Product Digitization – the Automotive Supply Chain’s Next Big Opportunity?

8th September 2017 | Roelof Koopmans


Automotive Upheaval


The automotive industry moves fast. Really fast.


Self-driving cars zoom closer day-by-day, driven by global innovators such as Google and Tesla. And the rate of digitization in vehicles led Frost & Sullivan to conclude in 2016 that connected vehicles will be the number one Internet application by 2020.


The change is constant. Just compare the computing power, software, and networking present in cars today to those from five years ago.


But for all the change in the automotive industry, there are players in this game that have seen innovation stuck on pause – automotive parts manufacturers.


The vehicles they help to create may be more digital and connected, but the parts aren’t. The gear boxes, pedals and brake pads themselves do little to offer the insight and innovation brands need to differentiate themselves and deliver greater value to their customers.


And this is where great opportunities for product digitization lie.


Connecting the Supply Chain – All the Way to the End-user


Product digitization is the process of embedding tags in your products so you can generate new data about how they’re doing and how they move.


For the automotive parts industry, it may just be what manufacturers need to innovate and stay ahead of the competition.


According to a 2016 survey by Automation World, manufacturers say improving manufacturing efficiency – or ‘Lean’ – is their biggest operational priority. With digitized products, you’ll get better data about your processes, and can use the insights to:


  • Improve production efficiency and accurately trace parts and components
  • Streamline logistics with near real-time shipping updates for suppliers and OEMs
  • Reduce the risk of counterfeiting by checking part authenticity
  • Add more value by embedded maintenance data electronically into parts
  • Improve inventory accuracy and turnover
  • Minimise shipping errors with increased visibility
  • Better understand shipping and storing impacts through various sensors
  • Get automated Bill of Materials (BOM) for prototypes.

Delivering Customer Value through Digitisation


There’s another way of using product digitization that can help parts manufacturers – and customers. By embedding NFC tags in your components, you give your customers the ability to trigger product-specific interactions whenever they tap the part. When they tap it with a device, they will be sent to a URL where the manufacturer can offer more information.


Digitised products can offer car mechanics or drivers access to current information – and even help them instantly reorder components with a tap of their smartphone. That’s great for the customer, as they save time, and great for you, the part manufacturer, thanks to simplified sales processes and improved customer engagement.


That same capability can also be used to allow mechanics or drivers to flag issues when they arise – both during installation or at the end of a product’s life.


Crucially, the tags allow you to uniquely identify individual products. So, you can immediately identify where a defective part came from, and whether other parts in that run may suffer from similar faults (a potential life saver when it comes to product recalls).


Another smart use case for product digitization is to deliver contextually relevant information to mechanics or drivers. For instance, you can deliver step-by-step instructions during part implementation and repair, or activate a warranty. The manufacturer could even offer a warranty extension if the mechanic enters their email address.


NFC technologies can help organizations previously disconnected from end-users close the gap. Even if it’s normally just the auto dealership that gets face-time with an end-customer, NFC can help components manufacturers and automotive OEMs alike remove the barriers and connect with customers.


A World of (tagged) Opportunities


Product digitization is a huge opportunity for automotive supplier brands selling physical products – be it filters, brake pads, diesel injectors, or even tires. With digitized products, you can unlock otherwise hidden insights across the entire supply chain, enable new innovations that deliver greater customer value, and streamline your own internal processes.


Digitizing your products is an opportunity to turn your products into platforms, and connect customers, dealers, distributors and manufacturers. With a better-connected process, everyone can benefit from greater efficiency, deliver new applications and improve the customer experience. The Smartrac Smart Cosmos Platform is designed to help you get started on your product digitization journey.