Integration-as-a-service is a now a supplier’s role, says Continental

First Tier suppliers will have to provide a much broader service to carmakers than just components in an ever more complex technological landscape.

That’s the opinion of Frank Jourdan, executive board member, chassis and safety division at Continental. Speaking at the 2018 NAIAS to TU-Automotive, Jourdan also suggested that the Goliaths of the auto supply chain will be the dominant force in driving forward advanced technologies.

Jourdan explained: “Our product portfolio today is components but if you look at an electronic brake system, for example, you have the hydraulics, the mechanics, the module with the software in it and those systems are heavily interacting with other systems in the car. So, we become much more than a components supplier, we supply a sub-system and we integrate the sub-system into the car for the OEMs. We make sure our system interacts properly with all the other systems correctly. This takes us beyond just delivering a component.”

He said the need to provide a wider ranging service has spurred a cultural change within the Continental organisation itself to allow it to provide better integrated systems. Jourdan said: “Now with the ADAS and automated driving there is much more complexity with these systems so there is even more interaction – an interior system from the back-end needs to feed information into the driving system and this makes the interaction much greater.

“This means we need to have a bigger interaction within the company. My division of chassis and safety needs to talk to our colleagues in interiors so our systems can be developed together. So the silos are breaking down within the company and the same is happening in the industry as a whole.”

This change in culture and client service will also demand suppliers to be commercially big enough to fulfil the function properly, said Jourdan. “Now it depends on the OEM whether they want a supplier who can do system integration for them. So I can see 1st Tiers growing into becoming system integrators developing a certain number of components of a system and not all of them. Some other suppliers might deliver some other components and that needs to be integrated. The OEM might deliver some software functionality but someone has to bring it all together and that’s a role we can play.

“Typically, those roles will be played by a very powerful 1st Tier supplier which has acquired some portion of the system and I don’t see the smaller companies being able to do that.”

Another reason the big players will come to dominate the space is the sheer risk factors being anticipated with the advance of autonomous technology. Jourdan explained: “If you have higher content you face higher risk. A component can cost a car recall already, if you have a system containing multiple components the risk is statistically greater. It’s a good question especially when you have so many things coming from different sources, from the OEM, from 1st and 2nd Tiers, and you put that together to find that something is at fault that has to be considered.

“There will definitely be discussions and things will go wrong but you have to consider the business model and if the risk is too high for the revenue generated, you have to change the model. If you don’t get that right it could kill off a company and we have to find ways to deal with this risk.”



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