Bill Bacon, managing director of automotive at DHL Supply Chain UK & Ireland
Increasing demand from motorists for a fast, efficient and personal service continues to put pressure on manufacturers and their supply chain partners, particularly in the automotive aftermarket sector. At the same time, huge technological advances are changing the way we buy products and the way they are delivered.
The automotive sector must continue to evolve if it is to adapt to increasing and varied demand. Two key trends we expect to have an impact on the market are the continued rise of e-commerce and the journey towards autonomous vehicles.
Firstly, as e-commerce is the norm in the retail sector consumers are becoming used to this way of buying everything from their groceries to their furniture. Online shopping provides consumers with a convenient, quick and easy way to buy but due to the size of product and the fact that drivers can’t easily fit many parts, the automotive sector has been slower to capitalise on this trend. As e-commerce continues to dominate the retail market it is likely that this will change.
According to industry analyst Frost and Sullivan, e-retailing of automotive parts is expected to grow by 20%-30% each year in some European countries until 2020. Moreover, 11% more online searches are made for aftersales than for used cars, highlighting the increase in demand for the purchase of parts online.
For OEMs and their dealerships that choose to sell direct to consumers through an e-commerce platform, forecasting will be more crucial than before. Making sure that the right parts are in stock both in-store and online when drivers want them will support sales and increase consumer loyalty.
Low stock might cause them to seek a cheaper deal from an independent parts provider. Already, 30% of spare parts available online are sold to repair shops and 60% direct to the end user. DHL’s recent whitepaper The Predictive Enterprise argued that organisations must take all of the data they have at their disposal and turn that to their advantage. In the automotive sector, this could create a better understanding of where parts should be and when. For example, manufacturers who utilise data well could understand what parts are failing at certain points in the year and prepare by ensuring stock levels reflect this across all channels.
My advice to manufacturers and their dealerships is therefore to start to monitor for patterns in sales now and better utilise the data at their disposal, in order to prepare for a more digital future. Having a forecasting strategy in place now will save time, money and resource further down the line when being ahead of the rest will matter most.
The advent of autonomous vehiclesIn addition to the increase in online sales, technology is also pushing the sector towards a more automated future, with the advent of autonomous vehicles. Although regulation needs to be agreed, autonomous vehicles are becoming a reality for Britain’s roads. Earlier this year (February 2016), Jaguar Land Rover announced its intention to create a ‘living laboratory’, testing connected and autonomous vehicle technologies on the UK’s roads1. In the US officials recently suggested that Google Cars’ Artificial Intelligence system could be considered a driver under federal law2.
As we all know, autonomous vehicles are likely to be a major feature of our roads. However, they will require new skills and a heightened understanding of the new technology operating in the cars. Different kinds of engineer will be needed to undertake upgrade works with more complex technology involved. Debate still surrounds the safety of the vehicles but some argue that in removing human error and installing active parking and crash avoidance technologies, there will be fewer collisions. If so, this could lead to a greater demand for technology upgrades or new parts instead of replacements.
What this all means is that manufacturers will need to start thinking about what skills and resource will need to be in place to service this trend as it will take some time to up skill staff and make the right investments.
Although the automotive sector is likely to experience some significant changes in the next decade, operations need not be affected, merely adapted. Starting the process now will ensure you are ready for the future.
Bill Bacon, is managing director of automotive at DHL Supply Chain UK & Ireland