As we set our sights on strategies for 2018, it’s clear that every megatrend is capable of driving significant change and delivering exciting new opportunities. But what happens if three come along at the same time? The automotive industry is about to find out.

Trend number 1 is globalization. Of course, the industry is already global but this megatrend still has much further to go. There are more and more new automotive consumers in emerging markets and – in the quest to optimize coverage and costs – vehicle production is becoming ever-more global requiring efficient, safe and swift movement of critical components around the world. Automotive players, particularly companies involved in the production of electric vehicles, are also reducing complexity by rationalizing their inbound components platform strategy and regionalizing supply as much as possible. This megatrend also adds a new layer of complexity to customer care – people rate companies according to the quality of global service they experience locally.

Hot on the heels of globalization is trend number 2, digitalization. This is driving smarter production planning, enhanced collaboration as well as the development of innovations including autonomous vehicles, the connected car, and automotive e-commerce. Digitalization is the main driver of the convergence of the automotive and technology industries and this leads to more fast and furious “tech-on-wheels” product launches, introducing and increasing technology components such as cameras, radars, sensors, and infotainment into the supply chain. Digitalization therefore has multiple impacts – it changes the industry’s products (vehicles), triggering new supply chain requirements such as condition monitoring, and it changes the logistics industry, unlocking new levels of efficiency through more connected and visible operations. In addition, this megatrend enables new mobility business models and these are becoming a core focus for the automotive industry.

The third megatrend impacting the industry is sustainable development. It’s something everyone has been talking about for a very long time but real action is only now being taken. Some governments are regulating and incentivizing green mobility yet substantial change is being driven by companies and cities – both are under pressure from their customers to reduce CO2 emissions. Existing OEMs and new entrants are, for example, investing in sustainable powertrain technologies and applying new business models around the sharing economy and consumer convenience. All this makes it essential to have continuous improvement and adaptation in logistics. For example, companies must find better ways to move and store the products that power electric vehicles – lithium batteries introduce a whole new set of logistics challenges and necessitate development of a circular economy to support the replacement cycle for what’s likely to be millions of battery packs, according to EV sales forecasts.

At DHL, we recognize our role as a global partner for change in the automotive industry. That’s why our Trend Research team tracks all types of trend – from micro to mega – and analyses how these will impact our customers’ products, processes and ultimately their profitability. Based on this, we work proactively and collaboratively to develop, pilot and commercialize the most useful logistics solutions.

In response to increasing globalization, we take a glocal approach (global in scope, local in implementation) and in support of this we have opened and connected new centers of logistics excellence around the world, both in developed and emerging markets. We add value by providing global supply chain visibility and centralized flow management for many automotive customers. Also we are leveraging and applying new digital technologies in the supply chain and the warehouse, many of which contribute to sustainability goals – optimized flows, load factors and transportation distances in the supply chain and savings in light, heat and headcount in the warehouse.

Currently we are deploying logistics solutions based on augmented reality, the Internet of Things, the use of robots and drones, and predictive data analytics. We are also developing solutions based on artificial intelligence and, for superior traceability and security in the supply chain, blockchain technology. Many of these solutions were presented and explored at our most recent customer conference, which drew very enthusiastic customer feedback. Highlights during the day included, among other topics, DHL commitment to sustainable development and particularly our advanced solutions for lithium battery logistics. Delegates were also very interested to hear about Deutsche Post DHL’s own achievements in CO2 emissions reduction. Having reached our original emissions reduction target four years ahead of schedule, we have now raised the bar once again by committing to cut all transport-related emissions to zero by 2050.

Is your organization prepared for the triple-trend impact? How will you adapt to the significant changes of globalization, digitalization, and sustainable development, and where can you see the most exciting new opportunities? Please share your thoughts and ideas below.

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Published: February 2018

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