Tech-firms partner McKinsey to launch first Digital Capability Centre

21 July 2017 Consultancy.uk

The Digital Capability Centre in Aachen, Germany is the first of a number of Innovation Centres aimed at educating businesses in the best ways to utilise automation in their industry. The project, founded by McKinsey & Company and ITA Academy, is also supported by technology partners PTC, ark|group, Intex, Jakob Müller, Stonegarden, LinUp, Ubimax, Magazino, and Evolvea, as the group work to expand the project across the world.

Global management consulting firm McKinsey & Company has announced the opening of a Digital Capability Centre (DCC) based in Aachen, Germany. The DCC Aachen was the first of realisation of a global project, and sees McKinsey cooperating with fellow founding member firm ITA Academy – an international research and training service provider – along with a plethora of other collaborators. The DCC, with its motto “Explore – Try – Apply”, is described by the companies as a “learning factory” focused on Industry 4.0 manufacturing.

As manufacturing goes through a revolutionary overhaul toward automation, the firm is hoping to become the go-to source of expertise when it comes to the wider integration of such technology, with the use of the Industrial Internet of Things, whereby intelligent machine and humans are integrated within the wider production process, among other innovations. Industry 4.0 has been estimated as seeing a potential $4.5 trillion in investment by 2020, and McKinsey has therefore announced the expansion of the DCC project to other locales including Singapore, Chicago, Beijing, and Venice, as the firm attempts to gain an increasingly lucrative market.

Tech-firms partner McKinsey to launch first Digital Capability Centre

Founding members McKinsey and ITA are also supported by a technology partner network, which the companies expect to grow as the project expands further. The current partners include PTC, a global award-winning technology provider of the leading IoT and AR platforms, and ark|group, a provider of interdisciplinary development services for the digital transformation of companies

They are joined by Intex, a provider of an integrated and innovative ERP software suites for textile manufacturers and Jakob Müller, market leader in ribbon and narrow-fabric technology. Stonegarden, another systems provider for innovative tracking solutions and mobile data collection are also partners, alongside LinUp, a developer of ergonomic solutions, integrated tools and Virtual Reality, leveraging the booming VR industry to improve and enhance human behaviour.

Ubimax, a leading supplier for industrial wearable computing solutions – an innovation proving increasingly popular in the leisure industry – Magazino, a developer of mobile transport robots for warehouses and factories, and Evolvea, a systems integrator specialised in virtualisation across a number of markets, complete the rainbow coalition of tech-partners.

Cutting-edge

Innovative technology is seen by many as a double-edged sword, and while offering significant improvements in output, efficiency and profit, it can also cause disruption across markets, and present new risks from cyber-attacks on linked networks, along with a potential threat to short-term employment amid the long-term economic realignment it could cause.

Along with McKinsey, a number of competing consultancies have launched Innovation Centres aimed at tapping into businesses uncertainty surrounding automation. Notably, BCG launched an Innovation Centre for Operations to showcase Industry 4.0 technology, located in Paris. Such facilities offer visitors a range of customised services to provide insight into the potential of new technologies transforming the manufacturing process and in this respect McKinsey’s DCC is no different.

Founders McKinsey & Company and ITA Academy - technology partners PTC, ark|group, Intex, Jakob Müller, Stonegarden, LinUp, Ubimax, Magazino, and Evolvea

In order to help educate business leaders on the potential pros and cons of Industry 4.0 – which remains uncharted territory for the majority of UK and EU business – along with research the DCC in Aachen will also facilitate hands-on workshops, which aim to teach participants a systematic and targeted approach to unlock value from industrial automation.

"Many companies are already thinking about Industry 4.0, but get stuck when it comes to implementation. The DCC helps companies realise the concrete value-add of digitised production," said Christoph Schmitz, a Senior Partner at McKinsey. “Industry 4.0 represents both a major challenge and an opportunity for the economy. We founded the global DCC network in response to the question of what Industry 4.0 means for companies in practice and how digital transformation can be realised successfully.”

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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”