The Indian automotive industry is witnessing a paradigm shift and there is a need to adopt digital supply chain solutions that can respond to changing consumer dynamics and increasing product complexity, said a joint report by the Confederation of Indian Industry (CII) and Ernst and Young (EY).
The report on the emerging trends in automobile supply chains observed that it is important for organisations to be digitally operated rather than just focusing on doing digital projects. The industry, it noted, is about to experience a monumental shift with the emergence of trends like connected, autonomous, and electrified cars and shared mobility. Further, emerging technologies, pace of digitalisation and changing consumer demand makes it imperative for automakers to develop early potential risk insights and optimise visibility across the supply chain.
“Adopting a disruptive approach towards building an intelligent supply chain ecosystem is a clear opportunity for automakers in India to stay on par with mega-trends emanating from the future of mobility,” said Vinay Raghunath, partner, Auto Sector Performance Improvement, EY India. Auto firms, he added, must also ensure that they invest appropriately to manage the “business of today” while being prepared for the “business of tomorrow”.
The report went on to point out that the supply chain is no longer linear, but is increasingly managing the interaction between emerging technologies and functional excellence, which has become critical for success. The report also highlighted four key components of a responsive and digitally driven supply chain that companies will need to implement. Procurement 4.0 to help move away from repetitive tasks, becoming a strategic tool enabling stronger quality and cost controls. Logistics 4.0 to ensure negligible paper and process-driven bottlenecks, leading to greater stocking and warehousing flexibility, accurate storage standards, delivery rerouting, among others.
Manufacturing 4.0 to realise greater data-based efficiency and failure prevention, leading to production flexibility and real-time capacity management. And finally, Control Tower 4.0, which will impact the three foundational pillars of planning, data warehousing and intelligence to enable seamless communication in driving strong strategic and operational controls.
According to another EY report, around 80 per cent of global CEOs perceived technology innovation as a top disruptive factor over the next five years, while 57 per cent of global institutional investors (GII) share similar sentiments. 67 per cent of GII executives want companies to undertake potentially disruptive innovation projects even if risky and may not deliver short-term returns. Meanwhile, 61 per cent of auto executives plan to actively pursue mergers and acquisitions in the next year, with 75 per cent expecting tech innovation as a key factor influencing deals.
Four-pronged approach to new system
According to the report, companies will need to adopt the next generation of technolgies in fields like procurement, manufacturing, control towers and logistics to shift to a responsive and digitally driven supply chain management system