The global automotive industry is undergoing a revolution, as manufacturers and consumers make the switch from internal combustion engine (ICE) models to electric vehicles (EVs). While this fundamental shift will produce enormous benefits for the environment, it’s creating challenges and complexity for the world’s automotive demand planning teams.

It’s difficult to get the product mix right — across EVs, ICEs and hybrids — by channel and region. To add to this complexity, today’s consumers are demanding and craving product customization. As smart features, electric powertrains and hybrid models continue to emerge, and as new options constantly become available, this trend is expected to grow.

For automakers, the abundance of choices makes it challenging to predict the exact configurations that will align with market demand. This often leads to overproduction of vehicles and options, resulting in an inventory of slow-selling models that sit unsold at dealerships and force profit-eroding discounts. In addition, consumer preferences and demand vary greatly across global markets. Getting the mix wrong can lead to excessive, aging inventory on the one hand and missed sales opportunities on the other. OEMs that can accurately assess consumer needs and adapt their supply chains accordingly will be the ones to remain profitable.

Meanwhile, automakers need to make high capital investments in new technologies, plants and delivery channels to support diverse models and consumer needs, with no guarantee that these investments will pay off.  And, while the global chip shortage is firmly in the rearview mirror, automakers still face supply shortages, in part due to the large component inventories needed to simultaneously produce EVs, ICEs and hybrid models. When production is stalled because of parts shortages, manufacturers lose margins, sales and customer loyalty.

Perhaps the biggest challenge? Automakers are trying to navigate this chaotic, complex market environment with outdated solutions that simply weren’t built for the task. Supply chain planning teams are unable to predict comprehensive demand across all models, regions and channels — or sense demand changes quickly enough to avert losses. They can’t anticipate, rigorously analyze or optimally resolve disruptions. And, too often, they can’t share real-time data throughout the organization and collaborate across functional siloes.

What’s Needed? A Solution That Runs on All Cylinders

To keep pace with all the changes in the marketplace, while also identifying and managing disruptions, automotive planners need an advanced solution, enabled by artificial intelligence (AI).

The ideal solution would go beyond human cognition and manual analysis, to ingest large volumes of near real-time demand data — as well as consider key economic data like the consumer price index (CPI), inflation, the gross domestic product (GDP), interest rates, fuel prices, and housing starts. Then it would leverage advanced data science and predictive analytics to arrive at accurate demand forecasts. The resulting forecasts would also be dynamic, not static, in nature to stay aligned with actual market needs even as conditions shift.

This AI-enabled solution would manage demand complexity across all models, channels and regions, to ensure that the right product is always at the right place, at the right time. Even the complex product mix that currently characterizes the global auto market would be more easily managed.

Finally, the ideal solution would not only leverage advanced artificial intelligence (AI) and data science, but also machine learning (ML), cloud computing and predictive analytics to compress the time horizon between planning and decisions from days to minutes. In defining forecasts, it would run hundreds of what-if simulations quickly, to understand and predict the impact of real-world demand-driving variables. This powerful solution would autonomously make optimal recommendations, enabling an unprecedented level of decision-making speed, responsiveness and agility.

Rev Up Your Results With Blue Yonder Cognitive Demand Planning

If this idealized solution sounds too good to be true, meet Blue Yonder Cognitive Demand Planning. Fueled by AI, this innovative planning solution allows automotive demand planners to benefit from:

  • Near real-time data analysis. Cognitive Demand Planning uses advanced statistical and ML models to accurately forecast demand across different time horizons, regions, channels and products — dynamically adjusting these granular forecasts as conditions change. This Blue Yonder solution ingests hundreds of causal factors and demand-driving variables — such as CPI, GDP, inflation, interest rates and fuel prices — to produce accurate forecasts. It also collates risk and demand assumptions.
  • A unified planning process. Cognitive Demand Planning replaces siloed decision tools and processes with integrated, collaborative planning and scenario modeling across functions. By increasing visibility to the supply chain, it intelligently aligns production with demand across global markets. Users leverage a single, shared data model that ensures they’re connected to the newest, most relevant insights. Decisions are made based on a single version of the truth.
  • Supercharged scenario planning. Blue Yonder’s AI-powered solution enables the demand planning team to digitally embed, track and improve its assumptions, as well as accurately identify the variables that impact demand outcomes. Planners can create, run and test multiple scenarios to arrive at actionable plans much faster — as well as update plans much more dynamically. Planning becomes continuous, not static, as cycles are compressed from weeks, days or hours to mere minutes.

Start Your (Optimization) Engines

If you’re a demand planner, it’s time to make a change. Just as EVs are revolutionizing the global automotive industry, AI-enabled Cognitive Demand Planning is revolutionizing the forecasting process.

Leading automakers are already leveraging Blue Yonder’s powerful optimization engines to get the product mix right across models, channels and regions — driving increased sales, margins, customer satisfaction and asset utilization. Think of this blog as a green flag that starts your own race to improved results. Learn more here.