Emerging Markets Main Driver for Revenue Increase
Over the last 10 years there has been significant growth in European and American automotive manufacturers running operations in China, consequently it has been one of the fastest places of growth in the world. However, China could lose its position of dominance over the next five to 10 years as a result of the growth in demand from India. And, according to a report by KPMG, the manufacturers believe that growth in the emerging markets will continue to be the key driver for increased revenue over the next ten years. European car makers will continue to lead the way in research and development, complemented with innovation from the North American based tech industry. Improvements to health and safety, alternative fuel use, and self-driving cars are at the forefront of automotive R&D.
Creating a new car or rolling out an innovation relies on hugely complex global supply chains. Different individuals, teams and companies need to exchange information accurately within the supply chain. The ability to have the correct data at the right time and place will become significantly more important in managing the manufacturing cycle around the world. IFS is developing training schemes for the Chinese market using local teams to ensure services are delivered effectively to local teams. Local teams are vital on the ground as they help to manage the cultural and regulatory variations within each country.
Low Cost Vehicles Will Disrupt the Industry, Starting With Supply Chains
It is common for multiple car brands and models to operate on the same platforms. This explains why the interface on an Audi may look the same as a Seat. This is set to become more common since it is an effective way of reducing costs in an increasingly global and competitive market. Supply chains need tools that enable all of the stakeholders involved to combine effectively to manage demand accordingly. Through its recent acquisition of VisionWaves, IFS is working with manufacturers to collect data from different departments as a means to collate and analyse in order to reduce costs in production and procurement.
Flexibility is the Key to Opening the Door in Emerging Markets
There are increasing occasions where a part is used in many different vehicles. Suppliers can’t plan to develop components in isolation, they have to deliver a whole module to match the needs of the manufacturer, and each module needs to be correct for each vehicle. This means the flexibility to react to the manufacturer’s needs for different models is paramount. When a manufacturer moves to a new territory, suppliers should consider moving with them in order to reduce supply chain times and transport costs, or potentially miss out on the business altogether.
Applications will play a key role in this, offering the ability to customise software with functionality and bring the newest development to manufacturers and broaden their capabilities to deliver a project. Suppliers need to ensure that they can deliver flexibility to adapt when manufacturers require a change, and they’ll need the software capabilities to match with this.
Stefan Issing is the Industry Director for Automotive at IFS.