A meeting of automotive minds at Odette 2015

What I saw and heard at Odette 2015.

During the first week of December, I joined over 250 decision-makers and experts from across the global automotive industry at Odette 2015 in Munich. I attended many interesting presentations and had some great discussions on the IFS exhibition stand. I’d like to share some of my impressions and thoughts about what I saw and heard, and about upcoming trends.

UK based Odette is a pan-European collaboration and services platform for the entire automotive supply chain. Since its founding in the early 1980s, its annual conference and exhibition has gained a strong reputation as an event where attendees can benefit from the insights of industry professionals on the most important issues facing the automotive supply chain.

Here’s what I saw and heard at Odette 2015:

The automotive supply chain in China

Trends like the Internet of Things (IoT) and Industry 4.0 are also a major focus in China. The Chinese government established the following program with interesting goals:

China 2025

• Joining the strong nation club
• Big manufacturing country

China 2035

• Important member of the strong nation club
• Strong manufacturing country

China 2045

• Strong nation
• Leading strong manufacturing nation

But at the moment the main focus is on traditional topics. Global auto manufactures are expanding their production capacity and locations in China as well as distribution networks there. “Go west” is the new trend – meaning, establishing production sites in western China that offer closer proximity to Western export markets – which, at the same time, leads to big change and challenges for logistics services providers.

Traditionally, inbound is the main cost driver of automotive logistics in China. The world’s largest automobile market requires more efficient automotive logistics – these are some of the inefficient operations that must be improved:

• Logistics costs rate 16.6 percent of GDP – two times that of Europe and the USA
• Daily truck mileage of 300 km, only 1/3 that of Europe and the USA
• Average no-load rate of trucks reaches 40 percent

Meanwhile, China has started thinking about actual global problems like air pollution and is investing in new-energy and energy-saving vehicles.

Challenges with returnable packaging in China

The automotive industry is a global leader in using returnable transport packaging. But adopting such a packaging concept in China, and Asia generally, is a slow and challenging process. One presentation I saw had exciting conclusions:

• Experience of China’s first returnable management business for transport packaging covering the past five/six years working in this field
• Potential pitfalls when implementing and operating returnable transport packaging in China
• Logistics concepts and activity from other Asian organizations and governments regarding standardization and global collaboration

Before implementation of the necessary processes, the average loss of returnable packaging was around 60-80 percent. The reason was that the material was just taken for internal usage or thrown away because nobody was used to handling returnable packaging.

Afterward, the return rate was around 95 percent – in other words, the loss rate was down to 5 percent!

IoT and Industry 4.0

My colleague, Antony Bourne, said recently that,

“IoT is real and it’s happening today.”

He’s right and I want to share some interesting facts about that.

IDC’s prediction is about digital disruption which is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services.

• By 2020, almost 50 percent of IT budgets will be tied into digital transformation (DX) initiatives
• By 2017, over 50 percent of IT spending will be for new technologies (mobile, cloud, big data, etc)
• By 2018, at least 50 percent of IT spending will be cloud based
• By 2018, 65 percent of all enterprise IT assets will be housed offsite; and 33 percent of IT staff will be employed by third-party managed service providers

3D Printing in After-Sales Service Supply Chains

Already in use at Siemens and I just want to share some compelling facts about what 3D printing can bring to the enterprise:

• No assembly times
• Reduce total production costs
• Reduced supply chain complexity
• Improved failure behavior
• 30 percent maintenance cost reduction of repairing gas turbine burner tip with 3D printing
• 90 percent downtime reduction
• Design upgrades and customization

Besides all those presentations, we had some very interesting discussions at our IFS stand!

In February, I’ll be in Frankfurt at the VDA Logistics Award 2016 of the German Association of the Automotive Industry (VDA) where the headline topic is about supply chain 4.0 – stabile, synchro and scalable. Let me know if you plan to be there, too.

• Related post: 2016 Automotive Industry Predictions