Digitalization Strategy: Strongest together

Chamarthi: Digitalization at ZF will be a long and exciting journey. It is going to be massive cultural transformation, in addition to our products, services and technology transformation. The whole company needs to be engaged in this effort.

Gollewski: Networked systems that extend far beyond vehicles are becoming increasingly widespread; for example, a market for autonomous transport systems has arisen as a result of the requirement to rapidly deliver orders placed online, while new mobility concepts envision robot taxis. And the question we’re asking is: could we not base both these types of vehicles on the same, standardized technology? The lines between our conventional market segments – cars on the one hand, commercial vehicles on the other – are becoming increasingly blurred.

Chamarthi: We will transform our business across all three horizons. First, by safeguarding our core to make our existing products and processes smarter and better. Then by enriching our core, by which I mean adding new features to existing products using digital technologies to, for example, create an uptime service offering based on predictive maintenance for wind turbine transmissions. And finally, by extending or redefining our core by creating a new product or service that is digitally enabled, such as the X2Safe safety algorithm. We need to employ digital to innovate all aspects of our business – products and services, product development, workplaces, factories, and supply chains.

Gollewski: The X2Safe safety algorithm demonstrates the huge potential advantages of using networked systems in road traffic; these systems even enable us to protect road users who are not in their own vehicles, such as pedestrians and cyclists. The algorithm was developed by ZF’s in-house think tank, by the way.

Chamarthi: At the end of last year, there was a terrible accident on the Interstate 96 near where I live. A pile-up of more than 40 vehicles in snowy conditions caused three people to lose their lives. I am certain that these sorts of accidents can be prevented with intelligent, networked systems.

Gollewski: As a matter of fact, we’re talking more and more about “artificial intelligence.” Research has now progressed to such an extent that AI systems are becoming practicable and marketable.

Chamarthi: Soon we will be accompanied by digital assistants, such as Siri and Alexa, all the time. Artificial intelligence will help these services understand our natural language.

Gollewski: Artificial intelligence is especially important for highly automated or even autonomous driving, because conventional computing processes are always deterministic and unable to deal with residual uncertainties. But just like human drivers, highly automated vehicles must be able to anticipate what is likely to happen in the next few seconds without working from a laboriously predefined script that includes every conceivable scenario. Reproducing this ability using conventional software would take an age in programming and testing, which is why we’re using self-learning algorithms in our ProAI control system for highly automated vehicles.

Gollewski: Increasingly, automotive manufacturers are showing a tendency to transform themselves into mobility service providers. This means that we, as a large supplier, have to assume more responsibilities in other areas. And yet there are nuances – not just between one manufacturer and another, but also between one vehicle and another – that present us with extremely exciting challenges and also make us a very attractive employer.

Chamarthi: We are currently going through a massive expansion of our development capacity across the world. We are tapping into the Indian software engineering market to establish a capacity of 2,500 engineers by 2020 at our recently opened Tech Center in Hyderabad, India. We expect three quarters of these engineers to work on developing new software capabilities for ZF.

Gollewski: It is also our job to continuously refine our own development methods. Think about functions based purely on software which could be retrospectively “uploaded” to vehicles. All technological innovations go hand in hand with process innovations.

Gollewski: In the long term, it will benefit all of them; at the moment, quite a few. The TraXon commercial vehicle transmission, for example, with its GPS connection and navigation data interface, is capable of anticipating future maneuvers, thus greatly improving fuel efficiency. Its intelligent PreVision GPS shift strategy is able to recognize uphill and downhill inclines in advance, and considers these when selecting shifting points.

Chamarthi: We are already extensively testing “Industry 4.0” technologies. Our plant in Saarbrücken, where more than 1,200 types of passenger car transmissions are produced, offers a good impression of this. Digitalization is making a significant contribution there, by further increasing productivity and process quality. As an example, inventory visibility of every single component in real time helps us reduce the overall inventory levels we have to carry in the plant. This saves us money.

Chamarthi: We will certainly NOT do this all by ourselves. We will work to combine our domain expertise with digital technologies – social, mobile, analytics, Cloud, Internet of Things – and openly innovate in an agile way with traditional and non-traditional partners to create the best products. As an example, we have established a strategic partnership with a digital start-up accelerator with a worldwide presence called Plug and Play. This partnership will help connect start-ups worldwide to ZF ideas and business opportunities. We will work with traditional (e.g. IBM, Microsoft), non-traditional (e.g. start-ups) and our internal networks to build the Digital ZF.

Gollewski: If we identify major potential in a start-up’s idea, we systematically foster it – in some cases, by investing in it. We founded Zukunft Ventures GmbH for precisely this reason. That’s not to say that these investments are our way of relieving the start-ups of their entrepreneurial responsibilities. Last year, we took a 40-percent stake in Ibeo, a supplier specializing in laser sensors; that’s a good example of our approach.

Chamarthi: At the same time, we are expanding our open innovation network, where we work in partnerships with high-tech companies. An example of this is the blockchain “Car eWallet” payment system, facilitating payments for charging electric cars, which we are developing together with various partners. The blockchain technology on which the system is based can also be used to enable wireless software updates in vehicles.

Chamarthi: Several successful activities have existed for a long time in the different divisions and business units. The ZF think tank is also constantly coming up with new ideas. As Chief Digital Officer, it is my task to orchestrate and streamline our portfolio of investments, helping us move from a disconnected portfolio to a streamlined portfolio. This will ultimately help us become a technology leader in automated driving, electrified drives and integrated safety.

Chamarthi: We already have a great foundation and a number of initiatives underway. We need to create further success by building on the existing momentum. We are currently working on a long-term roadmap. But nevertheless, we have to prepare our organization to become more agile and prepared to respond to the rapidly changing environment and technology landscape of the digital world.

Gollewski: In today’s market environment, speed is a key factor. This is why it’s a good idea for us to work in flexible networks. Our task in Advanced Engineering is to go on integrating new ideas into an all-embracing system, so we can meet all our automotive customers’ expectations and requirements.