Connected cars and the aftermarket supply chain

The increased use of telematics and the rollout of connected vehicle technology will do more than improve safety and provide new types of information to repairers. Connectivity will affect operations up and down the supply chain in ways that aren’t quite clear yet.

The technology is already affecting the relationship between suppliers and distributors. In July, the Automotive Parts Services Group (The Group) announced that it was evaluating its new and existing vendor relationships to ensure “future growth and success,” and supplier plans for telematics and connectivity will be an important part of that evaluation process.

The Group management team met with current and potential suppliers to better understand their long-term capabilities.

“While discussing topics such as new product plans, information, data support, training and technician programs which have always been important, we must now take the time to cover internet strategies, vehicle connectivity, diagnostic capabilities and a host of other subjects that have become essential to the success of our vendor relationships going forward,” said Larry Pavey, CEO of The Group.

“We’re looking for suppliers that share the passion and the vision that we have going forward, so we’re looking for high-quality suppliers and that have a complete offering with regard to supporting professional service providers and technicians,” says Pavey. “They need good, quality information, quality catalog data, training and support, and some of the tools for the future that will be important.”

That includes a clear plan when it comes to telematics and connectivity, and how those technologies can be used to improve supply chain operations.

“Emerging technologies are important to our members and our customers, and part of our job is to look ahead and make sure that we’re working with suppliers that have a vision for the future and that are able to support some of these initiatives,” Pavey says. “It’s becoming more important to understand the overall capabilities and future vision of the supply base and to make sure that we are aligned with member and customer needs.”

The IoT on the road

Connected vehicles are considered part of the Internet of Things (IoT), and will eventually generate mounds of data about vehicle performance, vehicle safety, and even road and traffic conditions in future “vehicle to infrastructure” networks.

That level of connectivity also will pose some potential challenges to the aftermarket. OEMs and parts suppliers are increasingly wary of potential security issues with driver input systems.

“Some OEs are attempting to put security algorithms to protect that part of their code and the vehicle from hacking,” says Kaleb Silver, senior product manager at Hunter Engineering. “At the same time, that may lock the aftermarket out of the data and access to those systems. We’re trying to raise awareness of some of those systems and how the aftermarket needs to access them.”

It is premature to discuss how data generated from connected and telematics technologies is currently impacting how distributors and suppliers work together because this data is not really available in critical mass yet.

“The majority of data flowing via telematics is mostly limited to diagnostics information for repair shops to use in servicing vehicles,” says Chris Gardner, vice president of the Automotive Aftermarket Suppliers Association (AASA). “There is opportunity in the future for the traditional aftermarket suppliers and distributors to radically change how they produce and deliver parts on an almost [just in time] manner.”

However, distributors are struggling to identify business models for telematics. Gardner recommends WDs working with supplier partners to create joint strategies for telematics, which appears to be what The Group and others are attempting.

That will include making sure the distributors and suppliers are able to communicate effectively via the internet and EDI from a business information standpoint, as well as being able to provide and share product and training information across the value chain.

“We’re working hard to support our members and their professional service providers and technicians with training and support, along with information and data,” Pavey says.

Connectivity and product development

Connectivity also will affect the nature of the parts being developed, and potentially accelerate improvements and redesigns.

“Connectivity is an area that is growing and will provide a great opportunity for improvement in a number of areas,” Pavey says. “We’re seeing more embedded telematics, and there will be a greater ability to communicate throughout the supply chain with the vehicle and vehicle owner, as well as the shop and the parts provider.”

Repair shops will have faster information about vehicles, and manufacturers will be able to improve engineering and manufacture of parts by knowing how parts perform and change while in use.

“Applying analytics to data from vehicles combined with granular data on cars in use will help identify when parts will fail,” Gardner says. “This will enable manufacturers to more exactly produce parts that will be needed. WDs will be able to more accurately warehouse and supply parts on an as-needed basis. Ultimately, this industry will be able to replace parts before they fail. This will result in reduced excess inventory, fewer stranded motorists, possibly extended vehicle life and improved customer satisfaction.”

The increase in connected sensors may also create new hurdles for repairers and others in the aftermarket. “For vehicles with stability control, lane departure warning, auto emergency braking and other systems, when you do a wheel alignment you have to reset those electronic sensors,” Silver says.

However, there is a lack of standardization for these types of resets. “In some cases, you need to do a reset after an alignment, but in others they may be self-learning or otherwise self-adjusting,” Silver says. “Each OE has a different way to reset each of those systems. And some of them have requirements for driving the vehicle after the reset that may be difficult for shops to complete.”

The future of the aftermarket supply chain

Ultimately, both OEMs and aftermarket distributors hope that the data generated by connected vehicles will help them improve responsiveness and make it easier to have the right inventory available when drivers need it.

“There will be an improvement in the information available and being able to share that information along the supply chain,” Pavey says. “That sharing is going to create some benefits both in terms of speed and efficiency, and in planning, forecasting and inventory management.”

“We’re excited at the thought of having more data available, and believe it should be available to the aftermarket and to the vehicle owner,” Silver adds. “And we’re excited at the opportunity to help the aftermarket shops to understand that data and use it to their advantage.”

Ownership of the data will be a primary hurdle. Diagnostics and maintenance data will need to be available to the aftermarket for it to have a positive impact on service providers and throughout the supply chain.

There is also increasing competition for the OBDII port among insurance companies, telematics vendors, repair shops with dongles, and the OEMS. There are hundreds of dongle and app providers that are unlikely to share data unless a standardized framework emerges.

Gardner also sees the collaboration across the supply chain as a challenge, along with the lack of sensors on many parts. There are also security issues being raised by federal authorities about connected vehicle technologies.

That said, he thinks connectivity has the potential to revolutionize the supply chain, if companies make the technology and analytics investments.

“I don’t think expectations are too high, but I do think that they may be too soon. Part of the concern is over parts manufacturers, WDs and repair shops that are not willing to research or invest in emerging technologies like IoT,” Gardner says. “The other is the challenge of getting the entire industry behind the collaborative effort that would be required to fully take advantage of the data we eventually will be able to access. Success would require every level of the supply chain to ‘lean in’ to an industry solution. However, just because there are challenges, the aftermarket should still pursue the potential benefits that connectivity offers.”

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