Digitalization of the automotive aftermarket - a journey that continues to move forward
Arvato Supply Chain Solutions offers solutions in various industries that cover much more than classic supply chain management. The portfolio is accordingly broad. Depending on the industry and requirements, customized solutions are developed, such as for customers in the automotive industry. The Corporate Information Management (CIM) business unit of Arvato Supply Chain Solutions is after sales business partner to the automotive industry for over 50 years. Holger Nitsche, Vice President at Arvato Supply Chain Solutions, explains in this interview how the business has changed in recent years, what developments are shaping the market and what new opportunities are emerging as a result.
What are the current developments in the automotive market?
The entire automotive industry is currently being driven by unprecedented momentum to rethink its traditional business model from the ground up. At the center of the change is digitization with its high speed. Trends such as electrification, autonomous driving, the sharing economy and connectivity are strongly shaping the industry. Along with this, the demands and requirements of end customers are increasingly changing, to which the automotive industry is forced to respond.
What solutions do you offer your customers from the automotive industry?
In the automotive segment, the solutions of the CIM unit - CIM stands for Corporate Information Management - are predominantly used. The CIM solution portfolio includes the creation, management, translation, procurement and distribution of product-related information, goods and services across all channels. In addition to the automotive industry, customers from other sectors, such as banks and insurance companies, also use these solutions. In the automotive industry in particular, we have developed a broad portfolio of services over the years as a result of advancing digitization. Our customers' needs range from the creation of content and the provision of IT systems for the distribution and management of information to the (digital and physical) publication and distribution of marketing materials and after sales media. Thus, the customer benefits from a solution portfolio tailored to his individual situation.
How has digitization changed your business?
Considerably! At the turn of the millennium, much of the repair information was still physically stored and distributed in our logistics center. A few years later, the workshops developed into digital information users. Our customers introduced a corresponding IT system for the brand-affiliated workshops and we introduced one for the independent workshops. The latter was a legal requirement of the EU. This enables all market participants to view relevant workshop information for the repair of automobiles.
In addition to the repair information for workshops, there are, for example, the operating manuals for vehicles as well as marketing materials. Here, we were one of the first providers to introduce print-on-demand processes. This meant that much less had to be printed or thrown away. In addition to the cost savings, this was a very big contribution to sustainability.
Every user of a vehicle is familiar with the physical operating instructions, and very often they remain unused in the glove compartment. To improve usability, solutions were developed for our customers so that the operating instructions can also be made available to the vehicle user digitally. In addition, the purchasing process for materials such as flags, price lists, stickers, etc. was digitized for car dealers by using state-of-the-art store systems.
Over the years, more and more digital solutions were added in the area of data and content management. Starting from editorial systems for the creation of special technical content to digital customer loyalty systems, everything is included. In 2017, we designed the Digital Service Assistant (DISA) in a concept study - a digital platform that takes the digital customer experience to the next level in the entire service process and supports the repair processes with the latest VR technology, for example. We have already implemented individual elements in recent years.
What developments are you currently driving?
Since more and more vehicles with their own IP address are rolling off the production line, networked data is playing an increasingly important role. All new cars can now communicate, are constantly online and collect a large pool of data that can be used intelligently. For workshops, for example, the large amount of vehicle data opens up new possibilities for diagnostic processes. Impending failures can be detected in good time while the vehicle is still in operation, and contact can be established directly with vehicle owners.
The further use of the data is of great interest to all complementary providers in the ecosystem, such as fleet operators, insurance companies and parking garages. This is because the data is not just about mileage, but rather about how the user travels with the vehicle and where, in order to make tailored offers based on this; for example, for insurance premiums.
Together with our customers, we develop new business models for data monetization. This involves the creation of marketplaces and business processes right through to payment processing.
Current developments are driving the intelligent use of data so that the needs of the end customer are the focus of action.”
More and more manufacturers are launching direct online sales. Do you also play a role in this? If so, how can you support them?
The sale of vehicles in general is and remains the responsibility of the manufacturers. But we see a large and in some cases highly underestimated ecosystem in the after sales market, whose potential is far from exhausted. Last year, we took a closer look at these potentials, challenges and possible solutions in a whitepaper. The basis here was in particular the comparison with the industries that know the 'new' digital customer needs best: the fashion industry and consumer electronics. We believe that there is a lot to learn from innovation drivers in other industries. In addition, direct sales give manufacturers access to end-customer data for the first time, which they can use to positively influence customer centricity and derive appropriate actions from it.
Will product-related information still be in demand in the future?
The desire is that electromobility will make everything easier. Meanwhile, individual vehicle configurations can be made within a few minutes. Spare parts are significantly reduced compared to the combustion engine. Accordingly, the amount of information that needs to be provided to the driver and also to workshop personnel will decrease. However, at the same time, the volume of software and data produced by the vehicles and transmitted directly to the manufacturer will increase. IT security and permanent communication with other vehicles, especially when it comes to autonomous driving, will increase disproportionately. To this end, mentally compare the first smartphone with the devices currently on the market. This opens up new potential. The challenge then is to filter out the right information from the volumes of data and draw appropriate conclusions - and this is where we have already positioned ourselves.
What does this mean for the strategic direction of your business unit?
We have clearly identified the topics we want to actively drive forward and divided them up internally. In one area, we deal with product-related information - that's where we come from. Of course, the trend here is clearly toward further digitization, which is why we essentially offer purely digital solutions. In contrast, the other area focuses more on primary products in after sales, such as accessories, which the manufacturer still sells via dealers today, but in the future will also sell directly to the end customer. Here we have already acquired a new customer who sells charging columns directly to his end customers. The business models are completely new for car manufacturers. It is a pure e-commerce business, in which the latter naturally benefits from the great expertise of our other business units. On this solid basis, we can effectively support our customers in adapting to the changed market situation - by building online stores, serving marketplaces, and handling end-customer delivery and returns management for them.
What else can be expected as a result of digitization?
There are several trends that will continue to prevail. On the one hand, I think that the last print products in after sales, such as operating manuals, will slowly disappear from the physical world or be reduced to a minimum. On the other hand, subscription models for mobility services will continue to establish themselves, creating many new use cases in the connect environment: Where is the vehicle, who drove it and when, or are there possibly any error messages? On what basis are car insurance policies calculated? These are very exciting topics that we are already dealing with intensively today. And since there are many new participants in the market as a result of the mobility revolution, we are not sure that the manufacturers will remain our only partners in this environment.
Do you have any questions? Get in touch with us!