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Posted 8 December 2022 by
Mark Gallagher
Managing Director of Performance Insights & Formula 1 Executive

Life in the fast lane: What Formula 1 teaches us about supply chain digitalization 

For our fifth annual “Let’s Get Phygital” event, we invited racing executive Mark Gallagher to speak about the critical role that digital transformation has played in driving the Formula 1 industry forward. Below, we present five key takeaways from his presentation that highlight how any company involved in manufacturing and complex supply chains can learn from the experiences of F1’s digital twin system. 

Takeaway 1: Integrate to innovate 

Contrary to what many people may believe, the most exciting technological development in Formula 1 today is not actually the cars, but instead how all the different technological solutions are integrated into a high-performance industry. That’s because, behind the scenes, Formula 1 teams are cutting-edge technology companies that design, manufacture and bring to market a complex product that just happens to be a Formula 1 car.  

It’s partly a jet fighter, partly a sports car but, more than anything, it’s a fully-connected device.  

Half of Formula 1’s history has featured digital transformation, and it’s a journey that has equipped the industry with the tools to deal with the big challenges that all businesses face today. Like most modern innovative companies, F1 teams are supported by complex supply chain networks, and they recognize that not all critical advancements will come from within but rather as part of a digitally supported ecosystem of high-tech suppliers. By integrating these external solutions into the overall product, teams free up their resources to focus on other areas that offer competitive advantage. 

Takeaway 2: People inform processes inform people 

Formula 1 teams typically have about 1,000 employees, but the people at the racetrack represent less than 10%—the other 90% is working behind the scenes in a factory or data center. Those other 900 people need to deliver every day in the same way that the drivers deliver for the team on a Sunday afternoon.  

This requires everyone to be fully aligned as part of a continuous improvement trajectory, delivering a competitive advantage over both the opposition and past performance. 

We have a saying in Formula 1: to finish first, first you have to finish

From factory operations to pit-stops, those critical advantages come down to two things: people and process. By fully integrating digital and analytics into the whole way of working, the people are able to continually refine the processes because the data and insights are available from previous events to help build future outcomes. That’s how 22 members of a pit crew can perform 36 individual tasks in under two seconds, and it’s how data scientists can consistently plot the winning strategy for drivers. 

Takeaway 3: The term “functional silos” should fill you with horror 

All ten F1 teams are extraordinarily impressive organizations with fabulous facilities, excellent technology and staffed by clever people. What differentiates the winners from those in last position is alignment, teamwork, innovation, problem-solving and advancing together toward an ambitious goal.  

The less-competitive teams are siloed; they’re not honest about their problems, they’re not sharing information and they’re therefore not solving the problems.  

For example, the Ford Motor Company spent over a billion dollars on Formula 1 without ever winning in five years of trying. Under Red Bull’s transformational leadership, those same people suddenly became winners by working together. Ultimately, the seamless combination of digital technology and teamwork is at the core of how leading F1 teams perform. 

Takeaway 4: Use data to drive outcomes 

By embracing digital, the entire Formula 1 industry has empowered data-driven decisions to radically drive powerful outcomes. 

For instance: every car on the track provides 1,000 channels of data in real time to the leadership team, supported by data analysts trackside. Each two-car team has 14 workstations operating at the back of the garage, and they’re utilizing artificial intelligence to run millions of potential scenarios to produce optimized strategy outcomes based in the realities of risk. All the key stakeholders are involved in delivering that strategy so that the driver has the best chance of achieving the best possible result. 

There’s no such thing as unpredictable outcomes, there are simply events that we have to plan for

Today’s World Champions are products of the connected, digital world. The teams use a digital twin called a “driver-in-the-loop simulator” to model outcomes and the best results come from the drivers who are most effective at following the algorithms to optimize performance and strategy during the race. F1 racing is no longer a journey of hope, it’s a journey of knowledge, insight and being able to make decisions accordingly. 

Takeaway 5: Use digital to adapt to changing expectations 

From increased driver and crew protections to limits on the industry’s emissions, Formula 1 has had to change with the times. As in any industry, regulations exist to manage risk effectively but pressure also comes from other directions too: as F1 has innovated new physical and digital systems, its client base has expanded away from catering solely to sports consumers. Sunday racing is now a platform from which teams can demonstrate their technical capabilities to the non-racing customers they work with Monday to Friday. 

Both regulators and customers have non-negotiable expectations that cannot be ignored. For instance, the entire business model has now shifted to significantly reduce the industry’s carbon footprint: digital technology has allowed a 34% reduction in air freight and a 38% reduction in people travelling around the world; instead, data is transmitted and handled centrally, all by harnessing existing technologies. By 2026, F1 engines will no longer run on fossil fuels but, instead, sustainable energy sources. 

Interested to learn more from Mark? Check out a video of the complete key note address here!

Mark Gallagher

Mark is the managing director of Performance Insights and a Formula 1 executive.