Industrial Revolution 4.0: BI in the Automobile Industry
As the automobile industry illustrates with its innovative use of business intelligence, the next industrial revolution will be knowledge-based.
By Maureen Huber, VP of Intelligent Information Logistics, Rocket Software
When most of us hear the term Industrial Revolution, it's almost impossible not to think about the automobile industry. Mass production predated the invention of the car by over a century, but the grainy black-and-white videos of Oldsmobile Curved Dashes and Model T Fords rolling off the assembly line are the indelible images of the new era of designing, building, and distributing consumer goods. For more than a century, the auto industry has been at the forefront of just about every manufacturing innovation, from just-in-time delivery to shared platforms to robotics.
It should be no surprise that as much as car companies have led the way in terms of physical manufacturing, they've also been leaders in computer-based technologies to streamline the design process, make manufacturing more efficient, and manage supply chains. In fact, automakers have consistently led the way in a number of key areas related to business intelligence. It's not just a question of adoption. Some major auto companies are developing their own proprietary software that is actually leading the way in BI.
Insight and intelligence are critical in just about any field, but in a capital-intensive business such as making cars and trucks, having clear, accurate, real-time visibility into supply chains and distribution channels can mean the difference between success and failure. It's one thing for a retail chain to swap out inventory based on market conditions but an entirely different matter for car companies to retool factories, change distributor agreements, and make the other changes necessary to ensure quality and protect the bottom line. That's why BI isn't a luxury in the auto industry: in a vertical where product development is measured in years, not days, it's a necessity.
What does business intelligence look like in the automotive industry? For starters, supply chain management is absolutely critical because there are approximately 20,000 parts in each car produced sourced from a tier supply chain comprising three to five tiers of almost 1,000 suppliers. If one of those parts is unavailable, the entire material flow and production is disrupted. The 2011 quake in Japan was the stress test for all automakers because the entire supply chain was disrupted. Companies with visibility and advanced analytics were able to respond more quickly reducing disruption -- which provided them a competitive advantage.
It's not just car manufacturers who are leading the way in BI implementations. Component suppliers are also tapping into this technology trend to meet the aggressive functional, quality, cost, and delivery requirements of their automotive OEM customers. As a result, companies that sell to the major auto brands are reporting massive reductions -- 40 percent and above -- in the time it takes to get approvals to begin making new components.
BI is also critical even after cars and trucks leave the factory. One automaker is aggregating data from 170 worldwide production facilities to segment and analyze data at the car level, and data from embedded systems is also incorporated into the data warehouse. Consolidating the data and centralizing the analytics enable correlation and help manufacturers to identify trends allowing automakers to address safety issues, possibly saving lives.
It is this innovative use of business intelligence and digital transformation powering the resurgence of the global auto market. Although much of the media coverage focuses on improvements in manufacturing processes and the factory floor, the next industrial revolution will be knowledge-based and we'll increasingly see connected physical systems, technology, and people.
Maureen Huber is a vice president at Rocket Software, where she leads the company's Intelligent Information Logistics business area. She holds Bachelor of Science and MBA degrees from Michigan State University. You can contact the author at firstname.lastname@example.org.