to Paul Eichenberg, an automotive strategy consultant. To go even further, the top 12 OEMs will launch 182 new electric vehicles nameplates by 2023. Is your organization dealing with these scenarios today?

In order to make the right decisions, organizations need to have supply chain visibility to ensure sustainability, but also to optimize their inventory levels, margins and capacities. Without visibility, there is no accurate long-term planning, no “what if” scenario, which can lead to many risks for the business. Long-term scenario planning is not just about process, it means having robust advanced tools to accurately manage both revenue and capacity projections. In fact, managing this process through complex spreadsheets, which are slow, not collaborative and prone to errors, is too risky when it comes to scenario planning. When selecting a tool, ensure that it provides the following capabilities:

  • Manage and analyze multiple “what if” scenarios to create a unique plan
  • Include phase in/out calculations for capacity decisions
  • Allow collaboration among key stakeholders (e.g. sales, marketing, finances, supply chain)
  • Allow collaboration among key stakeholders (e.g. sales, marketing, finances, supply chain)
  • Access to historical decision making data
  • Turn a global plan into local plans
  • Show the impact on operational and financial planning
  • Provide the final consensus stakeholders plan to ERP for forecasting and production planning

Scenario planning requires a robust set of repository data, such as historical ERP data, market forecast data and OEM data in order to provide an accurate and reliable simulation and plan. By simply doing nothing, you will be exposed to incurring costly premium freight, overtime, and obsolesce, at a time when competition from non-traditional competitors and innovation investments will be at an all time high.