Unlearning the old and learning the new

Issue #78, May 05, 2021

Tried and tested methodologies make way for new practices in the automotive industry. The practice of just-in-time or market pull based of ordering parts is replaced by the traditional forecast based push or stocking of inventory, for critical parts like chips. Traditional vehicle makers prepare for the 'digitization' of cars using methods like over-the-air upgrades for the software in cars. Electrification continues with China taking the lead. New sensors are coming out to guide autonomous cars. A new series of supply chain transformation updates curated from what is reported in the media and with our points-of-view is started on the Infosys Knowledge Institute page on LinkedIn. Please do 'follow' to stay updated and participate in the vibrant discussions. Here are the details of the updates.

Cars as a software platform

Taking a cue from Tesla, Porsche is finally treating its 5,000-pound computer like the SAS platform that it is. Most major automakers are fleshing out a strategy for selling upgrades via over-the-air software updates and a rash of them will start popping up in the wild in the next few months, starting with luxury vehicles. “If you don’t have digital experiences, you are not on the radar screen,” Kjell Gruner, CEO of Porsche Cars North America, recently told Bloomberg. “You’re irrelevant.” - Bloomberg

China's early mover advantage

China is erecting factories for electric cars almost as fast as the rest of the world combined. Chinese manufacturers are using the billions they have raised from international investors and sympathetic local leaders to beat established carmakers to the market. The Chinese industry has momentum. China will be making over eight million electric cars a year by 2028, estimates LMC Automotive, a global data firm, compared with one million last year. Europe is on track to make 5.7 million fully electric cars by then. - NY Times

Supply chain transformation update series

We have started a series of transformation happening specifically in supply chain management, not for any particular industry. But the automotive industry is one that is definitely impacted and also driving changes. Please do 'follow' the 'Infosys Knowledge Institute' page on LinkedIn to stay updated. We covered supplier visibility and digital supply chains in the first two posts. Microfactories to follow next.

Lidar with longer range

Argo AI, the self-driving startup backed by Ford and Volkswagen, has developed a sensor it believes will be key to commercializing autonomous transportation, even when it is dark. The company unveiled a lidar sensor capable of “seeing” 400 meters down the road with almost photographic detail. Lidar bounces light off objects to create an image of the road ahead, providing critical information to computers that pilot next-generation technology in vehicles without human drivers. The new sensor will be at the heart of the self-driving system that will debut on Ford’s ride-hailing and delivery vehicles next year and on VW models in the middle of the decade. - Bloomberg

The EV charging station catch 22

President Joe Biden’s plan to wean U.S. drivers off fossil fuels requires massive investment in public charging stations to power the electric-car revolution. So far, none of the companies that deploy the equipment has figured out how to make a profit. The dilemma boils down to demand, and there’s a certain chicken-and-egg quality to it. Most electric-vehicle drivers charge their cars at home, so many public charging stations get little use. But lots of people still driving gasoline-powered cars won’t consider going electric until they see charging stations widely deployed, for fear that they will run out of juice on the road. - Bloomberg

From JIT to stocking up inventory

The hyper efficient auto supply chain symbolized by the words “just in time” is undergoing its biggest transformation in more than half a century, accelerated by the troubles car makers have suffered during the pandemic. After sudden swings in demand, freak weather and a series of accidents, they are reassessing their basic assumption that they could always get the parts they needed when they needed them. “The just-in-time model is designed for supply-chain efficiencies and economies of scale,” said Ashwani Gupta, Nissan Motor Co.’s chief operating officer. “The repercussions of an unprecedented crisis like Covid highlight the fragility of our supply-chain model.” Auto OEMs look at maintaining an inventory of semiconductor chips. - WSJ