VW, Daimler, BMW join new alliance for cloud-based digital ecosystem

BERLIN -- The automotive industry is under pressure to improve supply chain efficiency through data analytics. The Catena-X Automotive Network data exchange initiative aims to bring the automotive supply chain together under a single open data cloud ecosystem.

Volkswagen Group, Daimler, BMW, Robert Bosch, Schaeffler, BASF and Deutsche Telekom are part of the European initiative. The new system is designed to ensure sovereign, trusted, and decentralized data exchange, allowing network partners to share their data with others without relinquishing data sovereignty.

The initiative is just one part of an international effort currently underway in the industry to build cloud-based digital architectures relying primarily on the three major global providers -- Google Cloud, Microsoft Azure and Amazon Web Services (AWS).

In addition to efficiency advantages in the supply chain, the network offers participants better quality and logistics processes, increased transparency and simplified master data management.

"Conceptually, this is very important," Gartner analyst Pedro Pacheco told Automotive News Europe. "Just imagine that suppliers from all tiers can directly and freely exchange data with the OEM, and vice-versa."

This system will enable the supply chain to react much more quickly to changing needs from automakers, and it becomes easier to identify areas of improvement, especially for an automaker, as it will be easier to see bottlenecks beyond Tier 1 suppliers.

Additionally, this would allow automakers to get a more precise picture of the carbon footprint of their supply chain and adjust it in order to reduce that footprint.

"The central challenge is that each company is different from each other in terms of digital architecture and also on the way it produces, processes and shares data," Pacheco said. "Hence, aligning those procedures and standards is crucial."

At the same time, those standards help make sure the data exchange between companies occurs with a higher level of security and data protection.

For Pacheco, it all depends on the alliance's ability to progressively demonstrate results.

"The initial concept and ambition are very encouraging, but the alliance needs to grow beyond Germany in order to generate a global impact in the automotive sector -- not just at the level of suppliers but also OEMs," he said.

"If the results appear and if Catena-X manages to reach a truly global coverage, then this may help OEMs and suppliers improve supply chain efficiency and even become better prepared to deal with future supply chain disruptions."

With the increase in networking, the alliance of automakers and suppliers hopes for improved conditions to further advance the transformation of the industry. Participation in the exchange is intended to secure the competitiveness of the European automotive industry in general.

"With Catena-X, it will be possible to interconnect the data chains based on uniform standards throughout the industry," said Michael Prinz, BASF's Europe director of segment marketing transportation, performance materials. "The members of the alliance are about to build prototypes for these scenarios in the current project phase."

Prinz said the exchange of data or information between the companies is increasingly becoming a necessary core competence of the industry.

"We are jointly tackling a range of initial use cases relating to sustainability, quality management, logistics, maintenance, and supply chain management," he said. "In addition, the companies in the automotive industry are formulating the common requirements for the software solutions so that this information exchange can be carried out easily, efficiently, fairly, and securely in the future."

Prinz said members of the exchange want to derive process descriptions, formats, findings, and freely usable open-source elements (e.g., connectors for access and use of the solution) and make them available to all players in the automotive value chain.

For Frank Göller, head of digital production at VW Group, data is the central resource of digitalization and an important driver on the company's path to becoming a sustainable digital company.

"By using data strategically, we can make even more effective and faster decisions -- this applies to internal processes, but also in collaboration with our more than 40,000 partners and suppliers around the world," he said.

"We see great potential in cross-company data exchange. A data-driven digital twin as an image of real-world operations, for example, can help optimize production and logistics processes and improve transparency on sustainability issues," he said.

Göller said uniform data standards are the cornerstones for a well-functioning exchange of data and information.

"Seamless networking only succeeds with a common language, meaning a uniform data model," he said. "In addition to the technical framework of a data network, common rules are also important. "For us at Volkswagen, data security and data sovereignty are central building blocks of a successful data network. Only if each company retains control over its data will there be greater willingness and trust in data exchange."

Göller said that digital transformation and the networking with partners and suppliers on the basis of common data standards and data models provide the necessary levers and approaches for optimization.

"With a joint approach--an industry standard--we want to reduce technological and organizational entry barriers for all stakeholders along the automotive supply chains, and thus accelerate the digital transformation of the entire automotive industry," he said.