Automotive finance leaders are feeling the pressures of a new landscape of change. This is coming from two compelling waves. The first wave originates in market volatility and risks as the industry transforms to an Automotive 4.0 digital model. This means that operationally, finance leaders can’t manage the old ways of the early 2000s. They need to develop and hone new methods to meet a new digital organization.
The second wave is business model change across all industries. Automotive finance leaders are being asked to drive strategy in a whole new and different way – advising on investments, mergers and acquisitions, and business model transformation. New operating models involving core financial and fintech advancements have created the need to develop responses to new competitive forces.
The combination of the shifts in the market due to this volatility and risk, as well as the move to digital business models, has driven a need for finance leaders to think and behave differently. In short, new management methods are needed to respond to these competitive forces.
These new competitive forces are vast and different, compelling automotive finance leaders to look beyond the immediate functions of reporting, disclosure, accounting, and controlling. For example, real-time, 24/7 reporting requires a look toward “lights-out operation,” whereby general ledger and accounts are soft-reconciled and reported on a continual, daily operational basis. Finance is also being asked to look deeply into not only core manufacturing and supply chain functions to improve margin linearity though “build to margin” scheduling, but also examine new ancillary considerations in insurance and advanced payments fields. All while keeping a secured, controlled, and threat-mitigated operational environment company-wide.
Finance leaders therefore find themselves as active leaders – and even mentors – on a number of these topics, forcing their field of vision above the normal corporate finance landscape. As digital mentors as well, automotive finance leaders need to prepare for tomorrow while managing the activities of today in a nonstop, always-on environment. The ability of automotive finance leaders to mentor and coach other C-level leaders inside the company is proving to be a key success factor as companies modernize, digitize, and compete for the same market resources as their peers, not just in the automotive industry, but also in the high-tech, transportation, insurance, banking, and retail segments.
James McQuivey of Forrester Research sums it up this way: “You always knew digital was going to change things, but you didn’t realize how close to home it would hit. In every industry, digital competitors are taking advantage of new platforms, tools, and relationships to undercut competitors, get closer to customers, and disrupt the usual ways of doing business. The only way to compete is to evolve.”
As automotive finance leaders work to change the face of finance and play a more significant role in other aspects of the automotive business, the ability to move to digital will prove to separate winners and losers in the coming years.
This article originally appeared in D!gitalist Magazine (available with additional infographs at link) as part of the CFO Knowledge community.
Want to learn more about how leading automotive companies are making the shift to digital operations? Join us in Detroit September 18-20 for the Best Practices for Automotive (#BP4Auto) event at the MGM Grand Hotel. Early registration extends to August 11.