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Challenges of the automotive supplier industry.

The global automotive industry is facing difficult times. According to Roland Berger’s latest Global Automotive Supplier Study, around 5% fewer vehicles were sold in the first six months of 2019 in comparison to the first six months of 2018. The main reasons for declining sales are weaker car sales in China and a global economic slowdown. In addition, the level of innovation in the automotive industry has reached a new peak while the market is facing a major transformation with new challenges. This can be seen in the electrification of the powertrain, autonomous driving, and new mobility concepts or digital technologies.

“If we keep doing what we did so well, we’re done.” - Dieter Zetsche, CEO Daimler

Of course, this also has an enormous impact on the automotive supplier industry, as research and development tasks have increasingly been transferred from the OEMs to the automotive suppliers’ areas of responsibility in recent years. Suppliers are therefore becoming more and more the innovation drivers and the driving force behind the development. Cost pressure, new technologies, and shortened product development cycles mean that significant investments must be made and new competencies must be built up more quickly. A long-term technology roadmap, strategic positioning in the value chain and efficiency improvements are therefore essential for suppliers to maintain their position in the market.

Product innovations in the automotive industry

In order to enable the integration of new and current technologies and tailor products increasingly and flexibly to meet the needs of customers, supplier companies are required to manage development projects more effectively and efficiently. This is particularly challenging in an environment with more and more international cooperation networks. This increasing complexity at all ends has an enormous impact on the competitiveness of the supply chain itself and thus of the OEM. Coordination processes take weeks instead of days, information is lost, and innovations remain unused due to inflexible processes.

“Innovations are the most important key for automotive suppliers to survive in international competition.” - VDA

In this context, the exchange of data plays an enormously important role. Nowadays, this is largely based on outdated methods with several manual steps, which usually results in inefficiency and security issues. This also ties up valuable human resources in complicated data transfer activities and inefficient coordination processes, which could be used profitably elsewhere. As a result, delays in processes such as quotation requests, change management, and corrective action management cannot be avoided. To be successful in the future, OEMs and suppliers must automate the data workflow in collaboration and eliminate as many manual processes as possible. The aim is to use the valuable and expensive resources of employees more productively and to employ them in higher-value activities.

Challenges for automotive suppliers in requirements management

The planning, coordination, and tracking of projects and the collaboration in complex and distributed supply chains has always been an organizational challenge. This also applies to requirements management, which poses major challenges for the entire supply chain, but especially for automotive suppliers, in terms of coordination and change processes.

System heterogeneity and manual processes as the reason for poor data quality and inefficiency

One of the challenges that can be identified is the increasing system heterogeneity in the area of requirements management systems and the associated interface problems. While until a few years ago a single system, ‘DOORS’ from IBM, was used industry-wide, the emergence of such systems has increased massively in the recent past. The main reason is that DOORS, as a quasi-industrial standard, is no longer being further developed and is no longer supported by IBM. For this reason, industries are increasingly looking for new solutions. Be it DOORS NG, the successor to DOORS, CodeBeamer from Intland Software or Windchill from PTC. The range of such systems being used in the automotive industry is continuously increasing. Despite the industry-wide ReqIF standard , which supports the exchange of required data in the automotive industry, this poses great challenges for many automotive suppliers. The media discontinuity associated with the system variety usually leads to poor data quality and increases the risk of information loss. The latest ReqIF Benchmark on behalf of the ProSTEP iViP Association and the VDA (German Association of the Automotive Industry) also mimics the same concern. How well the requirements management data are transferred and what quality they ultimately have, depends strongly on the combination of the requirements management systems. The reason there are different representations of the same information in these systems is due to the different approaches for the requirements management processes and different functionalities of the requirements management systems.

-Requirement management process –

Another reason is manual and non-transparent processes in the cooperation between OEM and supplier. In many cases, the work processes are not sufficiently digitized and automated, the end-to-end workflow between an OEM and their 1st-Tier supplier or over the entire supply chain up to the n-Tier supplier is not feasible. The fragmented system infrastructure and the lack of a secure and reliable connection between critical systems across company boundaries also play an important role here. This leads to an inconsistent database thus preventing a uniform data view for all involved parties. Suppliers, in particular, suffer as a result, as they are often heavily dependent on the OEM for process optimization and lengthy yet resource-consuming processes with the OEM make efficient coordination of subcontractors virtually impossible. Lengthy manual processes and disjointed workflows also increase the risk of misdirected and abused data and prevent non-manipulable capture of what was sent when, where, and to whom, which poses an enormous security risk.

Cross-Company Collaboration for the 21st Century

What is needed is an approach in which decentralized organizations and systems are interconnected allowing information to seamlessly flow between the different actors. Data sovereignty and decision-making have to be left to the respective contributing parties, but the urgently needed transparency has to be made available to all participants. Furthermore, it requires a collaboration tool to support the coordination between all stakeholders on a uniform data view. This includes a workflow-based and a rule & process-driven collaboration as well as the possibility to exchange information on different topics in secure project rooms. A standard such as the ReqIF can only help to mitigate the interface problems between the systems, but it is not a guarantee for efficient and well-coordinated collaboration.

Cesonia as an open application technology platform enables secure, efficient and data-driven collaboration across company boundaries. As a non-cloud based platform, it is based on a decentralized peer-to-peer network and allows end-to-end encrypted data exchange as well as full traceability of all activities thanks to blockchain integration. A uniform user interface also supports a “single point of truth” and provides functions for collaboration and coordination. This helps to increase performance and protects valuable intellectual property.

Thank you for reading and don’t miss out on the next blog about Product Development in the Automotive Industry.

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