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There are still no flying cars, yet; however, the automotive industry is arguably one of the most innovative industries that spends more than most to keep up with new technology and product development while working to keep existing operations profitable.
Today, automobiles are far more than just a mere form of transportation. There are two layers to the automotive industry. The first layer is the traditional layer, the industry foundation if you will. The traditional automotive business model is made up of the logistical processes such as designing, manufacturing, selling, servicing, etc. The second layer is more novel and represents industry transformation happening in real time across the entire automotive sector. This layer is responsive to industry trends like digitization and automation. These trends have driven new technologies such as diverse mobility, autonomous driving, electrification, and connectivity that have fostered industry-wide adoption.
Industry innovation is projected to continue to increase as new technologies continue to evolve and customer expectations continue to shift. These new trends include costly business decisions and investments and they require flexible liquidity to ensure that it is feasible to invest in innovation and meet new production demands.
“The future innovations will be achieved by software components, and each automotive supplier needs to find its own individual answers," said Joachim Skarpil, Head of Automotive Suppliers at Capgemini explained in webinar. "So, new products or other products with new services and new business models need to be developed. In the future, automotive suppliers will have to be more flexible and even faster than ever before.”
The shifting industry landscape coupled with altering consumer behavior has upended the automotive industry. So, how can automakers and suppliers meet today's consumer demand while simultaneously investing in innovation to sustain future operations? Automakers and suppliers must reframe their operations all together. With supply chain finance, industry players can unlock capital tied up in the automotive supply chain. Supply chain finance enables companies to optimize cash flow and use it to extend supplier payment terms. The automotive supply chain benefits in many ways from supply chain finance solutions like having the flexibility to navigate market volatility, meeting evolving production demand, developing new infrastructures, or future-proofing business models. To learn more about how automakers and suppliers can optimize working capital using supply chain finance, please contact us at info@traderiverfinance.com.