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Aftermarket digitization: a two-speed process
Nicoletta Ferrini
The automotive sector is experiencing a significant digital transformation leading to the creation of "smart factories" as well as developing new e-commerce channels. However, this does not apply to all levels of the supply chain: for example, small medium-sized Italian aftermarket companies are finding the going quite tough.
The digital transformation of the automotive supply chain is progressing at different rates, despite the fact that the sector seems to be the most advanced from a digital point of view, especially as far as developing new e-commerce channels and investments in "smart factory". E-Commerce data, collected and processed by Netcomm Consortium together with the Digital Innovation Observatories of the Milan Polytechnic, indicate that the Italian online spare parts market will end the year with a further 28% increase for a total value of 610 million euro. A survey by the Electronic Invoicing & e-Commerce B2B Observatory, performed with the same Observatory of the Polytechnic (1), further indicates that the value of online B2B transactions are worth 50% of the over 160 billion euro turnover for the entire segment, of which about 75% is traceable to Original Equipment Manufacturer, and the rest to the aftermarket. Furthermore, both sectors are developing and implementing new digital solutions, although in this case, the largest companies, such as producers and wholesalers, are driving this process of digitization.
Looking at advanced "smart manufacturing" systems, the most meaningful evolution is taking place “upstream”. Car manufacturers expect that, by the end of 2022, about 24% of their production plants will be "smart". Data collected by the Digital Transformation Institute of Capgemini reveal that the automotive sector spends a little less than the aerospace industry in investments on innovation, even though several companies are putting in resources in the order of 250 million dollars or more.
Aftermarket digitization: a slow process
The other side of the coin is represented by the slow development in digital evolution affecting small medium-sized enterprises of the aftermarket chain. Data on the level of digitization indicate that there is still much to be done, downstream of the system, to implement a real digital transformation: 81.6% of the over 166,000 companies in the sector (Istat data on wholesale trade , retail and vehicle repair) has a level of digital innovation that oscillates between low and very low. Add to this a widespread lack of ICT skills and specific training programs and the picture looks pretty gloomy indeed.
In short, automotive aftermarket companies are not heading in the same direction in which vehicle manufacturers are moving. In this sense, the gap is alarming and in line with the most recent Desi 2018 report, the European Commission indicator measuring the level of implementation of the Digital Agenda in all Member States. According to the analysis, in terms of digitization, the gap between large companies and SMEs is evident: the quick progress made by the former on electronic invoicing (18% of companies) and use of social media to communicate with customers and suppliers (21%), are counterbalanced by the disappointing figures of the latter. The Desi 2018 indicates that just 17% of small and medium-sized European companies have an online business.
In a slumbering European market, in which the very concept of a single digital market is coming up against huge obstacles, Italy is, once again lagging behind. Despite the progress made in the diffusion of broadband connections and open data, in the Desi 2018 Italy ranks 25th out of 28 countries. All this is confirmed by ISTAT data: according to the sixth report on the competitiveness of productive sectors, only 3% of national companies are digitized, while 63% appear "indifferent" and show a low digitization rate.
From possible and advantageous to essential and urgent
Digitization if fast becoming less of an option and more of a need. This is what emerged also during the Fed2018 (Digital Economy Forum), jointly organized in Milan by Confindustria Giovani and Facebook. The audience, made up of many young entrepreneurs, was encouraged to seize the opportunities created by this process of digitization, not only in terms of developing connected infrastructures, but also of presence in the virtual world. The keywords are: "be there". Opportunities are certainly not lacking. With around two billion users, Facebook represents an attractive virtual market. An increasing number of companies are using this social platform as well as Instagram to show their products and establish a growing number of contacts.
And if digital is beautiful, mobile is better. Increasing a company’s presence on mobile devices affords it to access a huge pool of users and transform a local enterprise into a global business - at least in the words of Ciaran Quilty, vice president of Facebook Emea for SMEs. In support of this view, the latest data from the Statista digital research portal shows that smartphone users, 1.57 billion in 2014, are expected to be 2.53 billion by the end of 2018, and 2.87 billion by 2020. By this same date, 37% of the world's population will possess a smartphone and global mobile advertising spending will reach 250 billion dollars. This is to say: whoever stops now (or fails to even start) is the loser.
Looking at advanced "smart manufacturing" systems, the most meaningful evolution is taking place “upstream”. Car manufacturers expect that, by the end of 2022, about 24% of their production plants will be "smart". Data collected by the Digital Transformation Institute of Capgemini reveal that the automotive sector spends a little less than the aerospace industry in investments on innovation, even though several companies are putting in resources in the order of 250 million dollars or more.
Aftermarket digitization: a slow process
The other side of the coin is represented by the slow development in digital evolution affecting small medium-sized enterprises of the aftermarket chain. Data on the level of digitization indicate that there is still much to be done, downstream of the system, to implement a real digital transformation: 81.6% of the over 166,000 companies in the sector (Istat data on wholesale trade , retail and vehicle repair) has a level of digital innovation that oscillates between low and very low. Add to this a widespread lack of ICT skills and specific training programs and the picture looks pretty gloomy indeed.
In short, automotive aftermarket companies are not heading in the same direction in which vehicle manufacturers are moving. In this sense, the gap is alarming and in line with the most recent Desi 2018 report, the European Commission indicator measuring the level of implementation of the Digital Agenda in all Member States. According to the analysis, in terms of digitization, the gap between large companies and SMEs is evident: the quick progress made by the former on electronic invoicing (18% of companies) and use of social media to communicate with customers and suppliers (21%), are counterbalanced by the disappointing figures of the latter. The Desi 2018 indicates that just 17% of small and medium-sized European companies have an online business.
In a slumbering European market, in which the very concept of a single digital market is coming up against huge obstacles, Italy is, once again lagging behind. Despite the progress made in the diffusion of broadband connections and open data, in the Desi 2018 Italy ranks 25th out of 28 countries. All this is confirmed by ISTAT data: according to the sixth report on the competitiveness of productive sectors, only 3% of national companies are digitized, while 63% appear "indifferent" and show a low digitization rate.
From possible and advantageous to essential and urgent
Digitization if fast becoming less of an option and more of a need. This is what emerged also during the Fed2018 (Digital Economy Forum), jointly organized in Milan by Confindustria Giovani and Facebook. The audience, made up of many young entrepreneurs, was encouraged to seize the opportunities created by this process of digitization, not only in terms of developing connected infrastructures, but also of presence in the virtual world. The keywords are: "be there". Opportunities are certainly not lacking. With around two billion users, Facebook represents an attractive virtual market. An increasing number of companies are using this social platform as well as Instagram to show their products and establish a growing number of contacts.
And if digital is beautiful, mobile is better. Increasing a company’s presence on mobile devices affords it to access a huge pool of users and transform a local enterprise into a global business - at least in the words of Ciaran Quilty, vice president of Facebook Emea for SMEs. In support of this view, the latest data from the Statista digital research portal shows that smartphone users, 1.57 billion in 2014, are expected to be 2.53 billion by the end of 2018, and 2.87 billion by 2020. By this same date, 37% of the world's population will possess a smartphone and global mobile advertising spending will reach 250 billion dollars. This is to say: whoever stops now (or fails to even start) is the loser.
