How Autonomous Vehicles Could Impact the Automotive Supply Chain

Posted by Nick Ostdick on Jan 31, 2017 9:00:00 AM

Autonomous2.jpgIt may sound like something out of science fiction, but the fact is autonomous vehicles (AVs)  and their mass introduction into the global market is more of a soon-to-be reality than a dream. In fact, a number of recent surveys indicate AVs could be on the road in somewhat restricted capacities within the next 5 to 10 years, with widespread adoption coming only a short time later. The development and acceptance of AVs is sure to have a sizable impact on the auto industry, especially on OEMs, suppliers, manufacturers, and others along the value chain who will have to adapt to new methods of planning, procurement, production, transportation, and delivery.

But how exactly could the introduction of AVs impact the auto industry? How will those in the automotive supply chain be forced to adapt and evolve to meet the shifting demands of tomorrow’s customer? And what might the implications be for OEMs as AVs are poised to significantly reimagine the partnerships and processes that are industry standard today?

To help answer these questions, here are 4 ways — both large and small — autonomous vehicles could impact the auto industry in both the short and mid-term future.

Reshaping the supply chain

On a more internal level, the introduction of AVs has the potential to reshape how automotive manufacturers manage and administer their supply chain processes. OEMs can leverage AVs in the movement of component parts via chassis from facility to facility, which, because of the smart, integrated nature of AVs, has the potential to reduce fuel costs, decrease environmental impact, and increase the efficiency of how products are moved from place to place. Because AVs incorporate intelligent tracking and mapping systems, OEMs can also perform at a higher level when it comes to route management and avoiding transportation bottlenecks before they occur. This could also result in smarter distribution practices, reduction in load sizes, and other cost and time saving measures.

Acceleration of associated applications

With a reliance on GPS, artificial intelligence, and advanced mapping and sensing capabilities, AVs have the potential to usher in a new wave of technological platforms OEMs and manufacturers have been slow to embrace. Because manufacturers and suppliers will be required to have in-depth, working knowledge of this systems based on customer demand, planners and managers will be able to apply these platforms and applications to other functions across the value chain. Container management, dock and yard management, BOM management, and other integrated demand planning strategies could see sharp increases in efficiency and cost-effectiveness via AVs and the various software solutions on which they operate.

OEMs as service providers

Perhaps one of the more significant potentialities from the introduction of AVs in the automotive industry is OEMs shifting from a mere production standpoint to a more service-oriented platform. Given the highly technical, connected nature of AVs, customers may want to move away from more traditional service shops in favor of the entities that actually produced the component parts when it comes to service and maintenance. This means OEMs would essentially have to add an entire new mode of operations to their existing platform whereby they produce, monitor, and service AVs on a consistent, simultaneous basis.

Pushing the auto industry toward complete automation

While the auto industry has been working toward a holistic automation strategy whereby as many manual processes as possible are automated across the value chain, much can still be done in terms of making the auto supply chain more lean, efficient, and productive. Because the introduction of AVs means new and developing partnerships with software and technology companies, OEMs will be required to incorporate higher levels of automation platforms to remain competitive in a landscape that will become more and more crowded. More players in the automotive sphere means more complexity, and with more complexity will come the need for solutions that help cut that complexity and provide enhanced visibility and transparency at each touch point across the value chain.

In today’s global automotive landscape, looking too far into the future can be problematic, especially when OEMs, manufacturers, and suppliers are often tasked with combatting planning and production issues in the short-term. However, when it comes to AVs, not looking into the future to understand the challenges and opportunities presented by this shift away from today’s contemporary vehicles is to miss out on one of the most exciting developments the automotive industry has ever experienced. Today’s major players in the automotive supply need to understand the potential AVs pose if they expect to remain viable and competitive in the long-term.

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Topics: Automotive Industry, Supply Chain Management