In the race to develop autonomous vehicles – everything from military drones to freight ships and of course cars – companies need to become strong integrators of technology to stand a chance of securing a share of the market as it evolves.
They must demonstrate their willingness to work with other businesses collaboratively and be open to new ways of doing business.
In the intensely-competitive field of driverless cars innovation, the market is currently made of many independent businesses striving to develop a technological breakthrough that will give them a strong foothold in the market in the future. While their goals are similar, the operational structure and cultural attitudes of these businesses vary considerably.
On the one hand, we have Google and Uber whose core capability is in applying their tech skills to the problem of making a car driverless. However, these businesses lack any heritage in automotive manufacturing. On the other are traditional vehicle manufacturers (VMs) such as Mercedes Benz, Volvo, Hyundai and Jaguar Land Rover, which know how to make cars but need to import the skills and mind-set needed to collaborate with a proliferating crowd of tech innovators.
The stakes are high for all businesses involved, regardless of their current business model. Significant investment is required to participate in experimental tech development and yet such activity comes with significant financial risk because it is impossible to predict which direction the market will take. Indeed, Ford’s recent warnings that profits are set to fall next year have been directly attributed to its decision to ramp up investment in new technologies and rethink its business models.
Despite the high degree of uncertainty, some predictions about what the driverless car future will look like have been shared. For example, a report published recently by Vendigital has predicted that in order for driverless cars to operate safely, manned vehicles will need to be removed from the road altogether. Traffic will need to be managed via a centralised control system using common standards in terms of messaging and navigation systems.
The report also estimates how much time and money motorists will save once driverless motoring becomes the norm. Most households in Britain today own and run at least one car but, in the future, personal car ownership would reduce dramatically – by about 95 per cent - as motorists take advantage of on-demand access to high-quality driverless vehicles to get them from A to B. The average cost of motoring would also reduce from £3,400 per year (calculated based on a small family car doing 8,000 miles per year) to around £350 per year. As well as reducing the cost of driving a car, driverless motoring would cut journey times by 50 per cent and motorists would expect to gain about two hours of extra free time per day.
John Zimmer, co-founder of the ride-hailing app Lyft, has also predicted that the driverless car future is fast approaching and while some people will always want to own a car as a status symbol, the vast majority of car users will welcome the new era of ‘affordable mobility’.
To play a role in shaping the future of unmanned vehicle markets, traditional OEMs increasingly recognise that they need to be prepared to work with new supply chains and adapt their practices and behaviours to suit. For some, this is a significant cultural challenge. Instead of relying on traditional supply chains comprising engineers, traditional manufacturing processes and factories and using procurement professionals to reach out for the technologies they need, these businesses need to establish new relationships and start positioning themselves as tech integrators. For example, the US Department of Defense has recently embarked on a charm offensive in Silicon Valley in a bid to build relationship bridges with tech innovators. Others are ahead of the game, however. For example, Uber’s recent decision to team up with Volvo in a $300m deal to advance an autonomous vehicle development project is an example of tech integration in action.
The recent release of further details about this project have revealed that driverless motoring could be nearer than many people might think. Volvo and Uber are planning to launch their first self-driving luxury cars by 2021, complete with an autopilot function costing around $10,000.
To become effective tech integrators, traditional VMs need to adopt a positive procurement strategy that is more outward-looking and open to ideas. With strong leadership and support, their personnel must adapt to become less focused on mere fulfilment and dealing with the fine detail of purchasing agreements. When set up in this way, procurement teams will become more agile by nature; selecting tech partners to meet and strike up relationships with, potentially leading to collaborative agreements.
One area of tech development that is especially dynamic at the moment is security – most likely due to raised concerns about the propensity for collisions and cyber-related risks when operating unmanned vehicles on roads, in the air or on the sea. Samsung and IBM recently revealed a new machine-vision platform which facilitates a better vision of the world at ultra-fast speeds and is ideally suited to in-car safety systems. In other cases, unmanned vehicles are being subjected to tests in operational environments to help iron out any difficulties or safety issues that might arise. The Royal Navy’s unmanned speedboat, Mast, is one of more than 50 vehicles, sensors and systems being put to the test off the UK coast in October as part of the Unmanned Warrior exercise. The companies and organisations behind these initiatives are demonstrating their strengths as tech integrators through their willingness to drive change collaboratively.
To secure a dominant role in the unmanned vehicle markets of the future, businesses must become adept tech integrators – making sure their procurement teams are equipped to grasp opportunities to invest in tech development projects and switch focus as new areas of opportunity come to light.
In some cases, their business model may also require them to keep the legacy business and its more traditional supply chain model going in the meantime. For these businesses, becoming a tech integrator is doubly challenging but the potential rewards are considerable.
Michael Minall, director at Vendigital
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