By Gareth Thomas, Managing Director of Icon Plastics, Eaglescliffe
There has been much comment recently about Silicon Valley planning to muscle in on the automotive market with the emergence of driverless cars and electric car technology and the impact this may have on the supply chain.
However, I do not believe that there is anything to fear. In fact, it has the potential to provide opportunities rather than threaten the automotive supply chain as long as companies are capable of adapting to embrace the emphasis on more and more technology being installed in cars.
For example, with new greener cars the margins are tighter, however adding new technologies gives the opportunity for automotive manufacturers to increase margins with more profitable bolt on features.
Whoever secures the dominant position in the automotive industry, its supply chain cannot afford to stand still and must have the ability to respond quickly to the changing industrial landscape.
In the past cars were all about getting from A to B in a quicker and more convenient way than that afforded by previous modes of travel and transport.
During the years the automotive sector has shown itself to be adept at moving with the times such as when as the need for more fuel efficient cars emerged in the wake of rising petrol prices.
As more knowledge about the effects of emissions came to the fore, the emphasis then turned to developing vehicles that were more environmentally-friendly.
This evolving business environment has continued in the automotive sector and in today’s vehicles there are as many as 100 microprocessors running the braking, cruise control, engine and transmission controls as well as the entertainment systems and many more functions.
This compares to two decades ago when there were only a handful of processors and mechanical settings for controls.
The current automotive technical revolution is one that suppliers ignore at their peril
I would equate what is about to happen in the automotive industry with what occurred in the mobile phone industry with the smart phone – you only have to look back a few years to when a mobile phone was merely a tool for calling people and text messaging and if a mobile incorporated a camera, it was classed a really advanced.
However, tech firms’ further progression into the automotive sector can only be realised if they are able to assimilate the skills and experience of the component manufacturing supply chain in to their production processes and truly make their cars a mass-produced reality.
It is imperative suppliers are not be wedded to the past and they must continue to demonstrate an innovation-led approach that has played such a part in the growth of the sector.
In the UK, the supply chain has risen to the challenge of successfully supporting a buoyant car industry, which is now the most productive in Europe.
Indeed, productivity has reached a new peak with output per employee running at 11.5 vehicles per year during the last five years against 9.3 in the previous half decade.
There also is the prospect of 320,000 UK jobs being created in the automotive sector, which has the potential of providing an annual economic boost of £321bn with extensive research in electric vehicle and driverless car technologies.
Companies in the supply chain must adopt an open, learning culture and be prepared to adopt new ideas and practices to meet the demands of their customers as the trend for more technologically advanced vehicles gathers pace.
There also needs to be a focus on delivering value with companies truly understanding their clients’ needs, not only meeting, but exceeding their expectations.
In conclusion, the supply chain must remain flexible, efficient and adaptable if it is to capitalise on emerging opportunities in a technology-focused automotive industry.