Move over auto suppliers — cloud companies are moving in

move over auto suppliers cloud companies are moving in
Cloud computing

Software and cloud providers such as Google, Microsoft and Amazon are quickly becoming an integral part of the automotive supply chain and redefining the word “supplier.”

Auto companies are relying on cloud providers to help them manage the massive amounts of data being generated by the vehicles and parts they build, as well as from the factories where they’re made. As more data is collected and more software is embedded into vehicles, the role of those tech companies and others is likely to grow, said Arun Kumar, a managing partner at AlixPartners.

“If you look back at the 1950s, the ability to produce the car was where the profit was. Fast-forward to today, most of the value in the next 10 to 15 years is going to be in the data that the car generates,” he said.

Instead of building out their own cloud systems to manage all that data, auto companies are leaning on the likes of Google and Microsoft because of the expertise they have in their fields.

“Rather than trying to build it all themselves, automakers say, ‘I have digital technology being provided by these cloud players, and rather than trying to put all this investment into developing it myself, I’ll just partner with them because the technology is more mature,’ ” Kumar said.


As a result of the trend, tech giants are introducing products with automotive customers in mind.

In May, Google launched two solutions, Manufacturing Data Engine and Manufacturing Connect, both of which are designed to let manufacturers process huge swaths of data and gain new insights into their businesses. Ford is among Google’s early customers for the tools.

The tools enable companies to “see at a very fine grain what’s being manufactured at the plant and what type of consumable is with that, whether it’s finished goods that come into the factory or a raw material or a consumable like glue,” said Simon Floyd, director of discrete manufacturing industries at Google Cloud.

“The idea is to maximize your efficiency and decrease waste. A lot of organizations don’t always have a good handle on waste. There are lots of programs in place, but they need a data engine behind them to get the most out of the supply chain.”

Floyd said Google is looking to “create value for customers in a short period” after implementing the solution.

As an example, he pointed to a customer that had been using a machine to build a certain component. After implementing Google Cloud’s solution and analyzing the data it generated, the customer saw that the machine was not performing at the anticipated level. The manufacturer of that machine then came out to the factory and fixed it, allowing it to run much more efficiently.

“The worst thing about manufacturing is the unpredictability of what happens when something breaks down,” Floyd said. “You don’t want to be held up unexpectedly. Any minute that you can be manufacturing, you should be manufacturing.”


German supplier ZF Friedrichshafen said last year that it would move its business, production and industrial processes onto the cloud as part of a partnership with Microsoft and its Azure cloud platform.

The partnership would allow for new autonomous driving capabilities, including “continuous data flow” between autonomous shuttles and their environments, and would help ZF to make its factories more efficient.

“Predictive analysis and AI can help us to foresee some of the problems we might not have been able to catch before,” said Sri Rajagopalan, head of Internet of Things enablement at ZF.

As vehicles transform into “computers on wheels,” Rajagopalan said, data management will allow companies such as ZF to offer new services in the era of electric, connected vehicles.


Carla Bailo, CEO of the Center for Automotive Research in Ann Arbor, Mich., said data analytics are becoming “integrated into everything” the auto industry does.

But she cautioned that there is no “one-size-fits-all” solution, and companies must be careful about what sort of data and information they agree to provide and for what purposes it’s used.

“When you structure something like this with a Microsoft or an Amazon, you can say, ‘This is the data you can have, and this is the data that gets siphoned out.’ But you have to be crystal clear in that, about what can go in and what cannot,” she said. “Otherwise, the people that work with you are going to say, ‘You want all that information? No way.’ ”


Still, the cloud gives companies a chance to rethink what their manufacturing processes and supply chains look like, which could prove to be crucial in the coming years as the industry works through supply chain challenges, Kumar said.

“When you look at what the pandemic has taught, it’s that the just-in-time approach to the automotive supply chain has to change a little bit,” he said. “All the labor shortages and the long supply chain from America to Mexico to China to Taiwan is creating an opportunity for automakers to rethink how they get visibility into the supply chain.

“The cloud enables that quite a bit because you can connect all your plants globally, and you can have a firsthand view of what’s going on. It allows you to gather vast amounts of data and process it in short periods of time and to take action in a short period of time.”


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