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The Digital Revolution: Transforming Supply Chains and the Switch to Electrification

17 December 2018 #Technology & Innovation #Technology and Innovation Articles

Editor: John Joe Chiasson, Territory Sales Executive for Automotive with DXC Technology

Author: Steve Nesbitt, Chief Programme Engineer with The Manufacturing Technology Centre

Author: Phil Mullis, Chief Technologist for Manufacturing with DXC Technology

Author: Bruce Sneddon, Lead Consultant for Manufacturing ANZ at DXC Technology

Sub-editor: Olivia Martin, Associate with DXC Technology


The digital revolution is making incursions into the $10 trillion-plus global manufacturing sector, yet few manufacturers are maximising the opportunities available to them. Digital technologies continue to evolve at pace, the innovation these digital technologies are generating is changing the nature of manufacturing.

Whether it’s embracing innovative driver-assistance systems, electrification or the adoption of new business models, the automotive industry is going through a monumental transformation. Heightened connectivity among consumers, product designers, suppliers, workers, C-suite executives, and all physical industrial assets continue to unlock large amounts of value. This is transforming every link in the manufacturing value chain, from research and development, design and production (including every link in the supply chain) to marketing, sales and ongoing service and support.

For the automotive industry the move from traditional internal combustion engines (ICEs) to electric propulsion systems is going to drive the need for a significant change within the supply chain.  This consumer migration to electrified propulsion technologies from conventional ICE (or “bolt to volt” as it may be referred to) has opened the door to organisations and new players such as Tesla, Dyson, Uniti, NIO, Detroit Electric, Sono Motors and so forth.  This will require existing automotive supply chains to be creative in adapting ICE manufacturing to also produce electrified propulsion systems in parallel.

In this article DXC Technology and the Manufacturing Technology Centre explore the current trends driving change in the supply chain, and propose the greater use of digital strategies and analytical methods to meet this challenge.  We suggest how and why we expect wider adoption given the particular need for change in the UK automotive manufacturing from the switch to electrification in propulsion systems.

Resistance to early adoption of digital strategies

Manufacturing has generally been slow on the digital uptake. Rising workforce costs usually come with lower productivity, and technology investments are often forced to compete with operational requirements. This means costly upfront changes – those required to support complex technology such as factory automation may not seem like a priority for a manufacturer who already has huge overheads.

The manufacturing industry is suffering from several challenges: high costs, ageing workforce, lack of skilled workers in some areas, and oversupplied markets due to increased competition and the low cost of some imports. Bruce Sneddon, Lead Consultant for Manufacturing at DXC Technology, agrees that cost is the one thing stopping big manufacturers from adopting digital technology across their IT ecosystems. “Traditional manufacturers that have done things the same way for a long time are loathe to make a big capital investment, especially one that requires an overhaul of most of their systems. If they’re cash-strapped, they will continue to operate with manual processes.” This resistance to investment has left many manufacturers with systems that restrict their ability to innovate and transform their processes.

A 21st century reality: the customer is in control  

Historically, people have had little input into what was being made and sold to them. Nowadays, they can play a role in product design.  Phil Mullis, Chief Technologist for Manufacturing UKI at DXC Technology adds: “Those in the automotive industry that embrace the possibilities of a Digital Platform to bring information into the fabric of every transaction with a client, partner, employee and process will be those that succeed in generating new business opportunities and gaining a greater ability to react to market forces and drivers.”

Tech-savvy customers expect much more in the digital age, within their respective budgets. They are more connected, with greater visibility and self-service ability across the purchase and delivery process. They also want personalised experiences tailored to their specifics. Agile companies that can make products and services on demand, to order, have a big competitive advantage, while those that enrich the post-purchase customer relationship can generate further revenue through repeat sales and support services. “A lot of traditional manufacturers are still focused on making products and shipping them off, yet customer satisfaction is now paramount. Creating great customer experiences using digital technology opens up whole new channels of marketing opportunities, especially through avenues such as social media,” Sneddon says.

The switch to electrification

In his recent presentation “Building the Infrastructure for Hybridisation and Electrification” at the IMechE’s “Developments in Transmission and Driveline Technology” seminar, Steve Nesbitt, Chief Programme Engineer at the Manufacturing Technology Centre, highlighted the challenge of switching production from internal combustion engines (ICE) to electrical propulsion systems.

Drawing on work from the Automotive Council UK, Steve highlights the UK’s current state of ICE production as 2.7 million units built in 2017, providing 8,000 jobs and valued at £8.5 billion, most of which is exported.  Certainly, there is much at risk.

Steve Nesbitt believes “The consumer will probably decide when the transition will sway to a HEV/EV majority and the desire to have or be seen with the “latest kit” is real and apparent.”  By applying a bell curve of customer technology adoption to the current time frames governments have targeted, Steve postulates the following ranges for the switch. 

Both his projections for slow and fast transition are faster than the “Industry Nominal” change rate expected using an aggregate of predictions.  The industry nominal he derives from multiple, open (internet) sources, including: McKinsey, Roland Berger, Bloomberg New Energy,, and others.  The difference between his projections and this industry nominal anticipates a wide range of potential take up between 2028 and 2036, this equates to a high degree of uncertainty and risk if companies are not well prepared for the change.

Steve is optimistic though, as an engineer he highlights that, “Much of the knowledge and expertise, but not all of it, on rotating parts can be translated from ICE and Automotive Transmissions, on to Electric Drive Units.”

In order to address the elements where knowledge cannot be directly transferred he notes that as the tipping point to majority electrification is unknown, there is a need to fast-track the learning and experiences with these different technologies.  “We need to find out what we do not know, quickly!” says Steve and highlights a number of areas that he expects to see investigated as a matter of urgency:

  • New materials, especially magnetics and laminations
  • Performance sensitivities relating to magnet insertion, packing density of windings
  • Processes and facilities to achieve volume rates for parts and assemblies
  • Metrology and non-destructive testing (NDT), what do you measure, how to guarantee “no faults forward”
  • End of line performance; noise, vibration and harshness (NVH), and diagnostics
  • Re-work strategy, some non-recoverable processes currently – if it doesn’t work, does it go in the bin?
  • Data & Information Systems, Controls & Connectivity
  • Intelligent Automation and Robotics, with Humans.

Transforming the supply and value chains

The leaders in industry are already revising their core operations, business models and supporting capabilities. Phil Mullis, agrees that the market forces impacting manufacturers are driving them to be more responsive than ever to maintain competitive advantage. “Manufacturers that are serious about optimising their supply-chain and value-chain performance will have to re-engineer at least some of their production processes.”

Processes such as product design, sourcing raw materials, production, marketing and sales used to be independent of each other, however, digital technology allows all these functions to operate within the same IT ecosystem. With digital supply-network management tools, factory managers have a clearer view of raw materials and equipment parts flowing through a network. This helps them schedule factory operations and product deliveries, while product managers simultaneously access customer experience data that helps them anticipate demand and design better products. Collaboration, data sharing and engagement across the value chain will help to better address customer, partner and supplier requirements, transforming manufacturing operations to a demand-driven supply chain.

Data-driven enterprise insights

Companies embracing smart manufacturing are already seeing a big difference in every area of their business: operational cost, speed to market, product quality and tailoring, customer experiences across product and service life cycles, employee productivity and safety. At the same time, advanced encryption technologies are transforming data security across IT and operational technology (OT) ecosystems, while simultaneously ensuring greater compliance across supplier and partner networks – anything from government import and export regulatory compliance to controlling the movement of assets, services and information from unauthorised users.

Transforming into a digitally savvy manufacturer will turn shop floor data into business-critical information, where analytics provides a far greater understanding of customer trends and influences product design and marketing. More specifically the move to electrification means that supply chain has to be adapted for the production of electric motors and ancillary equipment as well.

Manufacturing generates vast amounts of data. However, harnessing this data for valuable customer, supply chain and marketing insights has become essential to remain competitive.

The pace of change is accelerating and next-generation analytics, artificial intelligence and product simulation are already producing new data-derived enterprise insights from initiatives such as industrial machine learning and automation. Insights from real-time process and product data, including location monitoring, sensors and diagnostics information, are already changing the face of manufacturing as large manufacturers use the information to optimise factory operations and improve equipment efficiency and product quality. Phil Mullis explains further, “To deliver requires the Internet of Things (IoT, including Industrial) for data collection and the ability to apply analytics to drive the outcomes and benefits that affect the bottom line – such as reduced warranty claims and wasted time and money on production facilities.”

Diagram showing DXC Technology’s view of the Integrated Digital Manufacturing Value Chain.

Digital and analytics:  Winning with Team Penske

DXC is working with clients on a variety of digital and analytics projects to support changes in engineering. Taking Team Penske, the American IndyCar racing team as an example, they were challenged with the frustrations of using a variety of manual tools to track bills of materials and other logistics, 65% of their time was spent moving Excel files back and forth and 35% was spent on other tasks including designing parts and getting the parts to the car.  The team needed to spend less time on management and more time engineering faster cars.

DXC began with a ‘digital transformation workshop’ where we optimised the teams engineering software to identify workflow inefficiencies and opportunities. In addition, DXC helped Team Penske upgrade and customise its product life-cycle management (PLM) software and optimise its PTC Windchill solution – the workshop expedited processes and improved the team’s overall performance. Team Penske engineering could then apply their learning from the workshop in their newly optimised software environment. By streamlining tasks and consolidating engineering data centre facilities, Team Penske has reduced their costs, doubled the accuracy of component library parts and improved design quality and speed. The engineers now spend less time on tedious management tasks and more time designing and building record-setting cars.

Getting started on the digital journey

Digitalisation can sound quite daunting, but it’s about thinking big and starting small — laying the enterprise guide lines but delivering value early, so the organisation can quickly see value before scaling the solution and services. This advice applies equally to SMEs as well as global enterprises.  DXC has partnered with the MTC on a digital diagnostic workshop that helps manufacturing organisations to develop a coherent high-level strategy and roadmap — defining how to start and where to go next to release value quickly.

The future is digital

The ways people and businesses use information has shifted dramatically – the automotive industry is adapting and needs to adapt further.  Whilst specific business drivers are varied they can ultimately can be defined in one of three ways: improve current operations, deliver a better customer experience or change the business model.

There are a number of common industry and global challenges to contend, but there is no doubt that the switch to electrification represents both a significant threat and opportunity.  The need for the UK automotive sector to preserve business, jobs and export revenues is a very real challenge.

As a consequence, transformation of the supply chains is inevitable, it is a case of when and how. In order to explore the unknown elements, in a learn-fast approach, as yet underutilised methods and techniques will need to be adopted within an agile digital strategy.  Partnering, collaboration and skills sharing will be required to maximise rates of success.

By creating flexible plants that increase customisation, transforming supply chains, integrating embedded networks and systems, and utilising analytics to optimise production, car-makers will build cars that reflect the wants and needs of today’s and future consumers.


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