Disrupting the Automotive Industry through Digitalization

By Esteban Remecz, CIO, Asia Pacific, ZF Group

Esteban Remecz, CIO, Asia Pacific, ZF Group

More than ever, today we operate in a digital world, impacted by technology and driven through technological innovations. As a result, the automotive industry is impacted more acutely than most with ever increasing complexity.

To survive and thrive, world class companies are looking to digitally transform their processes and leverage i4.0 technologies inpursuit of competitive advantages and to develop and integrate new technologically differentiated products and business models.

With the introduction of disruptive technologies, the traditional industry ecosystems are currently being transformed into new digitally enhanced and integrated systems.

Before the introduction of i4.0, manufacturing industry used to rely on ERP as well as advanced logistics processes such as lean and Kanban amongst others,to enhance and optimize its efficiency. With the introduction of i4.0, these practices have shifted now to a different level with a vastly increased set of technology based solutionswith offer an enhanced value proposition by enabling adifferent set of insights into the value adding decisions in supply chain and production.

A clear example is that through the introduction of IoT, the value of data has gained a new meaning in the overall value stream. That is, by enabling the collection evaluation of data, a new digital ecosystem is introduced generating a paradigm shift in the overall manufacturing ecosystem which suddenly gives the possibility of generating insights into information (data) based decisions which were not available before.

Suddenly, through the proper combination of these i4.0 technologies and based on the proper analysis of the data collected, advanced insights and solutions such as Machine learning and Predictive maintenance or advanced logistics via telematics become not only possible, but also a common practice in the roadmap of any industry’s digital transformation practices. Even further, for most cases these solutions are consistently becoming a product by themselves and again underlying IoT data, the ecosystem created becomesa determinant factor in adding value and gaining competitive advantage in the production.

Industry and Automotive 5.0 (i5.0)

For other cases, the creation of a new digital ecosystem as a result of the introduction of disruptive technologies can become the most relevant feature of the product itself. The paradigm shift that connected devices has done to the industrial revolution transforming it into i4.0, AI will do the same to industry transforming it into i5.0.

It is very likely that in the near future, the automotive industry will be so dramatically transformed that the onboard digital systems will become the most valuable systems on the vehicle itself

In other words, more than a digitally connect¬ed manufacturing industry, it will become a digitally connected and intelligent manufacturing ecosystem where the data collected, will not only be processed, and analyzed, but also autonomously intelligently actuated within the industrial systems themselves.

The development of the automotive industry has itself been a determinant factor of the overall evolution of the industry and as such it has also paralleled the preceding 4 industrial shifts. Same as the first industrial revolution, auto-mobility started with the introduction of a steam powered automobile which then continued with the introduction of the assembly systems in the automotive manufacturing industry. This was then again mirrored with the introduction of the electrification of the vehicle. Also the automotive revolution started in the steam industry, followed by the mechanization, the electrification, and today not only the digitalization, but also intelligent systems are becoming widely adopted to enable autonomous driving.

• The history of the automobile begins as early as 1769, with the creation of steam engine automobiles capable of human transport.

• In 1806, the first cars powered by an internal combustion engine running on fuel gas appeared, which led to the introduction in 1885 of the ubiquitous modern gasoline, or petrol-fueled internal combustion engine.

• The year 1886 is regarded the year of birth of the modern automobile – with the Benz Patent-Motorwagen, by German inventor Carl Benz.

• Cars powered by electric power briefly appeared at the turn of the 20th century but largely disappeared from use until the turn of the 21st century.

With the introduction of digital technologies in the automotive manufacturing industry, the transformation is suddenly also transferred from inside the manufacturing of the product to become an integral part of the product itself. In this case, with introduction of the autonomous driving systems, it requires that different digital systems in the vehicle are able to not only interconnect among themselves but also to connect with its environment. This brings IoT and machine learning/big data analytics to a completely different level. This challenge is then resolved by with the introduction of advanced solutions such as the onboard AI enabled integrated systems on the vehicle itself.

As a result, digital systems and solutions and how they interact with each other and their environment are becoming the main product differentiator for today’s automotive suppliers and by far also the OEM’s value proposition. In fact it is very likely that in the near future,the automotive industry will be so dramatically transformed that the onboard digital systems will become the most valuable systems on the vehicle itself.

Automotive manufacturers are not the only ones. Other industries, almost on a daily basis, are introducing completely new technologies and creating completely new ecosystems to enable these solutions. In fact, it could be said with this paradigm shift to the digital ecosystem, the onboard digitally enhanced systems for autonomous driving as well as its subsystems will soon become the most relevant value adding and expensive integrated systems in the automobile space. This will not only be restricted to cars, but very likely it will disrupt the overall transportation industry as the scenario with the aviation industry for a long time. Why this cross pollination from, for example,the aviation industry to the automotive industry has taken so long has to be realized and how this will change in the future are not easy questions to answer and should perhaps be the topic for another article.