Vital issues discussed in Vienna at the 2nd Automotive Leaders Summit Europe 

Thought leaders from OEMs, suppliers and logistics providers gathered in Vienna on March 13 and 14 to discuss supply chain challenges and to share exciting new strategies for the big challenges facing Europe and the global market as a whole. 

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A fascinating visit to an advanced logistics company - LKW WALTER 

The event started with a tour of LKW WALTER’s facility nearby where the visitors were shown an exciting new initiative from the Austrian logistics company - a new type of digital supply chain, driven from the logistics provider’s ‘end’ and focused more on ETA than the conventional resource planning and tracking type of ERP. 

LKW WALTER prides itself on its truck-centred multimodal approach to automotive logistics and as a private company it is self-sufficient; it has no loans and is financed from within. It is a family-owned company that has a diverse portfolio, from logistics operations to container refurbishment and property development. 

The company receives between 1,000 and 2,000 tenders per year for its logistics business and it has a pan-European workforce, enabling it to speak to customers in their own language as Tait Richards, Sales Director said: “We are lucky to have staff from all over western and eastern Europe; they all start at the bottom, on the telephone dealing with customers and our truck fleet, whether they come in to us with a high school education or a degree.” 

Outsourced truck services

LKW WALTER owns more than 8,500 mainly curtainsider trailers, that are mainly used for intermodal transportation. It uses a very large pool of truck owner/drivers, from ‘one man band’ operations to companies with many vehicles. This policy of not having its own trucks and drivers means that it has a considerable management task every day - marshalling drivers, trucks and loads in the most efficient way is one of the company’s core competences as Martin Kvych explained in a presentation at the company's modern and spacious new offices. “An important policy of ours is to make sure our drivers are respected and treated well; it is very hard to find enough drivers so we like to ensure that they have good rest and refreshment facilities wherever they work for us. This way we can retain and recruit more drivers and keep them motivated.”  

Digitalisation of truck movements

Kvych went on to talk of the influence of Industry 4.0 and how the company is harnessing the power of the Internet of Things and how important it is for all companies in the industry to implement digitalisation now, and not in the future. He showed slides explaining how LKW WALTER’s digitalised ETA system captures all of its fleet’s scheduling in a way that will ultimately be able to integrate with artificial intelligence, to speed up identifying loads at gates and borders, without human logging in and out, or signatures. Kvych spoke of the importance of not relying simply on the GPS positioning data of a truck but maintaining constant communication with the driver, who often knows the best time and route to take and can take into account his or her allowed driving time and rest periods. This includes sharing information using more graphics than text through its own apps, which also negates the need for translation into the driver’s language. 

Open source and pan-logistics expertise

The company wants to offer its Industry 4.0 truck transport system to other parts of the supply chain; it feels that its expertise is not limited to automotive operations and that its method of moving away from booking delivery slots, to sending ETA info to the delivery site is the way forward for advanced logistics. 

Kvych said that LKW WALTER is open to sharing its systems on an open source basis, with smaller suppliers and will not seek to keep most of the initiative exclusive. In answer to a question from one of the delegates about whether all the smaller suppliers are ready to assimilate a complex transport management system. Christophe Faucher, a manager at LKW WALTER replied that, “I think it should be quite easy for any supplier to integrate the system and understand it as we have designed it so that there is an overview for one supplier at a time, sent to them and made available on a web page, so they do not need any sophisticated software or expertise to view any transaction or journey.” Michael Druml, Director Global Purchasing and Logistics at Magna Steyr rounded off the visit with the observation: “Many parts of the supply chain, OEMs, tier suppliers and logistics providers, appear to be ready for Industry 4.0, they are not all ‘ready together’ but this [LKW WALTER’s initiative] is a big step towards better connected distribution for the whole supply chain.” 

In the evening, delegates gathered for a networking gala dinner at the Ritz-Carlton Hotel where old friendships were re-founded and new business relationships forged.

The view from Bulgaria 

Lachezar Borisov, Deputy Minister of Economy, Republic of Bulgaria opened the Summit programme with a keynote address. Borisov spoke enthusiastically about the significant growth of the automotive sector in Bulgaria; growth of 4% in the sector was recorded in 2017 and the start of 2018 has seen even greater developmentd. He spoke of how protectionist measures in some non-EU countries must be considered in investment and trade calculations for all EU countries.

EU free trade agreements were highlighted as key to success of countries like Bulgaria, within and without the European union.

He pointed out how digitalisation in the automotive sector, particularly in production and logistics must work hand in hand with initiatives such as car sharing and innovative taxi and other new mobility solutions.

Borisov proudly talked of the 170 suppliers in the supply chain in Bulgaria, not only the automotive industry but in many other sectors too, with 40,000 people employed in the automotive sector, which represents some 4% of GDP. He said that the automotive sector is the fastest-growing sector and is growing faster than the EU average.

According to Borisov, Bulgaria offers the lowest operating costs in the EU, including very low energy - electricity and other energy costs, and of course, very competitive labour rates.

EU trends and forecasting

Jan Hofmann, Senior Automotive Consultant, PwC in a presentation on EU Trends and Forecasting spoke of a 34.2% increase in new car registrations until 2030 in Europe, and how the ‘Robocab’ economy will lead to additional demand in opposition to many observers’ view of the future of demand for vehicles. 

Hofmann predicted that 55% of all new registrations will be electric vehicles by 2020 and he spoke of how this will force the whole industry to rethink the existing infrastructure. 

Total mobility solutions - the view from Ford

The next keynote presentation was given by Gunnar Herrmann, Chairman of the Management Board, Ford-Werke who showed four megatrends on Ford’s vision of tomorrow’s automotive world. These included urbanisation, global middle class growth, air quality and changing consumer attitudes. 

Traditional auto business in 2017 was $2.3 trillion of which Ford’s share was 6%, transportation services, not car ownership, were $5.4 trillion in 2016, and Herrmann said that the growth of this ‘non-ownership’ sector this will drive OEMs’ strategies - indeed that it has to respond to this trend. 

Speaking on Ford Mobility, he spoke of how new technology and connectivity is making its way into plants, with lean manufacturing principles being modified by increasing man-machine interfaces. 

John Willems of TNT asked Herrmann whether Ford could do all these mobility solutions itself. Herrmann said that this was problematic as Ford has an established dealer network that could be affected by this but that there will need to be a sea change in collaboration with other mobility service providers in order to offer the required customer choice. 

Industry 4.0

After a networking break, the summit re-convened for a presentation by Bernd Schreiber, a Partner at Arthur D. Little who also moderated the panel discussion that followed. 

He said that there was a model that some companies followed that they should wait and see what would happen in Industry 4.0 but that this would allow their competitors to overtake them by a factor of two and that the time to act is now. 

Schreiber then introduced the discussion panel of Pierre-Martin Huet, Global Supply Chain Strategy Director, Michelin, Jordi Jove, Director, LKW WALTER, Stefan Brunner, Global Sector Head, Automotive Vice President, DHL Freight and Michael Druml, Director Global Purchasing and Logistics, Magna Steyr. 

He began by asking Pierre-Martin Huet of Michelin how the supplier is embracing Industry 4.0. Huet replied that Michelin feels better supply chain management through the use of advanced technology can bring good ROI in quite a short time but that it is very important to “bet on the right technology.”  

Michael Druml said that Magna Steyr is trying to be one of the “early birds” in adopting Industry 4.0 principles. He said that there was a perception that the new industrial revolution would result in job losses but the reality was that more jobs are being created.  

Jordi Jove of LKW WALTER said that logistics providers such as his company could and should be leaders in the institution of Industry 4.0 and that one of the most important elements of this is increasing visibility throughout the supply chain, and doing this using powerful IT tools. 

Customer satisfaction - the aftermarket

Sam Ogle. Editor-in-Chief of Three6Zero, moderated a session discussing the challenge facing OEMs and the whole industry that the relative simplicity of EVs in the future will radically change the service and aftermarket landscape. John Cooper, Vice President Aftersales, Ford of Europe and John Willems, Director Industry Marketing Automotive, TNT both pointed out that maintaining customer satisfaction could be improved by the increasingly connected nature of vehicles. John Cooper said that having every vehicle connected enables the OEM to tailor its services to each customer by harvesting profile information. Ogle asked John Cooper if vendor managed inventory was the way forward. Cooper said that the power of Industry 4.0 data management will empower dealers to drive the supply chain and help to keep inventories low. 

Platooning by rail

Helmut Eder, Member of the Board, LKW WALTER presented his company’s initiatives in what he called ‘Combined Transport’, using consolidation of trailers onto railcars by local transport companies. Likewise, when unloading the train, local operators can be used, alleviating long-distance road journeys. This can reduce traffic jams and move goods more smoothly through border controls and also reduce CO2 55% by rail combined transport and by 75% using short sea shipping routes. 

This is enabled by LKW WALTER’s ‘cranable’ trailers, trailer assemblies that can be loaded onto railcars, which also allows suppliers to load and even assemble parts straight into the trailer. 

Smart freight

Sophie Punte, Executive Director, Smart Freight Centre, outlined the activities of the Centre and how it can help OEMs to make their freight and logistics processes more sustainable and greener. 

She encouraged the industry to mobilise and recognise suppliers’ expertise through communication and awards, and highlighted BMW, FCA and Scania as being active in this area, by setting emissions targets, demanding the use of more efficient trucks (minimum Euro 4, moving to Euro 6), reduction initiatives and charting changes in absolute emissions. 

Autonomous vehicle transition - software solutions

Dr. Thomas Benz, Solutions Director Automotive, PTV Group presented a study of the urban and social impacts of the vehicles of tomorrow. He showed pictures of traffic congestion in 1894 and 1910, in London, as examples of how traffic congestion has been a problem for a long time. Benz showed examples of shared autonomous vehicles; TaxiBots, on-demand buses and other public transport systems.

Finished vehicles - connected distribution

Dr. Hans-Bert Bong, the highly experienced finished vehicle former OEM executive, moderated the next session, which concentrated on connected distribution. Bong discussed horizontally and vertically linked, sequential and parallel systems of vehicle distribution in a short presentation and then asked Dominique Gijbels, Managing Director, EVL Solutions for his take on the belief that finished vehicle logistics was lagging behind other areas in automotive logistics. Gijbels said that a more connected supply chain will help with this problem but there was not enough ‘joined up thinking’ across the business.  

Chris Godfrey, General Manager, Outbound Engineering, Renault Nissan Mitsubishi Alliance said that in the world of outbound, there are some companies that are sharing more information, between OEMs and their dealer network but there is still a long way to go. Pavel Haidai, Founder and Head, Avtologistika LLC said that the Internet of Things is helping his company improve its visibility of the whole order chain and that the connectedness of each car helps a lot, with the car reporting any problems such as windows left open or flat tyres. 

Leaders’ reflections on the day

Simon Duval Smith, Editor of Automotive Purchasing and Supply Chain websites and magazines, chaired the final session which sought to take an overview of the automotive industry, in the light of developments and challenges outlined in the day’s discussions. He was joined on stage by Sophie Punte, Executive Director of the Smart Freight Centre, Chris Godfrey, General Manager, Outbound Engineering of Renault Nissan Mitsubishi Alliance and Gunnar Herrmann, Chairman of the Management Board, Ford-Werke. Discussion subjects included how the role of the carmaker will change as the electronic architecture of both car and the transport environment develops, with everything from autonomous and connected vehicles to the innovative and advanced transport management systems of companies in the supply chain.

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