4 Elements of a Successful Digital Transformation in the Automotive Industry

The automotive industry is going through a digital transformation, both in its vehicles and on factory floors. It’s a big shift meant to keep up with the fast-changing industry demands. Data from GE Digital identifies four heavily largely transportation trends transforming how vehicles are used and made: connected vehicles, autonomous vehicles, shared rides (think app-based rides) and electrification. To keep up with these trends, automotive industry players are being pushed to think digitally in manufacturing as well.

Digital transformation consultant Capgemini reports that by 2022, 24% of automotive manufacturing plants will be smart factories. That is, these factories will rely heavily on artificial intelligence and other digital strategies to better use data to boost manufacturing productivity. Already 49% of auto makers have invested upwards of $250 million in these smart factories. But investment doesn’t necessarily mean results. The same study reports that 42% of those smart factory projects are struggling to succeed because the manufacturing operations lack digital maturity.

What is a digital transformation?

A digital transformation is a fundamental change in how a business operates and delivers value to its customers. However, this transformation will look entirely different for every organization depending where they are in their digital journey. For some it may mean automating new processes on the manufacturing line, while for others it may mean taking file-sharing to the cloud.

The key to remember (and a common pitfall to avoid) is that a digital transformation doesn’t mean adopting technology simply for the sake of using more technology. It is about generating greater levels of improvement by better managing systems and data to better serve all organizational stakeholders.

Four factors for success

Strategically launching a lasting digital transformation demands attention to the following four factors:

1. Company culture

No change is lasting unless it is part of the makeup of the company itself. Consider, one Boston Consulting Group study of 40 digital transformations saw that companies focused on driving a culture shift were five times more likelyto realize the breakthrough performance they sought. Yet a poll from Automotive IT identified culture change as the biggest challenge to the automotive industry’s digital transformation. More collaborative leadership that relies on greater input from frontline operators may be one key to lasting success.

2. Employee input

It’s tempting to think of a digital transformation as moving away from reliance on people. In fact, technology works best when working in tandem with human operators. Industry 5.0 is about harnessing the best of both worlds. One strategy is to encourage employees on the factory floor to make suggestions about how technology can help them work better. This input can lead to more effective change.

The Rever app is one way automotive manufacturers are encouraging employees to innovate through the assembly process. Rever allows frontline workers to submit suggestions for process improvement and track their suggestions through the testing process and into implementation. Employees who see their ideas make an impact on the factory floor feel like they’re a part of “something greater,” making them more engaged. It also makes employees more motivated to continue searching for the types of improvement opportunities that can boost productivity.

3. Test and learn improvement approach

Innovation works best when organizations have a framework in place for launching new systems and gauging actual versus expected results. Kaizen—or, the daily process of continuous improvement—offers that type of framework. As automotive companies undergo rapid changes, many are doubling down on kaizen and its tools and principles for testing ongoing change as first laid out by the Toyota Production System in the 1940s.

4. Integration with the supply chain

It’s not enough for automotive manufacturers to adopt internal digital solutions alone. They’ll need a supply chain that can likewise keep up with rapidly changing expectations. Global consultant McKinsey suggests that success will demand an ability to collaborate with former automotive competitors and new digital players. Many automotive companies are rebranding themselves as “mobility companies” as one step toward rethinking their partners. Global consulting firm Deloitte notes that automotive companies are reconfiguring supply chains to become leaner, more flexible, and nimbler.

Sustaining success

As implied by the name, participation in the digital transformation will lead to something entirely new on the other side. By listening closely to those who know the product best — namely, end-users and frontline operators — automotive manufacturers can ensure they’re creating processes that will support the type of innovation that will set them at the top of the pack.