Digitalization in the automotive supply chain: a cross-country perspective

Note by Margherita Russo, Italy's delegate at WPTIP
30th June 2017

With regard to the WPTIP project on "Digital and open innovation", Italy candidates a country case study on the ongoing digitalization in the Italian automotive supply chain (i.e. companies providing goods and service – machining, parts, modules and components ‑ for the car OEM). The case study will be realized under the scientific direction of CAMI-University Ca' Foscari, Venice, and CAPP-UniMORE.

The case study will rely on the national investigation on the automotive supply chain. In addition, it will include qualitative analyses to describe the open innovation practices adopted, the major transformations and challenges faced by businesses in the context of digitalization, and policy needs that are pertinent to open innovation.

Rationale for this industry case study

As stressed in the Paris workshop on "Innovation and the digital economy", we observe that digital transformation is a complex process embracing a quite diverse set of activities, competences and organizations. This transformation is not rooted at the same extent in all countries, and differences are observed across industries and within industries. Understanding those differences will provide some hints on the relevant issues for the transformations needed across the various related systems (education, regulation, etc.).

Industry case study

By focusing on the automotive supply chain, we could capture two related strands: one is country specific; the other one is company specific.

Country-specific analysis

With regard to Italy, across the various segments and the tiers of the automotive supply chain, the depth of digitalization varies greatly and it would be important to understand whether this is due to the current transition phase or to a structural character of the technology and the organization. This analysis would contribute to framing the scenarios of the pace of change and impact of digitalization on skills, employment and organizations.

Moreover, companies in the Italian automotive supply chain have many interrelations in other supply chains (e.g., in the machinery production), with this respect, the case study could some light on the extent which digitalization ‑ spurred by the car manufacturers needs ‑ spreads across other manufacturing and service sectors.

Another structural data is that, in Italy, SMEs and micro firms are relevant in this supply chain and spatial concentration of suppliers is strong, with relevant spillover effects across not-related supply chains, obtained also through labor mobility in the local/regional production systems.

Finally, in Italy, spatial concentration of production of sport and luxury cars (Ferrari, Lamborghini, Maserati, Pagani) is the outcome and the input of a double bind with a local concentration of suppliers. In this segment of the car industry higly digitalized processes are complemented by hand-made ones. Integration of different set of skills in the same working environment represents another dimension in the analysis of digitalization processes in all their nuances.

A special focus of the empirical analysis will be the impact of the ongoing progress of digitalization on both innovation processes, in the various segments and tiers of the supply chain, and the relationships between car OEMs and their suppliers.

A cross-country comparative analysis would enhance a better understanding of critical aspects that are country-specific and that would ask for different policy patterns and measures, more suitable for the different needs.

Company-specific analysis

Carmakers might not have significant differences in their internal levels of digitalization, but they can rely on different suppliers from various countries having different levels of digitalization, also in relation to the production of specific models of cars.

This observation moves in the direction of both expanding the automotive supply chain case studies to other countries and to develop a company-specific case study, for example through auditions/interviews to companies managers or scholars/experts for the TIP delegates.