Embracing the Digital Revolution: Seizing the Opportunity

Automotive Suppliers Must Catch Up with OEMs in Digital Transformation, Says Achim Terlinden from Unisys

Even though car manufacturers are often criticized for their slow adoption of big data and digitization, the automotive industry is starting to make significant strides in these areas. It’s no secret that traditional automobile manufacturers and their suppliers have lagged behind the tech giants and startups of Silicon Valley. However, no company wants to be left behind, especially in such a competitive landscape.

Well-known Original Equipment Manufacturers (OEMs) are now making significant progress. Their chief digital officers and vice presidents of digital strategy are leveraging data laboratories and partnering with Silicon Valley experts to implement agile techniques. Everyone is racing to lead the market in connected cars, electric vehicles, autonomous driving, and sales, with digitization playing a crucial role. Here, the objective isn’t just disruption—it’s also about redefining industry standards.

Digitization impacts two major areas: business processes and business models. For business processes, the focus is on boosting efficiency, increasing margins, and cutting costs. For business models, the challenge is to innovate with new products and services. This shift necessitates major changes in software-supported core processes like enterprise resource planning (ERP), computer-aided design (CAD), and product lifecycle management (PLM). The key is to integrate Internet of Things (IoT) and big data trends into these traditional processes while maintaining robust security.

So, how are automotive suppliers addressing digitization, and what factors are shaping their digital transformation?

OEMs Set the Pace

Automotive suppliers are under increasing pressure because OEMs are moving forward with their digital initiatives and expect suppliers to keep pace. For instance, if an OEM wants to use a new extranet or video conferencing tool to communicate with its suppliers, those suppliers need to comply with the latest ISO standards and Industry 4.0 processes. Falling behind could mean losing a valuable client, so suppliers must stay proactive.

The same goes for redundant IT infrastructures and IoT support. Effectively, digitization helps suppliers maintain their relationship with OEMs by aligning closely with the OEMs’ needs. This approach ensures that the products developed meet customer expectations.

Untapped Potential

Connecting industrial plants isn’t a new idea; what’s new is how these networks are now interconnected via private networks, cloud computing, and advanced communication systems. Hybrid infrastructures, which combine local data centers with cloud capabilities, are essential. They offer advantages in price, storage, bandwidth, scalability, and availability.

The data generated by IoT and big data analytics is vast, necessitating local data centers and infrastructures that many suppliers can’t currently provide. Hybrid clouds are a viable solution, but companies must be adaptable to avoid getting locked into specific vendors.

The IoT and cloud technologies pave the way for new industrial applications and business models crucial for Industry 4.0. Yet, making these technologies work isn’t straightforward. Previously, factories and plants were kept separate from the rest of the IT infrastructure for security reasons, leading to compatibility issues now that they need to be integrated.

One of the significant challenges for suppliers is meeting the higher security demands of smart production plants and networks, especially in the context of digitization.

In summary, automotive suppliers need to accelerate their digitization efforts to stay competitive and meet the evolving demands of OEMs. This requires a focus on integrating new technologies, maintaining flexibility, and addressing security challenges head-on.