The gathering pace of disruption – fueled by viral variants, production shutdowns, logjammed seaports, and geopolitical conflict – has prompted business leaders to seek out every available opportunity to instill resilience across their operations and those of their trading partners.
In few spheres of commerce are the stakes higher than the automotive industry, where the average car rolling off the assembly line involves the sourcing of 30,000 parts from suppliers spanning the globe. When even one critical component becomes scarce, such as the microchips that govern a vehicle’s electronics, automakers risk falling short on promises made to customers.
To counter the volatility roiling their industry, automotive firms across Europe have banded together to achieve 360-degree visibility across their interconnected operations. Through an alliance that began in 2021 called the Catena-X Automotive Network, dozens of manufacturers, suppliers, dealer associations, and application developers have built a thriving digital ecosystem, using SAP and other technologies as its basis, setting a uniform standard for the secure sharing of data throughout the entire automotive value chain.
The participants – including BMW, Bosch, ZF, Mercedes-Benz, Volkswagen, and Volvo, to name a few – seek to harness the visibility made possible by cloud-based networks to accelerate their competitiveness, improve their efficiency, and strengthen their ability to anticipate disruption and adjust accordingly. Yet the alliance isn’t just for dominant market players. Digital transformation benefits small and medium enterprises every bit as much as their larger competitors. That’s because the alliance rests on an open and scalable ecosystem. Data, after all, is agnostic as to the size of the enterprise that relies on it to guide operational decision-making and spur collaborative innovation.
Through digital networks, enterprises can gauge supply and demand through every stage of production. But what about glimpsing other vital business metrics? As organizations expand their commitment to environmental, social, and governance (ESG) objectives, they require real-time visibility along these dimensions as well. The core scenario for Catena-X is material – or parts – traceability, which is supported by SAP Business Network.
The material traceability option for SAP Logistics Business Network allows companies to trace products and components across multiple parties in a value chain, from n-tier sourcing to manufacture to distribution. It is an end-to-end traceability and recall-management option to help capture and analyze the product genealogy from raw materials to finished product. Initially developed in cooperation with leading companies from the food supply chain, material traceability enables them to strengthen transparency and sustainability by connecting the entire supply chain. The cloud-based technology fosters the accountability – and facilitates the analytics – necessary to support recalls and provenance analysis and integrates snugly with an organization’s existing enterprise resource planning (ERP) solution.
The same holds true for the automotive industry. Pinpointing defective products based on detailed manufacturing specifications can dramatically narrow the scale of recalls, accruing significant savings for automakers and dealerships and averting needless aggravation for consumers. Meanwhile, the very same material traceability option can equip businesses to ascertain whether a product or process meets designated compliance criteria. For example, does a vehicle’s originating factory observe environmentally sustainable business practices? Does an automotive manufacturer or supplier uphold a commitment to diverse hiring and contracting policies? Does it validate compliance with non-coercive labor standards throughout the supply chain as legislation around the world increasingly requires?
When backed by SAP Business Network and material traceability, decentralized industry networks such as Catena-X can achieve an unparalleled level of multi-tier supply chain visibility, spanning not only traditional supply and demand metrics but a wide range of social- and compliance-related attributes as well, positioning businesses and their trading partners for maximum resilience, sustainable innovation, and mutual growth for the long run. SAP Business Network, with its seven million trading partners, sets the foundation to support and interoperate with open industry networks of the future. By connecting to SAP Business Network, businesses can open up the potential for commerce and transparency with organizations of all sizes, whether for procurement, logistics, or industry-specific scenarios.
Paige Cox is senior vice president, chief product officer, and head of SAP Business Network.