German Auto Makers Link Up To Prevent Future Crunch

Auto manufacturing plants are closing, consumer electronics orders are delayed, and a wide range of industries from medicine to energy to defense are crippled. The reason: not enough microchips.

The global semiconductor shortage began in 2020 when chip factories in China, Taiwan and across the globe closed due to COVID-19. But the proliferation of the shortages is also a result of a boom in technological innovations and companies’ mismanagement of supply chains.

The automotive sector, which relies on chips for everything from the management of engines to driver assistance systems, has doubtlessly been hardest hit. Automakers run incredibly lean on supplies to keep costs down, and when consumer interest in vehicle purchases rebounded faster than predicted, chipmakers had already shifted to making chips for consumer tech companies.

“Never let a good crisis go to waste.”

The quote by Winston Churchill has become the motto for German automakers now. BMW, Mercedes-Benz, Volkswagen and tech giants Deutsche Telekom, Siemens and SAP among others formed a new network for data exchange in May 2021. Called Catena-X, Latin for “cloud-x,” the network is a cloud-based data exchange platform and early-warning system designed to prevent future supply chain crunches.

Catena-X will be the first “data driven value chain” for the automotive industry. By creating a platform for exchange and uniform standards for information and data sharing, the network aims to improve the efficiency, transparency, and sustainability of the entire automotive value chain.

Besides improving supply chain resilience for future crises, Catena-X is also modernized the auto supply chain.

“The data network will create an important starting point for the industry to respond more efficiently to the challenges of digital transformation and to make better use of the opportunities offered by digitalization,” commented network representatives in a press release.

Overcoming Old Fears

Building an alliance for secure and cross-company data exchange, the network helps participating stakeholders dispel past concerns about data protection and maintaining control. Catena-X has tremendous potential to help automotive stakeholders participate in the platform economy and power growth in the industry.

In a world of integrated supply chain ecosystems, information exchange among network participants is prone to challenges like poor interoperability, inconsistency and lack of transparency. Catena-X believes it’s the answer.

More at: catena-x.net