The competitive landscape of the automotive industry has rapidly changed in the last decade. This leads to tons of new ways to monetise new customer value propositions. But to do that, automotive industry companies must embrace change, which is a digital transformation.
As we get nearer to the future, consumers will have a gradually increasing demand for an advanced and better experience, including in the automotive sector. It can be said that digitisation is a growing investment for the automotive industry.
Nowadays, customers expect automotive companies to be able to integrate digital technology into all aspects of manufacturing operations, product designs, procurement, production, sales, marketing, and supply management.
The question of “how” is what we shall discuss in this article. What would be the best instrument to guide you to an advanced digital technology transformation as a company in the automotive industry? Without a doubt, RISE with SAP is the answer.
But before we dive in further, let’s talk about the automotive industry’s digital transformation benefits.
Benefits of Going Digital in the Automotive Industry
When considering digital transformation, the automotive industry has to look at it as a long-term solution—not an instant change that can be finished overnight. Here are some of the long-term benefits:
- Digital platforms create bridges to sales growth
- Artificial Intelligence (AI) in automotive repair and maintenance
- Innovate vehicle performance and design
- Expand into new markets with auto parts or supply sales
- Offer omnichannel experiences in sales and customer care
- Provide post-sales support and monitor customer satisfaction
- Launches new digital-enabled services or businesses
- Designs of customer-centric products
- Optimisation of supply chains
- Increase in productivity (i.e. decreasing operational costs)
- Improvement in quality management
However, these benefits will not come without a challenge. Let’s take a look at what the challenges are.
Challenges in Automotive Industry’s Digital Transformation
Good things don’t come easy. To fully use a digital transformation, the automotive industry must face a few issues and challenges. Considering the competitive nature of automotive companies, the quickest one to address these challenges would be the fastest to get ahead. Some of the challenges are:
A. Forecasting The Return on Investment (ROI)
Companies need to read thoughtfully into conserving cash and its risk management. Efficiency must be prioritised. Therefore, spending outputs need to focus on things that drive supply chain visibility, customer loyalty, and sales efficiency.
Even when companies or manufacturers spend billions of dollars on R&D, questions will always remain on whether customers will be willing to pay for it.
Based on a 2020 Deloitte survey, most consumers in Germany and Japan (67% and 61%) are unwilling to pay more than $500 for autonomous vehicle technology options on their cars.
In conclusion, automotive industry companies will have to focus on the most valuable aspect with the highest ROI while also forecasting the ROI of emerging technologies in the automotive sector.
B. Breaking Through The Resistance To Change
Not everybody is keen to change. Although the transformation is convenient and efficient, it needs to involve more than a few core stakeholders. In a few cases, even the government must embrace it. One of the recent issues in the automotive industry is electric cars.
The number of electric cars on the world’s roads by the end of 2021 was about 16.5 million, triple the amount in 2018. However, this leads to a problem in charging infrastructures worldwide. There’s still an ongoing debate about whether the responsibility should be burdened on the state or the manufacturer.
Another example revolves around the issue of digital maturity. The speed of the changes’ implementation can’t keep up with the surprisingly low level of digital maturity among car users.
In conclusion, companies need to find a way to encourage customers and other essential stakeholders to embrace the change necessary. Not because they have to, but because they need to.
C. Handling The Data Privacy and Security
To gain technological advancement in automotive, companies must gather a large amount of customer data. Without it, vehicles’ new features, new robust designs, and improvements in mobility services would be hampered.
Customers will have a rising concern regarding the security and privacy of their data in the hands of the automotive industry. This data collection includes the vehicles’ and consumers’ data. And it means the company’s responsibility is to ensure that the data are not abused.
D. Managing The Complexity of Change
Digital transformation means changing business models and customer experience. It includes significant changes, and all operations can affect this transformation. Therefore, the complexity of digital transformations may be a challenge for companies.
The transformation process should be managed meticulously. Leaders and managers of the company need to prioritise change to the culture and talent in the organisation as soon as the transformation kicks in. Involvement should not be disparate and without exceptions.
Of course, these aren’t the only challenges the automotive industry will face. But we must remember that even though challenges arise, there will also be benefits. Either challenger or benefits will also depend on the tools being used.
Now we’re reaching the main idea of this article, which is how RISE with SAP can both benefit the automotive industry and help overcome the challenges.
RISE With SAP As The Solution Framework
As a solution package, there is no better solution for digital transformation than RISE with SAP. This platform technology provides the foundation of application integration which extends to a robust ecosystem of solutions, data, and AI.
RISE with SAP enables automotive companies to run as intelligent enterprises with various approaches to creating new business outcomes and developing new business models. In short, RISE with SAP paves a new road for the automotive industry’s digital transformation.
In the effort to pave the new road, here are a few key strategies on how RISE with SAP approaches the outcomes.
A. Customer Centricity
This strategy is about discovering each individual, family, or business’s mobility needs, which leads to creating a new perspective on business opportunities.
Understanding the customer’s point of view and putting their feedback at the centre of every decision are critical prerequisites for success in the digital age. These insights must be applied to determine which products are built, how customers are treated, and what service options are offered.
With RISE with SAP, companies shall be provided with experience and customer data management to develop ongoing customer relationships. Some of the examples include:
- Unified customer experience
- Support for direct-to-customer sales model
- Automated and self-service customer journeys
- Automated and self-determined monitoring systems
- Flexible billing options
- Insights derived from customer sentiments and feedback across all touch points offline and online
- Support for mobility solutions such as subscription, pay-per-use, and many more.
Here are the frameworks of how SAP deals with customer centricity:
- SAP S/4HANA for use in an integrated lead-to-cash process
- SAP Commerce Cloud solutions to deliver an engaging customer platform
- SAP Customer Data Cloud solutions to help ensure customer data remains private
- SAP Digital Vehicle Hub application provides the vehicle digital twin to support new business models
- Intelligent technologies from SAP to support AI, machine learning, chatbots, robotic process automation, and the Internet of Things (IoT).
B. Connected Cars & Mobility Services
The main idea of connected cars is that our interconnected world creates new thoughts and desires daily, turning every car into an entertainment, productivity, and mobility platform. And together with the mobility services, the view would be widened to mobility solutions. These combined would unlock customer value and foster a new ecosystem and fresh revenue streams.
Today’s vehicles are becoming more intelligent and connected. Cars now are able to serve as a platform for delivering new applications and services. However, the current automotive industry tends to rely on the “request/receive” model, which is no longer efficient.
Moreover, emerging business models in the automotive industry are starting to provide complementary and alternative solutions to vehicle purchasing and leasing. That’s why, with digital transformation, automotive companies need to be able to support subscriptions or other new mobility-as-a-service models.
With RISE with SAP, the network of business partners shall provide bundled mobility services and subscriptions for mobility services and apply the concept of the vehicle’s digital twin with the ability to offer additional services for connected cars. Direct applications include:
- New sales models and subscriptions services are enabled
- Vehicle usage data and experience data can be consolidated to provide insights into the overall mobility experience
- User has visibility and control of data generated
- Stakeholders can monetise collected vehicle data
- Up-to-date information is available in real-time across brands and stakeholders
- A central digital vehicle repository storing all vehicle data in the cloud supports collaborative business model design across stakeholders
- Additional mobility business scenarios such as fleet management, charge point operations, and the digital vehicle repository enables parking services
Here are the frameworks of how SAP deals with connected cars and mobility services strategies:
- SAP S4/HANA (with a vehicle management system) to integrate vehicle data
- SAP Subscription Billing solutions for accurate billing for new mobility business models
- SAP Customer Data Cloud to help ensure customer data remains private
- SAP Asset Intelligence Network for an open and secure value creation network
- SAP Digital Vehicle Hub represents the digital twin for any ground transportation object
- SAP Internet of Things with capabilities and services to support the connectivity of vehicles.
C. Digital Supply Chain & Smart Manufacturing
Accelerating innovation cycles require responsive, digital supply chains that use intelligent technologies to ensure rapid flows with high quality—resulting in productivity, flexibility, and new dimensions in customer service.
However, in current processes, growing model diversity increases complexity, and the traditional linear production on assembly lines is reaching its limits. Enabling modular manufacturing will be vital to producing heterogeneous products, providing a quick and flexible reaction to changing customer demand.
With RISE with SAP, the automotive industry should reach a new level of productivity by applying Industry 4.0 principles to enable modular manufacturing and resilient chain supply processes.
- Adaptive and modular productions
- Track-and-trace capabilities for staging materials and work in progress in the warehouse
- Production supply with driverless transport systems
- Mitigation of supply network bottlenecks through detection analysis and scenario planning
- Enablement of autonomous action and self-optimised adaptive manufacturing
- Automatic onboarding of machines and equipment to flexibly extend production capacity
Here are the frameworks of how SAP deals with digital supply chain and smart manufacturing:
- SAP Digital Manufacturing Cloud solution to help enable manufacturing execution and insights
- SAP Digital Vehicle Hub and SAP Asset Intelligence Network for use in open and secure value creation networks
- SAP S4/HANA to support integrated supply chain planning and execution
- SAP Extended Warehouse Management application to integrate logistics operations
- SAP Integrated Business Planning for Supply Chain solution to support comprehensive supply chain planning.
D. Driving Sustainability
With this strategy, car companies and other auto manufacturers focusing on sustainable business performance will gain competitive efficiencies, more easily comply with increasing regulations, deliver on commitments, and ultimately adapt and thrive through new business opportunities.
The automotive industry also needs to transform and lead the movement in decarbonisation, building sustainable electric vehicle products, and providing traceability while increasing profitability and remaining competitive.
With RISE with SAP, automotive companies may collaborate with recyclers to provide them with data needed to make decisions on component reuse, recycling, or recovery strategies. All this is to close the loop and achieve zero emissions and waste. Direct applications include:
- Simplify collaboration and share a common digital twin in the network
- Gain transparency on sustainably sourced and produced materials, parts, and components
- Share best practices for optimal product quality and availability across the product lifecycle
Here are the frameworks of how SAP deals with driving sustainability:
- SAP SuccessFactors solutions to support a comprehensive human experience management
- SAP S4/HANA to integrate corporate functions, finance, planning, and more
- SAP Sustainability Control Tower solution to enable transparency across financial, operational, compliance, environmental, and social key figures
- SAP Product Footprint Management to help calculate the product footprints at scale
So, the last step is to determine how you want your company to kickstart its digital transformation.
Start Your Digital Transformation with RISE with SAP, ONE with cbs
RISE with SAP solution is designed to support your business needs in your industry, in any geography, for any regulatory requirement, with SAP responsible for the holistic service level agreement (SLA), cloud operations, and technical support
With it, you can Increase revenue through more upsell and cross-sell opportunities by delivering new mobility solutions and revenue streams, such as vehicle data, as a basis for value-added services.
Furthermore, you can also reduce costs with more intelligent and automated end-to-end integrated processes to support and validate the real-time visibility of orders and deliveries across manufacturing, sales, and support.
This cloud solution shall also help you optimise environmental impact by designing and manufacturing vehicles and services that can help you run a more resilient and circular value chain through automation and intelligence.
All this is possible thanks to cbs Consulting. Your business needs RISE with SAP, ONE with cbs to achieve manufacturing process agility, reduce business and technology risk, ensure customer satisfaction, realise predictable and new revenue streams, and embrace sustainable best practices in the automotive industry.
So, what are you waiting for? Start your transition journey towards digital transformation with SAP S/4HANA now!