Before the pandemic, manufacturers spent years developing ever more complex, global, and interdependent supply chains in order to drive efficiency. As the impact of the crisis becomes clear, the sector is accelerating towards a new transformation, with digital resilience at its core.
This is particularly true of automotive, one of the hardest-hit manufacturing sectors. At the height of the pandemic, car production plunged around the world. Continued subdued demand from key markets such as Europe – where sales are expected to contract by a record 25% this year – is extending the pain.
The automotive sector also depends on some of the world’s most complex just-in-time supply chains. Around 80% of global car production involves parts from China, with a handful of economies including Mexico and India also crucial. And while supply chains from the region are now broadly functioning well again, original equipment manufacturers (OEM) shutdowns during the pandemic are prompting questions about resilience in boardrooms globally.
“Much of auto manufacturing is now based around best-cost countries,” says Santu Mandal, Business Head – Manufacturing & Utilities, Germany at Tata Consultancy Services (TCS). “If one assembly line stops in one country, that can cause bottlenecks for a global company. If production in a whole country stops, that creates enormous disruption. New digital solutions are needed”.
Technology, including the Connected Workforce Safety Solution from TCS, can help manufacturers sustain operations by promoting social distancing. Near-shoring of supply chains is also being explored. However, further digital tools will be needed to address underlying supply chain vulnerabilities and risks.
That’s because of the complexity of the process: the average car has some 30,000 components. And in the UK, for example, more than half of these come from elsewhere. It’s why, during the pandemic, companies everywhere needed visibility of these components and suppliers, fast.
But as well as a widespread lack of supply chain mapping, many manufacturers have lacked the tools to have quick visibility of their data, preventing them from being able to quickly identify risks, and solutions.
One global manufacturer, a TCS partner, needed to identify alternative suppliers fast and evaluate its own warehouse capacity. A neural manufacturing approach, enabling an intensely networked group of partners to share data intelligently, provided the solution.
The manufacturer was able to identify and track individual components using Radio Frequency Identification (RFID) technology and IoT sensors. At the same time, machine learning algorithms tracked and coordinated the entire process. Self-healing and largely autonomous, every stage of the supply ecosystem could see this data and make use of it.
Another company’s finished vehicle supply chain was optimized with a solution by TCS that could transmit live data from cars in transit. This gave busy managers a helping hand: intelligent, connected systems could keep track of their assets so they could focus their finite attention on problem-solving to keep supply chains moving.
“The Manufacturing enterprises of the future will need in-built intelligence,” says Mandal. “We need to network the networks in intense ways that manufacturers never previously thought of.”
TCS’ Digital Twin technology sits at the heart of this idea. It clones the physical world into a virtual model so every piece of a manufacturing supply chain ecosystem can be seen and acted on.
By making a digital copy of carmakers’ worlds, the power of the network can be used to solve its problems.
Blockchain can also be used to build digital resilience in global supply chains by increasing transparency and integrity across multiple actors in a system. As Mandal says, all measures that increase visibility and help share data will be central to operating in the Industry 4.0 era.
“In future every motor manufacturer will have to give a risk score to their supply chain and this will be increasingly standardized across sectors,” says Mandal. “Before the pandemic, everyone was looking at different parameters for scoring, like quality and innovation. In future, more companies will be looking at geographical challenges too.”
Over the next five years, the world’s carmakers are expected to build 200 new electric car models. This, together with developments in autonomous vehicle technology, are just two areas of growth that could reinvigorate the sector.
But those who invest in resilience look most likely to reap the rewards – a point made clear in TCS’ recent Supply Chain Management (SCM) whitepaper on how to future-proof supply chains in auto and industrial manufacturing.
That’s because more shocks are expected. Climate targets and the increased frequency of natural catastrophes could lead to further supply chain disruption. Other warning lights on the corporate dashboard include post-COVID economic and geopolitical risks.
Building resilience will be key to dealing with these uncertainties, and meeting customers’ expectations. And any long-term solutions will need a digital core.