Joining tomorrow’s vehicles to the connected supply chain

The 2018 North American Automotive Leaders Summit saw the synergies between new technologies in vehicles and transport infrastructure explored in a series of lively discussions and presentations.

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The event opened with a cocktail reception in the Italian Garden at the Westin Book Cadillac Hotel in the heart of the Motor City on the evening of April 16.

The next morning saw delegates gather for the summit sessions, which started with Brett Cayot, a Partner at consultants Price Waterhouse Coopers who gave a presentation on North American Automotive Trends & Forecasts. Cayot showed slides on the difference between the region’s growth of production and sales, and that of Europe and the rest of the world.

His Global Alternative Powertrain Forecast showed a 17% growth in this area which he pointed out had exceeded previous predictions.

He broke the global forecast down to electric and autonomous vehicle growth in North America, Europe and China, with notes on the varying levels of autonomy, from Level 1 through Level 5 (fully autonomous). He said that Level 5 could grow to 82 million units globally by 2030.

Moving to a North American focus, Cayot showed illustrations of the variations in SAAR and light vehicle inventory in the region and commented on how, after peaking in 2016, there had been a slight drop in 2017.

He commented on a slide showing sales incentives that had been offered over years by OEMs, noting that car inventories had gone down slightly in 2017 with truck incentives remaining flat for many years but rising a little in 2017.

Mexico starting to flatten

Cayot spoke of how production was starting to flatten in Mexico, in spite of the continuing growth of plants in the region. He showed a slide illustrating the assembly cost in Mexico and noted that even with incremental transportation costs in and out of the region, Mexico still held a strong cost efficiency advantage.

He noted that most conversations about Mexico centred on the trade imbalance between the country and the US and the importance of an open discussion at US government level.

The future of personal mobility

Scott Corwin, Managing Director and Future of Mobility Practice Leader at Deloitte Consulting made a presentation on Perspectives on the Future of Mobility. Corwin talked of the profound changes in consumers’ desire for personal transport, spurred by the millenials and their seeming fading interest in making the capital investment in their own vehicle but being more open to car sharing and other ‘communal’ vehicle operating models.

He predicted profound change in personal transportation, speaking of a seamless intermodal transportation that would be cheaper, faster, safer and better for the environment than today’s systems.

He spoke of the winners in the future model of personal transportation, talking about the big value shift from hardware to software, products to services, point solutions to platforms and providers to trusted advisors. He spoke of the challenge facing the OEMs, how they must shift their business models and invest in highly uncertain propositions.

Mobility in Detroit

Mark De La Vergne, Chief of Mobility for the City of Detroit gave a city-specific view of the new mobility model. He spoke of seamless mobility, of how the city needs to integrate fixed route transport with new mobility services, and how easing making payment for these services was one of the most important elements. De La Vergne also touched on the role of connected technology in transforming how Detroiters get around, using the new intelligence of today and tomorrow’s vehicles to harness data that can be fed back into infrastructure management and development. He spoke of the public-private partnerships and the pilot schemes launched with OEMs and car sharing companies such as GM and Lyft, suppliers such as Lear and partners such as DTE, Bedrock and the Michigan Economic Development Corporation. 

The view from the stars

Terry Virts, former NASA astronaut made a Keynote address about the longest and most critical supply chain. He talked about his experiences in space travel and the International Space Station and he spoke of how space exploration programmes have contributed massively to automotive technology in such areas as combustion and carbon dioxide management. He talked of the importance of collaboration, between the US and Russia and how the teamwork achieved at the space station is one of his proudest legacies. 

Virts pointed out that the only item produced in space is electricity; everything must be shipped to the spacecraft or space station, and space programmes demand the ultimate in supply chain management. He illustrated this with the story of how several supply craft ‘blew up’ on their way to the space station and this made management of stocks of life-supporting materials critical. 

Knowledge Hubs 

Delegates, speakers and discussion panel members broke out into Knowledge Hubs. 

The Future Transportation Hub saw 15 new mobility providers and logistics companies in lively discussions about the connections to be made between the new vehicle technologies and the need for connected logistics services. Other Knowledge Hubs included Logistics Networks where delegates discussed the changing face of all areas of transportation, from road to rail to sea and beyond. Joined with this was the Vehicle Preparation table, where shifting PDIs and other customer-facing activities from the OEM organisation to skilled and agile logistics providers were debated. The Technology Driven Logistics group saw the issues of harnessing the latest software and hardware to streamline the inbound and outbound supply chain discussed. 

The aftermarket sector was well served by a lively debate called Customer Satisfaction - from faster service part delivery to fleet management, how the LSP can add vehicle buyer retention and satisfaction.

Future Cities and connected security tables merged to examine the impact of the automobile on our urban spaces with subjects as diverse as EV charging stations to dedicated routes and parking for alternative power vehicles. Also discussed were car-free housing projects and cyber-safety in every aspect of tomorrow’s transport models, from shared connectivity to data protection, tracking consumer choices and increasing vehicle security. 

Transport in and out of Mexico

Richard DeBoer, Executive VP of Supply Chain Logistics at Carter Express, Inc. & Carter Logistics started the post-lunch sessions with his insight into supply chain visibility in Mexico. He spoke of the great changes coming to the profile of drivers in the future, with autonomous and connected trucks. He said that the shortage of drivers can be alleviated by the government reducing the driving age from 21 years to 18. He also spoke of how 40% of Carter’s drivers have come through the company's own training programme, recruits with no previous truck driving experience. 

DeBoer spoke of the considerations surrounding near sourcing and issues such as differential labour costs between Mexico and the US for truck drivers versus quality and cost issues of changing suppliers to Mexico-based providers. He spoke of security risks and the benefits of running trucks during the day when cargo theft is much lower.   

DeBoer answered a question about insurance, replying that his drivers who came through the company’s training programme had far fewer incidents and so helped keep insurance costs down. 

Customer satisfaction

The first of the discussion panels saw Anu Goel, Executive Vice-President, Group After Sales, Volkswagen Group of America and Stephan Reiff, Vice President, Aftersales, BMW North America join Sam Ogle Editor-in-Chief of Three6Zero to discuss how aftersales can help to maintain the brand promise. Stephan Reiff spoke of how customers cannot always understand how Amazon can ship some of its inventory immediately but a carmaker may take a few days to supply slow-moving parts. He pointed out that much of Amazon’s slow-moving stock will take five days to ship and that Amazon does not keep vintage or out of date parts and supply them in the way that an OEM will. 

Anu Goel gave an example of over-the-air updates and services made to vehicles without them having to be brought in to a dealer’s premises, citing a survey of owners who had not noticed that their vehicle had been updated/corrected eight times in a year. When asked about vendor managed inventory, Reiff said that it was not on the horizon for BMW. Goel added that there are workable models such as allowing dealers more sight of the OEM’s inventory and allowing them to help to keep the stock of a certain part between manageable levels. Answering a question about 3D printing, Goel said that while he did not think that it will get to a volume at dealership level that will take business away from suppliers, for slow-moving, obscure parts it is a very viable proposition. Reiff gave an example of a customisable side moulding for MINI that can be tailored to the customer’s name or slogan, by 3D printing. 

Connected supply chain

From Raw Material Extraction to Vehicle End of Life - Securely Connecting the Supply Chain was the theme of the presentation by Reid Eastman, Blacksands Inc. Eastman talked about the new players in Automotive 2.0 and showed how personal information and preferences are not only being exploited for selling to the car customer but also to influence the design, manufacture and logistics of vehicles. He showed examples of remote access and how this can be incredibly risky and how some of the small networks within the supply chain must be carefully managed and protected from outside interference. Eastman put the security of IT into a supply chain context with examples of the dynamic supply chain and how the end-to-end challenges of information security run all the way from the raw material supplier right through to the end user - the vehicle buyer. He spoke of how some suppliers are embedding reporting devices into quite small components that might allow the supplier to access parts of the vehicle’s - and OEM’s - infrastructure that it should not have. 

Big data linking Automotive 2.0 with Industry 4.0 - an emissions example

Jeremy Burne MBE, from Global MRV and British American Chamber of Commerce (Great Lakes) spoke about the research on investment predicted to be $4 billion, in the use of big data in automotive. He detailed that the largest portion of this would go into autonomous vehicle development. He spoke of the sheer volume of data in the vehicles of tomorrow - an autonomous vehicle may generate several terabytes of data every second. Burne moved on to talk about Global MRV, an example of how one new source of data can have a huge impact. Global MRV’s offering to the market is an emissions testing system fitted to each car, giving real world driving emissions measurements on an ongoing basis. Benefits of this could include shortening time to market, generating CO2 credits with the legislators, optimising the use of existing assets such as laboratories and development centres, reducing warranty recalls and re-work, achieving transparency with the regulators and is a hardware-with-a-service with no added cost. With the vast amount of new data that can be harvested, predictive analytics can be carried, using artificial intelligence instead of human engineers to analyse the results. 

The future of the North American automotive industry

Bernard Swiecki, Director of the Automotive Communities Program at the Centre for Automotive Research (CAR), presented the Centre’s research on what lies ahead for the industry in North America. Swiecki focused on the differences between SUVs and the newer breed of CUVs and detailed the relative gains and losses in sales in the US, with some remarkable observations on the rise of clearly-defined CUVs as opposed to SUVs. He showed charts illustrating the investments made in Mexico, interestingly showing just one US OEM investment in the region in the last few years, somewhat at odds with a lot of public, and industry, perception. He also showed sales and production forecasts for the whole of North America which, including Mexico and Canada, is very encouraging. 

Swiecki showed slides on material percentage usage by year, from 2010 to 2040 which interestingly showed a continuing healthy growth for the use of steel and some growth for aluminium and composites. 

The Leaders Debate - rounding-off the event

The last session of the day was chaired by Stephen Harley, Managing Director of construction giant Laing O’Rourke and formerly Global Director of MP&L at Ford, and included Sarah Amico, Chair of Jack Cooper Holdings, Mark Anderson, President and COO of United Road, Anu Goel of Volkswagen Group of America, and Michael Berube of the US Department of Energy. The panelists discussed such diverse subjects as driver training, management and shortages, finished vehicle distribution issues and communication between OEMs and their dealer networks. Stephen Harley asked the panel when autonomous and connected car technology would really enable logistics advances such as self-parking and self-loading vehicles. Sarah Amico pointed out that the legislation might lag behind the technology and that fuel surcharges and other levies will need to be adjusted to take into account the added weight of finished vehicle transportation. On future transportation, Anu Goel pointed out that the customer for the electric vehicle is presently ready to use an EV for most of their transport needs and that subscription-based ‘second’ cars should be promoted by carmakers and dealers for longer journeys. Stephen Harley summed up the session, and the whole summit, with the observation that if we harness the new technology in the vehicle and in the supply chain in the right way, we can solve a lot of the industry’s problems but that we must drive the future and not let it drive us. 

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