Technology could change business models for OEMs and suppliers
INSIGHT ARTICLE |
With the arrival of smart technology and the anticipation of an enhanced data infrastructure, increasingly urgent questions are arising for automakers and their suppliers. Vehicle components using embedded sensors are able to capture and share a great deal of information, but how that information is stored, shared and used is the difference between merely collecting data and actually adding value. But who will have access to the data from individual vehicles? How will that data be secured from unauthorized users?
As information on drivers and products becomes available, OEMs and auto suppliers seeking to leverage that data need to have a solid data strategy.
A changing business model
The auto industry is often cited as an example of the application of artificial intelligence. But using data to gain a competitive edge is an example of business intelligence.
For all its advantages, the internet of things merely gathers raw data either for individual vehicles or a cohort of them. With the implementation of wireless cellular vehicle-to-everything technology, data can be gathered down to the component level and real-time information can be provided to drivers from other vehicles or an external infrastructure.
Auto suppliers hoping to distinguish themselves in the marketplace need find ways that they can capitalize on the new technology, if they haven’t already done so. Some call it the internet of services, where both consumers and automakers are beneficiaries. For suppliers analyzing and leveraging the data they collect, applied knowledge is power.
For consumers, the connected car will assist in a variety of ways that address safety and traffic flow. Infrastructure with roadside monitors will alert drivers to emergencies or traffic congestion, and provide alternate routes. This is already happening with some GPS apps. Vehicle maintenance alerts will not only remind drivers of ongoing maintenance issues, but may also suggest specific vendors. Aggregate data collected from vehicles can be used to predict issues before they become problems.
For automakers, service problems can be avoided if suppliers use technology to predict and address potential difficulties with components. Being able to track components, enable lean inventory and manage production quality are areas where suppliers can provide value.
Security and ethical considerations
According to the Auto Alliance, automakers invested nearly $109 billion globally on research and development in 2017, ranking the industry ahead of other technology-driven industries. But technology is not without a degree of risk.
The technology behind connected vehicles makes them vulnerable to unauthorized access. Collectively, automakers and suppliers are establishing associations to deal with this common risk. Auto-ISAC, for example, is an industry community of auto and commercial vehicle OEMs and their suppliers that was formed to share and analyze intelligence about emerging cybersecurity risks to connected vehicles.
The information pulled from private and commercial vehicles raises legal and ethical risks as well. Regulatory entities around the world may differ when it comes to what can be done with such information—if it can be collected at all.
Needless to say, working with innovative technology requires the skills of a trained workforce. The Center for Automotive Research says the auto industry ranks among the highest in percentages of electrical, industrial and mechanical engineers in the workforce. Low unemployment and an aging workforce will force suppliers to find incentives to attract and retain such an integral part of the industry’s future.
It’s not just about capturing data
According to the Auto Alliance, today’s high-tech automobile is comprised of 30,000 parts. As more data comes in, suppliers have an opportunity to provide additional value to their OEMs and, ultimately, to consumers. But they will need to have a robust data strategy if they are going to take advantage of the raw data they are collecting.
Sustained industry strength has fostered tremendous stability in the market―which makes this the right time to fund the future.
The road ahead looks promising, but there are a number of areas that will require careful navigation by auto manufacturers and suppliers.