Thursday, September 29, 2022

Are automotive OEMs and suppliers in sync with emerging technology requirements?

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The automotive industry is witnessing a surge in new technology implementations. Are the automotive OEMs and their suppliers in sync with the emerging requirements of new technology?

The automotive industry is undergoing significant transformations, triggered by the convergence of disruptive technologies and radically changing consumer trends, i.e. shared mobility, connectivity, electrification, and more recently, autonomous vehicles. Each presents new challenges, and opportunities, for automotive Original Equipment Manufacturers (OEMs) and suppliers across the global automotive industry.

An evolving and transforming inter-dependency

Automotive OEMs have typically relied on the expertise of their suppliers to develop solutions and strategies to develop innovative and competitive products. However, in the current rapidly changing circumstances, the inter-dependency is increasing pressure on the supply chain to continually develop novel solutions, transforming the OEM-supplier relationship even further.

Automakers are fundamentally depending on their suppliers to deal with everything, from ultra-modern redesigns to advanced hardware and software, to progressive lightweight materials. With automakers racing to incorporate more and more technology in their vehicles, suppliers have had to reimagine their operations and research/development strategies. The growing importance of product innovation and access to emerging technologies, such as those required to develop driverless cars and advanced materials, are critical factors behind the significant number of alliances with technical and research institutes.

Auto suppliers need to reinvent their product and technology offerings, as well as their business models.

Reinventing product and technology offerings to remain competitive

Auto suppliers need to reinvent their product and technology offerings, as well as their business models. With advanced trends, like electrification, being at the forefront, suppliers face unique demands, requiring integrated and sophisticated solutions.  By far, the most radical changes are demanded within the vehicle’s cockpit and interiors, requiring advanced electronic systems to match the intuitive user interfaces similar to what’s available today on most popular smartphones and personal electronic devices.

To enable these in-vehicle experiences, suppliers have shifted their focus from designing hardware-driven product approaches to developing embedded, or open-platform, software-driven operating systems. Indeed, the role of software has exponentially increased and will continue to grow dramatically. It is estimated that software will account for almost 30 per cent of total vehicle value by 2030, up from about 10 per cent today. With increasing sophistication and connectivity, the average new vehicle is believed to currently have computing power capable of processing over 100 million lines of software code.

Automotive

A need for skills, talent and resources like never before

This will also mean a shift in the way the industry thinks about talent and capability requirements in the future. These changes will also offer an opportunity for automotive industry participants to use digitalisation as an enabler to create a unique competitive advantage across the value chain. The industry will therefore need to gear itself for a cultural shift, structural changes, job disruptions, and major skill and capability building to compete with global players, maintain and create a competitive edge, and cater according to global requirements and standards.

Achieving success in the digital world will require new ways of thinking, especially in the area of talent. The need for transformation of the workforce in the digital age will require much more than simple automation of routine processes. It will be about the collaboration between technology and talent to unleash organisations’ full potential. This will mean finding people with the right skills and capabilities or providing the workforce with the required skills while protecting employees’ experience and helping them build a trusting relationship with society.

Achieving success in the digital world will require new ways of thinking, especially in the area of talent.

Moving forward successfully

Supplier businesses will continue to face dramatic changes, challenging their fundamental economics, with certain areas of the automotive market shrinking considerably and others showing continued growth. While the software is becoming more and more the critical requirement for differentiation for certain players,  all suppliers will necessarily have to step up their digital capabilities to stay in sync to meet OEM demands for productivity, competitive costs, innovation, and agility responding to changing demand patterns.

Automotive

This firstly means, having to drop conventional mindsets that have long dominated the automotive industry. This will require a shift in the way the industry thinks about talent and capability requirements in the future. These changes will also offer an opportunity for automotive industry participants to use digitalisation as an enabler to create a unique competitive advantage across the value chain. The industry will therefore need to gear itself for a cultural shift, structural changes, job disruptions, and major skill and capability building to compete with global players, maintain and create a competitive edge, and cater according to global requirements and standards.

Achieving success in the digital world will require new ways of thinking, especially in the area of talent. The need for transformation of the workforce in the digital age will require much more than simple automation of routine processes. It will be about the collaboration between technology and talent to unleash organisations’ full potential. This will mean finding people with the right skills and capabilities or providing the workforce with the required skills while protecting employees’ experience and helping them build a trusting relationship with society.

Also Read: Automotive aftermarket garages in India: Now, near future, and ever after

(Vinay Piparsania is an automotive industry veteran and former Executive Director of Ford India.)

(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)

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