With rapid advances in vehicle technology, the challenge for the automotive logistics industry is to keep up, said supply chain experts at the recent Automotive Logistics UK conference.
From the adoption of Electric Vehicles (EVs) and artificial intelligence (AI) to new mobility models, the automotive industry is simultaneously undergoing a global technological transformation and its logistics is becoming more digital.
More than 40% of delegates taking part in the poll at the conference said that in-car technology was having a significant impact on their business.
“Our business is not like five years ago and in five years’ time won’t be like today,” said Martin Corner, vice-president supply chain management at Renault-Nissan-Mitsubishi Alliance (RNMA).
“There is a new consumer driven by technology and their habits are filtering through into the B2B environment. The buyers we’re dealing with expect the same speed they have in their domestic lives. These are the key drivers in the world of logistics; it is no longer linear.”
There is also the impact of new technology on the vehicle itself, with the driveline technology of almost all manufacturers set to change in the next five years by 30-70%, according to Transport Intelligence analyst, Thomas Cullen. He asked whether carmakers had a logistics plan to cope with the impact on the supply chain.
Talking about RNMA’s position on electric vehicles and battery sourcing, Corner said it was currently hard to tell how much the move to an EV-centric supply chain was going to change its business and factory processes.
“We have a steam train coming towards us in terms of technological change and we are still ignorant of where this is coming from, what the R&D footprint is and how we will ship [the products],” he said.
The battery supply chain is a specialist and complex one, with lithium-ion batteries designated as hazardous cargo. Nissan has a lithium battery plant next to its Sunderland assembly plant but Corner said he expected that with volume increases and the type of electrification coming down the line, it would also be sourcing batteries from China.
He went on to suggest, however, that battery transport was a great opportunity for logistics companies.
“Anyone who buys into expertise on transporting batteries or electrification parts to support that powertrain will be getting a lot of business,” said Corner. “It will be more costly on insurance and there are safety issues related to the batteries, but it is a massive opportunity for logistics companies.”
Corner said RNMA was using technology to analyse customer behaviour, including using AI to forecast what inventory it needed around and how to implement technology at low cost.
John Buchanan, manager of powertrain programming at Ford, noted that new sourcing strategies would be needed for the new components in autonomous cars and said the supply of transistor chips had been a challenge in the recent past, with a number of global shortages at the tier three/four level.
The automotive industry is in competition with other industries, notably consumer electronics, for these chips and Buchanan said it was shock to many in the automotive industry to find that their voice at the table wasn’t as loud as they expected.
“Part and parcel of this digital revolution in the car industry is new types of suppliers and we need to work out how to secure the supply of parts that are going to be needed,” said Buchanan.
One thing of advantage to parts and vehicle-makers in the west was the opening up of the railway from China to Europe, as part of China’s Belt and Road trade initiative, he said.
“It is reliable and predictable and, in comparison to ocean freight, not that much more expensive. That will change the way we operate in bringing parts in,” he predicted.
Corner added that developments in software meant manufacturing would change significantly but at the same time, carmakers and their suppliers would be handling fewer parts.
“Processes will be simplified in one way regarding car configurations but the making of it will be more complex,” he said. “The big change in the vehicle launch is that there are more software problems and [the question is] can we pull the right talent into our industry to deal with this.”
Corner said that by 2022, RNMA would have 40 autonomous drive vehicles on the market and its cars would be connected 90% to the Internet of Things.
Many businesses have successfully contained supply chain costs to unlock huge savings, reducing waste and improving efficiency. A significant investment in technology has resulted in visibility and transparency, awarding the companies the ability to track components and automobiles as they pass through various supply chain touch points, dealer outlets and service points.
Juan Manuel Santiago Mendez, CEO of Mercedes-Benz Parts Logistics UK summed things up on a positive note, suggesting that the best way to navigate the changes that were happening so fast was to enjoy the ride.
“These are exciting times and we have not seen anything like it for the last 100 years,” he said. “Daimler has produced cars for 132 years now and the core business is still there, but behaviour is changing and it is changing so quickly that we have to think about how we will adapt our business to a mobility set up for the future.”
What was crucial for Santiago, when it came to the logistics supporting this, was a change in mindset and a more open approach to change among the OEMs. “We have to ensure we are aware of what is going on out there and we are able to react quickly,” he concluded.