History shows suppliers that invest in technology to drive innovation have better financial margins, as their solutions are not so easily commoditized. Yet, for innovation to work, suppliers have to take risks to execute new ideas.
It seems apparent that cars are the next mobile platform – from Bluetooth technology to driver assist devices, the connected vehicle has become a reality. This mobility, in conjunction with fuel-economy mandates forcing new powertrain technologies, requires an unprecedented rate of innovation.
OEMs cannot keep pace with today’s requirements without relying more heavily on their suppliers for unique contributions to the vehicle. History shows suppliers that invest in technology to drive innovation have better financial margins, as their solutions are not so easily commoditized. Yet, for innovation to work, suppliers have to take risks to execute new ideas.
A 2013 PriceWaterhouseCoopers study, “The Highway to Growth: Strategies for Automotive Innovation,” found less than two-thirds of automotive executives have a well-defined innovation strategy. So, how can suppliers successfully work innovation into their business model, starting right from bid, while reducing risk in a volatile market where material prices constantly are changing?
First, the more comprehensive the requirements in information provided to suppliers at bid, the more accurately and creatively the supplier can respond. Higher detail at project bid means a higher probability design, performance and price expectations will be met.
Assuming this level of information is provided, it then falls on the suppliers to unify people, processes and tools, leveraging the collective knowledge and creativity from across the global organization and into their supply chains to meet or surpass OEM requirements.
Computer-aided design and manufacturing solutions focused on reducing product-development time are a given. And most corporations have gotten pretty good at capturing engineering knowledge for re-use. Yet, there still remains a lack of strong integration and information-sharing across the enterprise. Collaboration is key to innovation, and solutions today must address this at multiple levels – across engineering systems, internal departments, geographic boundaries and external partners. To elicit the highest level of innovation, no one group can be functioning within its own silo.
For example, as more responsibility is given suppliers to deliver complete modules, there is a need for an integrated platform that enables a systems-engineering process that can synchronize the creation and dynamic testing of all mechanical, software and electronic content.
Today, collaboration between different domains is accomplished, but typically with translators and add-ons between the solutions allowing them to interact with each other. Work is getting done, but at a cost to timeliness and data richness. With all information contained in the same environment, non-value activities related to searching, meetings and data transfers can be reduced, leaving more time for innovation.
Beyond engineering, there is a need to also unify business processes with product-development activities on a common IT platform. With this integrated approach, different departments within an organization see how they relate to each other, and any changes – be it design, materials availability, pricing, manufacturing constraints, etc. – immediately are reflected to all stakeholders in real-time.
Non-value-added effort required to switch between systems can be significantly reduced and adherence to quality standards such as Advanced Product Quality Planning and Production Part Approved Process become an embedded part of the process, revealing issues much earlier in the lifecycle. With a single system capturing all development and business processes for re-use, various design and engineering scenarios can be considered along with their associated costs, helping better manage the innovation process while decreasing the time needed to analyze various solutions.
With globalization, the governance of multiple programs across geographies has become increasingly difficult, making it nearly impossible to succeed by relying solely on office applications or isolated data repositories. A single platform uniting product information across the organization can streamline communication and mitigate risk, ensuring teams can fulfill local requirements and meet milestones while providing consistency, visibility and traceability throughout the organization.
Extending this single source of truth into the supply chain enables better management of the external partner relationship, providing insight and control of all the components involved in the supplier solution. The true costs associated with the proposed solution can be projected to a much higher level of accuracy, reducing the risk in offering new and innovative solutions.
The way to tame product complexity and enterprise breadth is to simplify the process. The greater the exploitation of common information throughout the supply chain, the higher the likelihood of efficiency and innovation.
Basing product development on requirements that can be shared transparently via an integrated single source of the truth across the organization allows each stakeholder insight into how their role affects the process – encouraging collaboration, controlling costs and reducing development time.
A 2014 Center of Automotive Research study, “Advanced Enterprise Information Technology,” states virtually every automotive company notes the use of in-house legacy systems as a challenge to their business operations. Implementation of a business platform is needed to integrate these legacy IT applications and create a cohesive collaborative environment that leverages existing know-how and fuels a supplier’s innovation culture to improve their win ratio, productivity and profit margin.
Michael Lalande is director-Americas transportation & mobility for Dassault Systems.