The Importance of Business Moments in the Automotive Supply Chain
Nick Ostdick - March 02, 2017
Imagine this scenario: A part inside the engine of John’s car breaks down and prevents the car from starting properly. John engages a function on the car’s console that then sends the specifications of the component part to a local auto part store that then alerts John the store is currently out of the necessary part.
At this point, the store’s inventory management system sends an alert to a regional manufacturer that then engages a shipment of replacement stock to the store or the individual part directly to John’s house. John can then track the shipment of the part in order to know when it will arrive and in what condition to best schedule an appointment with a repair shop to install the replacement part - in fact, the car might actually be able to schedule the service with a nearest auto repair shop based on location, customer reviews, or other criteria John chooses to input.
This scenario might seem far-flung, but it’s actually a relatively simple and soon to be realized facet of supply chain management called a business moment. Coined by the industry publication in the last few years, business moments are poised to reinvent how companies — particularly those in the automotive supply chain — manage and administer their value chains.
As in our example, gone are the days of long lead times and complicated networks in order to oversee parts from the production floor to the customer’s door. With the development of business moments, transactions can take place anytime anywhere in the blink of an eye. While many within the automotive supply chain disagree as to when business moments like this will be deployed en masse, nearly everyone agrees the building blocks are already in place for OEMs, manufacturers, and suppliers to leverage business moments as critical aspects of their supply chain management sooner rather than later.
Defining a business moment
According to Gartner, a business moment is defined as “a transient, customer moment that organizations can exploit dynamically based on the interconnection of many things.” These “many things” are a combination of:
People: Usually the customer or set of customers whose needs or desires are fulfilled by engaging in a sales or buying process whereby products are moved from one location to another based on demand rather than forecasts or predictions.
Businesses: The primary drivers of the sales and production processes. Usually OEMs, manufacturers, suppliers, or other major producers within the supply chain, these actors engage with technology or software triggers - like the alerts in our car part example - to facilitate procurement, sales, and production programs to serve customer needs.
Things: Defined as “actors” by Gartner, things refer to the products, component parts, or physical goods transferred between people and businesses. Things are an equal part of this equation - if not more so - and are the critical bridge between the people and business segments of the business moment equation.
To synthesize the three elements of this equation, a business moment is a brief everyday occurrence that catalyzes a series of events involving people, data and devices spanning multiple ecosystems and environments. In today's digital business environment, a business moment may actually last only a few seconds. And as the supply chain industry increasingly moves to an Industry 4.0 mindset, where data is available in real time, the scope of relevant business moments will continue to expand well beyond the traditional supply chain structure.
Potential impact of business moments in the supply chain
If we look at business moments through the lens of lean manufacturing principles - which refers to the elimination of waste and the reduction of uneven workloads in planned production programs - as well as in the light of digitized manufacturing, we can see how the creation of business moments is set to revolutionize the way sales and operations management and supply chain management functions on a global stage. Some of the potential impacts or significant changes to the supply chain could include:
New structure of automotive value chains: Because successful execution of business moments are set to take place in real-time, the automotive value chain will be forced to operate in kind to meet new and shifting demands of customers. This could very well mean planners and managers will have to rethink traditional demand planning and forecasting strategies to account for instantaneous nature of ordering, inventory replenishment, and transportation management. In addition, the automotive value chain will have to adapt to a 24/7 mentality where alerts and communications can take place at any time.
Breaking down barriers across the supply stream: Even though automotive industry movements like Industry 4.0 and The Internet of Things have already promoted large-scale integrations of the sales, procurement, planning, and production processes, business moments can further encourage the integration of once disparate practices into holistic actions. Thinking back to our car part example: A number of stages of the supply chain must work in perfect harmony to successfully execute this business moment. This means breaking down barriers and silos that once stood between collaboration and communication.
Redefined metrics for efficiency and optimization. The metrics used to measure efficiency and productivity in today’s supply chain can vary from manufacturer to manufacturer, however, most center on traditional data and reporting such as sales, production volume, and revenue generation. While these elements are unlikely to vanish with the development of business moments, new metrics such as rate and speed of order fulfillment, expanse or reach of a manufacturer, and the sophistication of a manufacturer's alert or notification network could very well factor into the efficiency and efficacy the supply stream.
As you can see, business moments have the potential to radically change how companies manage their supply chains from procurement to production to delivery. Identifying business moments will not only make companies in the automotive supply chain faster, more responsive, and more agile, but they will also highlight instances where companies can expand their supply networks and value chains to leverage enhanced sales, growth, and productivity in both the mid and long-term.