Stereotypes are hard to break, whether it is about people or work. When it comes to certain businesses, one could be talking about the secret services for all you know! They are vast and niche, and no one really knows too much about them. Like the automotive firm for instance.
Concepts like direct to consumer, customer experience, digital product architecture are not associated as easily with manufacturing like supply chain and just in time delivery, and total quality management (TQM). While the world grapples with what is now called the new normal, it is indicative of further change that is inevitable and necessary.
The automotive firm is at an inflection point – movement from the physical to the point of digital convergence is now a reality. This industry across its entire ecosystem is faced with fundamental shifts through what are called mega trends.
Mega Trends and AFoF Imperatives
For the automotive firm of the future (AFoF), the reality is the understanding that the answer to the need for connected and complex ecosystem lies in the digital spectrum. Digital adoption will create end-to-end change across global value chains including product development, plant and supply chain operations, and field performance driven by increased customer experience expectations. Businesses need partners with demonstrated capabilities of being fluid, agile, forward thinking and collaborative.
It is imperative for AFoF’s to re-imagine the value chain as industry knows it. The defining behaviour of AFoF is the understanding of how it needs to organize its operating model. They will need to shift away from the traditional pipeline or linear operating model to a mash-up of organizational capabilities based on a new operating model that will blend R&D, engineering, and design, SCM, production, sales, and marketing functions to determine the behaviour of the enterprise. Essentially, the traditional linear operating model will give way to several such functions being done together in real time. For example: emerging technologies like 5G and metaverse will make it entirely possible for engineering, sales, and customers to be talking in real time to make product level changes, offer customer experience at a level unimagined.
AFoF and its Impact in the Future
Here is an outlook of how the disruption made by AFoF will affect the dynamics of the industry:
Product-to-service capabilities and offerings will increase. Companies that make products will explore opportunities to be relevant at the end of the cycle through extended service offerings.
Disintermediation of value chain or what is called B2B2C or direct to consumer(D2C) where the end goal is direct access from a business to its customers. Electric vehicles (EVs) are testing the D2C sales and marketing channel already to significantly improve the customers engagement and penetrate the markets.
Autonomy may immediately recall autonomous cars but that’s just one of many things that will change with enhanced technologies.
Hyper customization won’t just be about high-end luxury cars; bespoke offerings may be an actual reality not too far into the future. The hyper personalization will be at peak for the BORN Electric vehicle (EV) platforms
Changing product architecture to become digital products is already happening; the degree of smartness may vary from the use of more software content in traditional bill of materials to fully software defined vehicles with full autonomous capabilities.
Future enabled technologies are great but having the right people and right partners will always be important. AFoF will need a multitude of disruptive digital technologies – what Tech Mahindra practices as core digital enablers - sense, think, connect, visualize, communicate, and act as a way of working. AFoF will have to re-imagine IT operating models, combining traditional IT and disruptive digital as a two-speed business.
About the Author
Digital Transformation Head - Automotive Vertical, Tech Mahindra
Sachin brings over 20 years of bend of core automotive luxury OEM, business, and technology consulting global experience. Sachin holds a degree in engineering, an MBA in marketing, and a postgraduate diploma in digital business.