Many indus­tries have been affect­ed by COVID-19, but the auto­mo­tive indus­try was hit par­tic­u­lar­ly hard. The impact has stretched from the sup­ply chain all the way to the demand chain and has affect­ed every­thing and every­one in between. The indus­try has faced chal­lenges both in its cus­tomer-fac­ing oper­a­tions, as well as its back-end busi­ness processes. 

As a result of the chang­ing busi­ness land­scape, many auto­mo­tive orga­ni­za­tions have not been oper­at­ing at nor­mal lev­els since COVID-19 made waves. In fact, accord­ing to ASUG research, 75% of orga­ni­za­tions with­in the auto indus­try are cur­rent­ly oper­at­ing below nor­mal lev­els, and many are post­pon­ing some or most of their planned tech­nol­o­gy invest­ments. We have also seen automak­ers shift gears, so to speak, and go into dif­fer­ent mar­kets such as pro­duc­ing com­plex med­ical equip­ment as well as per­son­al pro­tec­tive gear. 

Dur­ing the ASUG Best Prac­tices: SAP for Indus­tries vir­tu­al expe­ri­ence, we heard from indus­try experts, cus­tomers, and part­ners who put the road ahead into perspective. 

Dig­i­tal Dri­ves the Auto Industry 

His­to­ry has taught us that the auto indus­try is a resilient one. It has sur­vived reces­sions and count­less oth­er chal­lenges, always com­ing out stronger on the oth­er end. The chal­lenges of 2020 have posed their own obsta­cles, but even before that, the auto­mo­tive indus­try was under­go­ing dis­rup­tion as a result of elec­tri­fi­ca­tion of vehi­cles, mobil­i­ty, ongo­ing reg­u­la­to­ry changes, and shift­ing cus­tomer behav­ior. By lean­ing on tech­nol­o­gy, automak­ers are bet­ter equipped to solve today’s prob­lems while plan­ning for tomorrow’s challenges. 

Nick Oster­gaard, man­ag­er of Toy­ota Mate­ri­als Han­dling, along with Rick Bai­ly and Kevin Fos­ter, senior man­agers from Deloitte Con­sult­ing, shared what it means for the auto indus­try to be human-expe­ri­ence-focused and how to design a sys­tem that is built to evolve along with changes in the mar­ket­place. Toy­ota start­ed on a jour­ney four years ago to change the way it inter­act­ed with its deal­ers and its cus­tomers as it moved to a dig­i­tal plat­form. ​“We saw gen­er­a­tional shifts, and that cus­tomers in the busi­ness world were going to want more con­sumer-led expe­ri­ences,” Oster­gaard said. ​“Over the last year, COVID-19 cer­tain­ly has been a piece of that, and things have accel­er­at­ed. We’re look­ing at our indus­try now and watch­ing as cus­tomers are com­ing in with new expec­ta­tions. The ease of doing busi­ness is now a com­pet­i­tive advan­tage, and dig­i­tal cre­ates that.” 

The three dis­cussed the impor­tance of cre­at­ing a net­work, rec­og­niz­ing that each deal­er­ship is an inde­pen­dent enti­ty. ​“Most, if not all, of our deal­ers have come along for the ride,” Oster­gaard not­ed. ​“It’s because of that ecosys­tem that we’re cre­at­ing. It’s that part­ner­ship where we have a cen­tral­ized cus­tomer expe­ri­ence through dig­i­tal chan­nels both in the U.S. and glob­al­ly.” By hav­ing a cen­tral­ized mod­el that can be used for ser­vice agree­ments, leas­ing sce­nar­ios, financ­ing, and much more, Toy­ota can stream­line every­thing and pro­vide an end-to-end cus­tomer expe­ri­ence no mat­ter where a cus­tomer is locat­ed or how they are engag­ing with the brand. 

The Work­force Is the Engine Behind Every­thing Automotive 

As the pan­dem­ic swept through the world, the auto­mo­tive indus­try found itself in an unusu­al sit­u­a­tion — sales of tra­di­tion­al medi­um-sized vehi­cles were already slow­ing pre-COVID-19, but the onset of busi­ness­es shut­ting down and calls for safe­guards in the work­place put the brakes on the indus­try. Some automak­ers adjust­ed their prod­ucts and began to pro­duce med­ical equip­ment as well as per­son­al pro­tec­tive equip­ment (PPE), while oth­ers need­ed to com­plete­ly reimag­ine man­u­fac­tur­ing plants, work­flows, and so much more. 

Kei­th Combs, direc­tor of glob­al indi­rect pur­chas­ing at Ford Motor Co., dis­cussed how the com­pa­ny cre­at­ed a COVID-19 play­book that helped it quick­ly adjust man­u­fac­tur­ing and pro­duc­tion to con­serve cash and focus on over­all 2020 pro­duc­tion vol­ume. He addressed how today’s real­i­ty has affect­ed almost every busi­ness and has forced inno­va­tion and adapt­abil­i­ty on every­one involved. ​“It’s an under­state­ment for me to say that in my 38 years in this indus­try, that this is a unique time,” Combs said. ​“Who could ever have imag­ined that we would have all of our industry’s facil­i­ties, and even oth­er indus­tries, shut down at the same time for such an extend­ed peri­od of time?”

Ford took ini­tial steps of iden­ti­fy­ing employ­ees who were con­sid­ered work­place depen­dent and those who were able to work from home. For each group, the orga­ni­za­tion cre­at­ed a play­book that out­lined health and safe­ty mea­sures in addi­tion to action plans for a vari­ety of sce­nar­ios. ​“We lever­aged a lot of tech­nol­o­gy through­out every step of this process,” Combs said. Ford didn’t stop short of just imple­ment­ing these changes inter­nal­ly. ​“We want­ed to make sure that we were serv­ing soci­ety as a whole by shar­ing best prac­tices with oth­er man­u­fac­tur­ers as well.” Ford was able to step for­ward and add to its pro­duc­tion capac­i­ty by man­u­fac­tur­ing face masks, face shields, ven­ti­la­tors, and oth­er med­ical supplies. 

“We are an ongo­ing busi­ness,” Combs said. ​“It’s great that we can serve soci­ety, but we also have to be able to main­tain via­bil­i­ty.” Combs and his team are work­ing dili­gent­ly, under con­stant­ly chang­ing cir­cum­stances, to remain agile, do the right thing, keep the busi­ness run­ning, and, most impor­tant­ly, keep the work­force at the fore­front of deci­sion-mak­ing. ​“Put peo­ple first,” Combs said. ​“It’s the most impor­tant met­ric and it will allow us to come back strong.” 

The Auto Indus­try Revs to Move For­ward and Quickly 

There were a lot of sto­ries from cus­tomers regard­ing chal­lenges they have been fac­ing dur­ing COVID-19, as well as before, and how they are work­ing to adapt to con­stant change. There also were ses­sions that high­light­ed how part­ners are co-inno­vat­ing with cus­tomers and SAP to help address those chal­lenges. Through­out the two-day vir­tu­al expe­ri­ence, SAP also demon­strat­ed its com­mit­ment to the indus­try and high­light­ed its road map and strategy. 

Hagen Heubach, glob­al VP of the auto­mo­tive indus­try busi­ness unit for SAP dis­cussed the dig­i­tal sup­ply chain and smart man­u­fac­tur­ing. He put an empha­sis on the SAP indus­try cloud solu­tion for the auto­mo­tive indus­try and how the SAP Intel­li­gent Enter­prise Frame­work can enable inno­va­tion for auto­mo­tive com­pa­nies. ​“We’re learn­ing how to run tra­di­tion­al and prof­itable auto­mo­tive com­pa­nies dur­ing a cri­sis, while at the same time dis­rupt­ing in a future of mobil­i­ty with new ser­vices and busi­ness mod­els, and process­es,” Heubach said. ​“In the end, it’s all about the frame­work of the intel­li­gent enter­prise and inno­vat­ing together.” 

The Road to SAP Indus­try 4.Now

David Drey­er, senior solu­tion prin­ci­pal of dig­i­tal manufacturing/​COE at SAP, pro­vid­ed high­lights on trends and pri­or­i­ties in the auto­mo­tive indus­try today and how SAP Indus­try 4.Now will address them. ​“No mat­ter where we are in the sup­ply chain, it is crit­i­cal that we are focus­ing our ener­gies and our capa­bil­i­ties on our cus­tomers,” he said. Dry­er iden­ti­fied the top busi­ness pri­or­i­ties from man­u­fac­tur­ers as prod­uct inno­va­tion, sup­ply chain per­for­mance, man­u­fac­tur­ing oper­a­tional excel­lence, cus­tomer-cen­tric­i­ty, and dig­i­tal thread capabilities. 

“The SAP Indus­try 4.Now strat­e­gy can help auto­mo­tive com­pa­nies move from proofs of con­cepts to becom­ing a strate­gic dif­fer­en­tia­tor,” he said. ​“To remain com­pet­i­tive, you need to have vis­i­bil­i­ty, trans­paren­cy, and predictability.” 

Dry­er intro­duced the audi­ence to SAP Design to Oper­ate, which aids in design­ing a prod­uct, plan­ning for mate­r­i­al and sup­ply chain, man­u­fac­tur­ing and assem­bling, all the way to deliv­ery and of course, what intel­li­gence can be gained about the cus­tomer along the way to help improve the entire process. ​“Every­thing that we’re doing with Indus­try 4.Now is wrapped around what adds val­ue to the customer.” 

Watch all of the auto­mo­tive ses­sions on demand, along with the rest of the ASUG Best Prac­tices: SAP for Industries.