Modernizing Automotive Supply Chains: Innovations in Efficiency and Security

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Over the last few years, the automotive supply chain has undergone a dynamic shift. Faced with environmental concerns, a semiconductor crisis, and increased expectations to make strides in autonomous and electric vehicle technologies, major players need ways to reduce supply chain disruptions and improve efficiency.

The sheer scale of the automotive supply chain has further complicated matters. Some modern vehicles require up to 30,000 parts. This means they rely on a massive network of manufacturers and service providers, as well as the three tiers of suppliers before they reach the customer and the end of their lifecycle.

So, the question remains: How can automakers navigate these immense challenges and work towards building a more efficient, connected, and disruption-free supply chain? 

The key lies in the following technological innovations.

Digitizing the Automotive Supply Chain  

Automakers are increasingly investing in technology to improve visibility and transparency across the various touchpoints of the supply chain.

Innovative digital solutions have shown promise in enhancing the speed and accuracy of operations, predicting and meeting customer demand, and enabling data-driven decision-making.

Recent trends point to the increased adoption of the following = technologies:

Telematics

The global sale of electric vehicles rose by 31% in 2023 and is anticipated to grow another 30% in 2024. To meet this demand, manufacturers are shifting focus from traditional suppliers and looking to create a new ecosystem of partners with more relevant components.

The trouble with this is that many of these new partners use different logistics processes to move products, making real-time visibility into the movement of crucial components challenging.

Enter IoT-enabled telematics. With these systems, manufacturers can gather and analyze vast amounts of data from various touchpoints in the supply chain, which helps them identify bottlenecks and streamline operations. 

At the same time, vehicles fitted with telematics also return useful information—related usage trends and driver preferences—back to the manufacturer. This allows automakers to engineer new products that appeal to their customer base. 

Telematics systems are also proving to be game changers for aftermarket service providers, who can directly communicate with the consumer and perform preventive maintenance. 

Cloud-Based Platforms

The shift away from legacy systems and the adoption of cloud-based software is similarly helping automakers manage the flow of materials. They can track, schedule, and forecast the movement of goods more accurately. 

Highly scalable cloud solutions also help manufacturers analyze vast amounts of data to reduce the impact of demand variation. Furthermore, they improve traceability across various supply chain touchpoints, allowing players to validate the quality of parts and reduce recall rates.

Some solutions also offer AI- and ML-driven insights into bottlenecks and what’s causing them, allowing manufacturers to plan better and accelerate fulfillment.

Digital Twins 

The concept of digital twins has seen rapid growth across the automotive industry. It’s estimated that the market value of the technology in the sector will grow from $460 million billion in 2020 to $5.06 billion by 2025. 

For suppliers, digital twins optimize the behavior of various vehicle components in a risk-free environment. This means that before any part is sent out to the manufacturer, the supplier has already experimented with different scenarios and eliminated inefficiencies. This has the potential to seriously ease bottlenecks. 

On the factory floor, digital twins can be used to create virtual automotive wiring diagrams, which, despite being critical, are still mostly presented as 2D drawings. When manufacturers analyze the immense amount of data offered by digital twin technology, they can accurately identify wiring requirements, manage their inventory better, and streamline production. 

Securing the Automotive Supply Chain

As the automotive supply chain becomes more complex and more data is gathered than ever before, the number of potential cyberattack points has never been higher.

In fact, as per a Kaspersky report, 64% of automotive industry leaders said their supply chain was vulnerable to cyberattacks. This raises a crucial question: What can be done to improve security?

For one, a multi-layered security approach must be adopted, which includes perimeter defenses, network segmentation, robust authentication protocols, encryption, and continuous monitoring to detect suspicious activity in real-time.

A special focus must also be given to PLC security. The programmable controllers deployed on production lines weren’t designed with security in mind and remain one of the most prominent targets for cyberattacks.

Fortunately, adopting emerging technology has proven to be adept at countering cyber threats. Machine learning and AI-powered solutions greatly enhance threat detection and response capabilities since they can identify patterns of potential cyberattacks. 

Furthermore, blockchain technology, which has shown potential in helping track automotive parts and materials, can help prevent counterfeiting and fraud as the products and components make their way through the supply chain. 

The New Era of Automotive Supply Chains 

In the near future, we can expect advanced technology and cutting-edge innovations to completely reshape the automotive supply chain as we know it. It won’t be long before robots are deployed to build parts with more accuracy, and AI-enabled technologies are widely used to optimize scheduling and inventory levels.

We already have a sign of what this could look like: In 2021, Nissan unveiled an “Intelligent Factory” in Tokyo, which employs AI, IoT, and robotics to enhance efficiency, minimize disruptions, and reduce environmental impact. 

Similarly, we can expect this interconnectedness to bleed into every aspect of automotive supply chain management.