Is integration being left behind?

There’s been a lot going on over the last week or two that potentially could form the theme for this week’s blog, but there are a few pointers towards an issue which is not only topical, but has proven to be a challenge for decades across not just our industry, but many others.

The UK general and trade media has been full of coverage of the cyber attack on JLR, which has closed down their factories, prevented their dealers selling new cars and ordering parts, and left their suppliers high and dry with no business, and no certain timeframe when the lines and their income will start rolling again.  It is a dramatic illustration of how integrated in a general sense the automotive industry is today, but also indicates that either the firewalls with their trading patterns remained effective, or that the integration is more a case of dependency than true hand in glove process and system integration.  I have not heard any stories of dealers or suppliers also being hit directly by the cyber attack, so whatever it was that has wreaked havoc within JLR, has not spread further.

With my dealer hat on, we are now six months into our start-up.  Each month has set records – the best March, followed by the best April…  Seriously, the business has got off to a great start with the likelihood that we will hit our Year 2 business plan volume in Year 1.  That puts a lot of strain on our business, but also on our OEM partner Omoda Jaecoo – who themselves are a start-up only selling their first car in the UK a year ago.  We are both building processes and implementing systems at pace, but it still feels like trying to run up a down escalator.  The lack of an integrated view within our business and with our manufacturer partner and other key players like the 3rd party logistics companies creates inefficiencies and the potential for errors.  Excel is a wonderful tool, but it is not the basis for seamless processes.

We have also seen the confirmation this week by BMW that they expect to proceed with their agency implementation for the BMW brand across Europe in 2027, following the launch in recent months with the Mini brand.  One of the key obstacles that they said they have faced is having to merge hundreds of systems, but the Mini experience has highlighted positive results in clear control over pricing and the customer experience.  Agency does make it easier to provide a seamless omni-channel experience to customers, with consistent pricing and stock availability regardless of channel, and full visibility of the customer buying journey from start to end.  Without the integration of processes, systems and data, there could not be a seamless journey.

There are multiple other areas in the automotive sector where integration is key.  Collaborative deign and engineering processes between OEMs and their Tier 1 suppliers and the just-in-time processes that allow manufacturers and suppliers (cyber attacks not withstanding) to produce high volumes of products with minimal stock levels can only exist because of robust integration of processes and systems.  Unfortunately this is less true when it comes down to the world of distribution.  Aftermarket parts supply is fairly good in established manufacturers, including examples of vendor managed inventory in some categories, including for tyres from major independent wholesalers.  Parts distribution to independent repairers remains fairly traditional however with repairers highly dependent on the extreme responsiveness of a very local distributor to meet their immediate needs for a car on the ramp.

In the new vehicle supply world, where cars are passed to dealers from manufacturers and then retailed by dealers to customers, there are still many islands of information, and batch processes that support monthly planning and sales cycles.  Too many systems, too many databases, objectives that are often misaligned between trading partners and a lack of any integrating vision all mean that stock does not flow through the system (which would be most efficient) but progresses in a series of lurches.  We are seeing many islands of development where specific processes are optimised, such as load planning for the physical transportation, or better use of data to plan campaigns and pricing.  But these are all working in ignorance of the bigger picture, and it is likely that better results would be found if there was an integrated view of the whole outbound supply chain including customer demand trends at a detailed level.

In this environment, I wonder whether the tech sector in pivoting to AI as the next great opportunity to make billions, will only create even more islands of excellence, whose performance will continue to be compromised by the lack of integration.  Is there the potential to focus AI instead on improving integration, which in itself will bring huge benefit?