Opinion/Analysis
Auto manufacturers boast some of the most sophisticated and comprehensive ledgers on the planet. Their ERP systems track every penny and every bolt, marshalling myriad detail to maximize quality and income while minimizing costs.
While these systems weren’t explicitly built to enable net-zero manufacturing, the auto industry will need every bit of their considerable horsepower – and a whole lot more – to get there.
Achieving carbon neutrality by midcentury is a goal derived from the Paris Agreement; a legal mandate in places such as France, Sweden, and the United Kingdom; and already in the plans of OEMs including Volkswagen, GM, and Ford. Enhancements to current automotive ERPs are in development now to accommodate new ledgers capable of precisely tracking the carbon inputs and outputs associated with countless components and processes. Carbon tracking is being embedded into existing logistics, parts-traceability, and other functions. But that’s only the start.
On its own, no single company can hope to achieve the carbon-accounting scale and precision required to support net-zero. Consider the simplest of parts – a copper battery wire, say. Its carbon footprint depends on such vagaries as where the copper was mined, where and how it was smelted, where and how it was stretched into wire and how much copper is in that wire, what materials make up the insulation and cladding, how and where they were produced and transported, and so on. To understand that wire’s contribution to the embodied energy (and thus the carbon footprint) of a finished vehicle, all of this must be established and accounted for. Nearly all of it happens well outside an OEM such as Volkswagen, GM, or Ford.
Multiply all that by roughly 30,000 components of a modern automobile – many of them composed of subcomponents much more complex than a copper wire – and you have a sense of the challenge ahead. Meeting that challenge will demand open, interconnected, cross-industry networks for all participants in the supply chain, not a few of whom are fierce competitors. It’s a daunting prospect, but one the German auto industry is already tackling through the Catena-X Automotive Network.
Catena-X partners include many of the biggest names in German business: BMW, Deutsche Telekom, Bosch, Siemens, ZF Friedrichshafen, Mercedes Benz, Volkswagen, SAP SE, and many others. The alliance was created to foster uniform standards for the secure but transparent exchange of data and information among European auto manufacturers, suppliers, dealers, and software and equipment providers. Its foundation is the open, scalable, European cloud data infrastructure, Gaia-X.
Catena-X’s pilot phase is focusing on improving transparency, speed of interaction and enhanced trust in the realms of quality management, logistics, maintenance, supply chain management and sustainability.
Carbon tracking will, in the future, fit well into the functionality now being built to support value-chain-wide sustainability. The intent is to support the precise mapping of carbon emissions along the entire supply chain, including traceability of individual components such as battery wires. Catena-X will thereby provide the foundation for a net-zero supply chain in Europe. My hope is that the global auto industry follows our lead.
Of course, even an infinite sharing of data cannot in itself cut carbon emissions. That will take vast amounts of renewable energy and the relocation of energy-intensive processes to places where renewables are bountiful; less carbon-intensive materials; recyclable and reusable components; and enhanced production efficiencies, to name a few. But without a recognition that collaboration on data-sharing platforms will be indispensable to carbon neutrality, the auto industry can no more expect to achieve the goal of net-zero manufacturing than a company that tracks neither income nor expenses can expect to survive.
Hagen Heubach is vice president and global head of the automotive industry business unit at SAP SE, with responsibility for SAP’s automotive solution portfolio as well as the company’s strategy on future mobility and new business models. He is a member of the executive board of Catena-X Automotive Network.
