New Digital Ecosystems for the Major Challenges in the Industry

MHP Management- und IT-Beratung GmbH [MHP Management and IT Consulting LLC] is a subsidiary of Porsche and advises a number of automotive groups as a digitization expert.

"Enabling you to shape a better tomorrow." With this claim, MHP Management- und IT-Beratung GmbH, headquartered in Ludwigsburg, describes its goal – for both customers and staff. More than 3,300 employees at 19 locations worldwide advise more than 300 companies in the mobility and manufacturing sectors.

An interview with Michael Appel, Head of Cluster Digital Platforms & Solutions.

LNK: Mr. Appel, what exactly is your job at MHP, a Porsche Company?

Michael Appel: My personal consulting focus is on digital platforms and ecosystems ­– a topic that a lot of companies are currently dealing with as part of their digitization strategy.

With my team, we help our customers position themselves for that in terms of organization and technology. In addition to developing a strategy and roadmap, we support them primarily with platform implementation and scaling.

Mobility and manufacturing are MHP’s areas of focus. What exactly does your service involve?

At MHP, we offer companies management advice, support them with our digital services and IT solutions and in their system integration at all stages of their processes – from product development on the supplier’s end to the delivery of spare parts from the trade to the customer – while offering them our guidance and support. Our strength is our experience, especially in the automotive field, which in my opinion is currently the most exciting industrial sector since so much is changing around cars and mobility in general.

In what way?

The industry is facing major challenges. The requirements for future vehicle models are rapidly changing - E-mobility, software & connectivity, and autonomous driving are major drivers for innovation here.

In addition to increasing cost efficiency, it is also becoming increasingly important to consider sustainability not only in production but also in the entire supply chain. There are also challenges in the market: new competitors, new generations of buyers, completely new business models. And the big question: Do customers want to continue buying cars or will they be using mobility as a service in the future?

Complexity arises from the fact that all those changes affect companies at the same time. With our technology and process expertise, we help our customers meet those challenges – from strategy to implementation.

Who exactly are your customers?

They are companies of all sizes – from medium-sized suppliers with 100 employees to large, international automotive groups with annual sales of several 100 million euros.

To what extent is MHP a subsidiary of Porsche?

We were founded in 1996 – with a clear focus on the automotive industry. Porsche was initially a major anchor client and has invested in MHP in several steps. Today, we are an 82-percent subsidiary of Porsche.

Isn’t that problematic when working with other automotive companies?

Not in general. Customers are more likely to see the benefits of our experience from working with a lot of manufacturers than to be concerned about it. In addition, company-wide collaboration, through digital platforms for example, is steadily increasing. Integration across sectors is increasingly becoming a competitive factor as well. That creates new digital ecosystems where you can work together on the major challenges facing the industry.

The situation is very beneficial for our employees, too: They are able to gain extensive experience through advising a lot of different manufacturers and suppliers. One argument in our recruiting is: "Why work for one manufacturer when you can work for all of them?"

How does your work for large corporations and smaller suppliers differ?

Basically, the challenges are the same everywhere. Every company has to ask itself: What do the current developments in the industry mean for our company?

One example: Most vehicles will do without a transmission or exhaust system in the future. Along with manufacturers, suppliers are repositioning themselves as well. Those are complex transformation projects where we at MHP contribute our expertise. We also support them in finding answers to current questions – such as for the supply chain issue.

What do you mean by that?

In the automotive industry, global supply chains are a matter of course – fasteners come from the Czech Republic, electronics from China, bodies from Spain, and all that is assembled somewhere else. But the pandemic seems to be throwing the world out of joint: Container ships are becoming scarce, there are staff shortages in logistics and transport. In addition, there is a growing scarcity of raw materials that has long ceased to be limited to exotic resources. We are seeing a clear trend toward regionalization of supply chains – but that requires establishing contacts with new suppliers or for companies themselves to start manufacturing parts that they previously sourced from abroad. All of that needs to be planned with foresight.

How high is the degree of digital maturity of your customers?

That is a difficult question. Digital maturity varies – from "still at the very beginning, almost everything is still done on paper" to "modern IT landscape present". However, there is no end point at which a company can say: We have reached our goal. Digitization is a continuous process. It is important here to regularly check the course you have taken and to adjust it if necessary.

There are companies in the sheet metal processing industry that are already way ahead in digitizing and integrating their processes. However, the vast majority have only begun to take steps in that direction. What would you advise? Which aspects do you think are most important when small/medium-sized companies want to start digitizing a production process?

We often witness people wanting to start projects (too) quickly to demonstrate an agile approach to manufacture. It is important to discuss the strategic cornerstones of the project first. There are no general recommendations here. Especially when it comes to introducing software solutions or entire platforms, the first questions for me would be:

• Vendor strategy: Do you want to tie yourself to a strategic partner – and thus promote speed and stability but lose flexibility ("vendor lock-in"), or is an agnostic, that is, manufacturer and technology-independent approach perhaps more promising?
• Make or buy: Should solutions be developed individually based on your own requirements, or should they be purchased as ready-made solutions?
• As a service: What are the pros and cons of obtaining applications "as a service" from the cloud?

But that is just the beginning – it is important for the technological and organizational aspects to be well coordinated. I would like to illustrate that using project methodology as an example: A lot of customers want to set up their projects in an agile way in the future, but the agile mindset required for that does not develop overnight.

You deal a lot with digital platforms and ecosystems. What opportunities do you see here specifically for small and medium-sized companies?

Digital platforms connect companies by providing the technological and organizational foundation for data exchange. Consequently, solution providers and potential customers have the same objectives. Applications, for example, can be obtained directly from marketplace functionalities.

In addition to that low initial hurdle for the integration of external software solutions, platforms also offer companies the opportunity to become software providers themselves.

A lot of companies have built up know-how and maybe even innovative software solutions for specific issues, such as those found in production or logistics. Why not make this asset available to other companies? Unless, of course, the solution is cutting-edge. That way, new revenue streams can emerge, and IT can become a profit center.

This requires the ability to turn existing applications into products and to market them through platforms. We can help with that!