Overview Of Disruptive Digital Technologies

Introduction

The purpose of the report is to identify and review three disruptive digital technologies that could potentially impact an organization. This report also seeks to make use of appropriate success stories from research and case studies.

What is disruptive digital technology? It is with disruptive impact on industries and businesses, rendering existing products, services, and business models obsolete. Disruption is not new, but the pace of change is rapid. The fourth industrial revolution is forcing businesses to rethink everything they know. Leading organizations behave as living entities, constantly adapting to change. With invention at their core, they continuously redesign their business to generate new sources of value. Winning is about fostering inventive thinking to create what comes next.

Overview of the Company

AlMailem of Companies (here after referred to as The Group) started its activities in June 1960. Over the years, various companies and divisions within the group have contributed to its growth and emerged as one of the leading organization in Kuwait having focused business activities in the field of automotive products.

The group’s strength lies in both retail and wholesale business activities. It has retail multiple networks of showrooms all across Kuwait city and the suburbs Its retail network collectively in 30 plus locations to meet the requirement of both an individual customer as well as a corporate customer. All its retail facilities are manned and supervised by professionals, who are knowledgeable and courteous.

The Group’s main product lines are automobile tires, spare parts, batteries, auto glass, lubricants and garage equipment for tire service. It caters to all kinds of customers, which include the Oil sector, Ministries, Government and Semi-Government Agencies and Departments, Contracting Companies, Public and Private Sector.

Disruptive Digital Technologies

Digital Stores - Customer Experience.

Emerging trends of digital store concept could have a major impact on how the current business model operates. Most of the retail shopping chains are looking to get advantage of digital store system. Initially, it is expected to have major impact on retail business such as clothing, electronics and thereafter other segments of the market. This will include online ordering, selecting and payment which will be mostly handled by mobile application. That is why it is really important to go mobile first while implementing any e-commerce application. At present, The Group is in the process of implementing first mobile application for tire products in Kuwait. For this initial market survey done by the group’s marketing department and they have come up with following statistics. Out of total population of Kuwait 4.1 million, around 1.1 million Kuwaitis and others consist of expatriate workers. There are around 275,000 Kuwaiti families with minimum of 3 cars and most of these Kuwaitis carry mobile phones and they are well aware of vehicles and kind of tires they use. Our target is to provide them with solid solution as far as tires and auto motive products concerned through the mobile application that is more efficient and effective. This will provide a customer with better visibility of our product range, while customer will have the option of referring to product reviews and comparisons like booking a hotel. The Group hope that knowledgeable customer will add more value to the business in long run and can be attracted for future to do business with The Group. Once The Group implement e- store concept it can gain competitive advantage by use of data analytics. At present The Group only use historical data and patterns to predict future buying patterns whereas this disruptive technology will give online real time digital data that can be used for data analytics. More importantly, digital retailing and technology have changed customer’s behavior, expectations and attitudes. Today online retailing occurs for items no one would even dear suggest would happen without the value added by physical interaction. Zappos and ASOS however, selling shoes and apparel, have been growing and making profits for more than a decade now. Information is so accessible that customers are able to check prices and availability of products using their tablets or smartphones on the spot, while in store. With all that, the key mind boggling question becomes: What is the store’s role and value at a time when digital retailing is fast growing? Best Buy deciding to close the 11 and withdrawing from opening 200 stores in UK is just an example of what many retailers in western economies think about and fear.

Online Car Repair Service.

There is a huge demand for car spare parts and repairs as the growing number of vehicles on the road increase day by day. It is estimated total vehicle population in Kuwait around 1.9 Million out of which majority over four years old. As the age of vehicle gets older there is higher probability of repairs and consumers are looking for hassle-free, fast affordable quality services.

The automotive aftermarket comprises manufacturers, distributors, retailers, service providers and garages, which collectively spell opportunity for automobile repair services market in Kuwait. However, Kuwait is yet to witness any specific government body or association backing automotive maintenance and repair industry, and is, therefore, still lacking in quality and is fraught with price disparity. So there is a new possibility of disruption that could create by online car repair services startups that can manage to organize this fragmented market to the limelight. This operation will make use following wireless technologies include:

Radio-Frequency Identification (RFID)

In spare parts industry you will find number of line items of spare parts in a large warehouses, each needs to be bin located and stored in organized way to have efficient customer service. Here RFID is a vital technology to adopt to search and select correct part.

Global Positioning System (GPS)

This is most important for read side assistance for an emergency vehicle repair calls as well as the tracking operational vetches of the unit.

Geographic Information Systems (GIS)

GIS includes number of different technologies, processes, and methods. Mostly it is important in many applications related to engineering, planning, management, transport/logistics, insurance, telecommunications, and business. This can be used to get location analysis as well as visualization of the situation virtually. The Group is into facilitating better service to customer mobility can gain distinct advantage by the use of GIS.

Location-Based Services (LBS)

LBS is a software application which is capable of tracking the location of the mobile device.

LBS can provide user with vital information such as where the nearest garage in case of an emergency. It can push-based and deliver coupons or other marketing information to customers who are in a specific geographical area.

CarZippi: Founded in August 2015 by Suman Howlader, Bengaluru-based Carzippi offers comprehensive doorstep car care services at any location within a 30-km radius of the city. Customers can avail its services at market rates. The turnaround time varies based on the size and condition of the vehicle and the service selected, but on average, it takes 30 to 45 minutes. The price range of the services is between Rs 450 and 5,450.

Electric Cars

First of all The Group need to assess the impact that could come from electric cars on tires, since the majority of The Group’s revenue contribution comes from tires. Most of the countries in the world looking to cut down carbon emissions and current trend of e-mobility have created window of opportunity for tire manufacturers and dealers around the globe. By 2030 all countries in Euro Zone will go 100% electric cars, and this could have major impact on other nations as well. Most of the car manufactures are too moving towards conventional car to electric car designs. Electric cars have been developed which are a fresh, new concept and that run on rechargeable batteries located inside the car. However, although electric vehicles are mainly good news, they do have a negative effect on one key component; the tires. Which is negative on customer perspective whereas positive for tire dealer concerned.

What is the impact on tires by electric vehicles?

It is estimated that electric vehicles are 20 to 30% heavier than conventional vehicles, this is due to extra weight stems from heavy batteries inside the vehicle. Therefore, it is obvious that tire burnout is faster and need replacement frequently than conventional vehicle. As The Group is mainly a tire retail and distribution entity needs to gear up to face the new era of opportunities to cater higher tire turn around. Better Supply chain management is key in this respect. By use of latest advancement of information management systems The Group would be able to cease the opportunity with both hands

Consequences for automotive logistics spare parts

Entire supply chain will have implications from the new disruptive technology of electric cars. Traditional car for example, consists of around 1.200 parts, whereas an electric engine is only composed of about 20 parts. This difference will have a huge effect on entire supply chain. Also keep in mind traditional combustion engine comes with very complex engines with cooling systems, elaborate gears, and expensive exhaust systems. With electric vehicles, battery production is, to a large extent, automated. Specialized suppliers of parts such as pistons or crankshafts, that are needed to transform the pressure caused by combustion into a rotation, will not be required anymore. This could be considered as the most disruptive technology as far as the automotive industry concerned since the inception of commercial car manufacture by Henry Ford in early 1900’s. Increased safety and handling requirements of applied batteries must be cost- efficiently integrated in logistics process. That integration also depends on the car manufacturer´s decision whether to produce important components for the electric vehicles in-house or to outsource. Battery production includes complex chemical processes and high quality requirements, and even Tesla who operates their own “gigafactory” has already struggled with a battery shortage due to problems with the 100kWh battery production.

Moreover, automobile producers gained their expertise in producing combustion engines and cars over decades. Building up the same knowhow in battery production in a considerably shorter period is challenging. In general, the market entry barriers for new competitors are lower.

Vehicle distribution is changing, too

New vehicles with combustion engines are already driven many miles before arriving at the customer. It is the same with electric vehicles, but additionally, the battery status needs to be considered during the logistical processes. That means also new challenges for car terminal operators. Do the cars´ batteries need to be charged while stored at the terminals? How are routes and the time at the terminals calculated best, when a new parameter like battery charging is added?

If necessary, investments in charging stations occur that need to be installed directly at the terminals depending on the process handling. Also, the length of the battery charging would have to be taken into account in order to optimize all subsequent processes.

In principle, it is questionable how to optimize the processes to integrate the car´s range and battery life intelligently. Additionally, there are new safety guidelines during the distribution processes. The lithium cells built in the batteries are highly flammable. To avoid an electric shock, the high-voltage component needs to be disconnected in case of fire.

Conclusion

The e-mobility hype is in full progress, and the automotive industry recognizes the chances by now, too. For many affiliated industries, the trend means preparing today for future business models and production. The original equipment manufacturers and logistics service providers need to adapt the car manufacturers´ business and production models. E-mobility leads to new challenges for all parties, and changes not only the picture of our streets, but logistics processes.

11 February 2020
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