3 Mega Trends in Automotive Creating New Opportunities for Tier 1, 2, & 3 Suppliers

Auto-Manufacturing2Recently, IQMS participated in the Center for Automotive Research (CAR) Management Briefing Seminars (MBS) in Traverse City, Michigan and observed several three undeniable trends that the automotive industry OEMs and suppliers must address in their strategy and plans for the end of this decade.

  1. Material and process innovation is a requirement.  Part, module and systems redesign based on material and process innovation will be necessary across the entire vehicle to successfully reduce weight and enable hybrid and electrified powertrains to meet US federal regulatory requirements for 2020 – 2025. This is driving OEMs, Tier I’s and entire supply chains to pursue disruptive designs to combine components into single pieces, eliminate unnecessary fasteners and joints and produce high-strength steel, aluminum, magnesium and resin composites structural elements. It is common to hear targets of weight reduction of four to five hundred pounds per vehicle.
  2. Autonomous driving capabilities. New active driver assist systems (ADAS) features and technologies will need to be invented or matured to create reliable and safe autonomous driving capabilities in cars, trucks, CUVs and SUVs. While there are many issues and challenges to be ironed out, it is clear that the Federal and state governments, changing vehicle buyer demographics and public concern for consumer safety will drive the need for innovation. Public and private partnerships are also planning and developing facilities for developing autonomous vehicle technology. These initiatives are based on creation of special “mobility” campuses and even public roads where communications between vehicles (V2V), regional infrastructure (V2I as smart traffic signals, road surface sensors, etc.) and ultimately the Internet of Things will validate safety protocols.Also, investments and new ventures formed by traditional vehicle OEMs and ride-share disrupters will rapidly evolve as pilot programs and service offerings in target cities across North America, Europe and Asia are already launched and enjoying some success. Many of these companies have plans to leverage self-driving vehicles in dedicated future private fleets of vehicles.All of this economic energy and technology is creating opportunity for start-ups as well as global automotive suppliers.
  3. Competition is fierce. Among the automotive OEMs who build over 280 nameplates in North America, competition for market share and profits is fierce. They are striving for differentiation in market niches based on consumer demographics that they believe they have a special strength or are underserved by other OEMs’ product offerings.Collectively, they are launching record numbers of new vehicles in next three years and expect their supply chains to not only launch on-time and with perfect quality, this market dynamic also signals increased administration of more part SKUs and tools running at lower volumes than ever before.

These three trends mean that suppliers who seek to be exemplary partners to their customers have an opportunity to stand out from their fellow competitors by being consistently organized, nimble, accurate and responsive. While company leadership, culture, skills and process technology all are key components of extraordinary customer service, this writer believes from his three decades in industry that real automation of information is the glue and the lubrication in the gears of suppliers in the automotive industry. This is true in all areas across the enterprise from sales to engineering, APQP launch management, forecasting, scheduling, operations monitoring, shipping and reporting in real-time so company leaders have actionable and accurate insights to respond and steer their manufacturing companies to success.