The automotive industry is a complex ecosystem that relies upon the efficiency of high-quality logistics
- Single platform production
- Forecasting Sales
- Communicating down the supply chain
- How to deal with changes
The automotive industry is a complex ecosystem that relies upon the efficiency of high-quality logistics. With globalisation growing at rates never seen before, and increasing customer demands, the challenge of managing this is now significantly harder than ever. Navigating the complexities of the global supply chains for the automotive industry requires careful planning, forecasting and consistent communication to ensure that operations are smooth, and deliveries meet their strict deadlines.
Therefore, we need to consider:
- Single Platform Production
- Forecasting Sales
- Communication down your supply chain
- How to deal with the changes
Single platform production
Single platform production refers to the manufacturing of vehicles using a single software or hardware platform, traditionally companies will test and then select a suitable technology stack or toolset that can be used to implement it. Some of the strengths and weaknesses include:
| Strengths | Weaknesses |
| Reduces production costs | Limited differentiation |
| Increased efficiency | Design constraints |
| Improved quality control | Risk recalls |
| Flexibility | Increase in R&D costs |
The process of implementing this process is defined by some key stages: –
- Project Planning: Identifying and scoping the necessary components that can be integrated.
- Platform Selection: Selecting a single platform that can support all the components required.
- Uniform Design: Creating an architecture (Control Centre) that can integrate all the components into the unified platform will make life significantly easier.
- Development and Testing: Each component of the vehicle and manufacturing process needs to be compatible and functional within the architecture design.
- Deployment and maintenance: Deploy the components on a single platform and maintain them to ensure its continued functionality and usability.
Forecasting Sales
Forecasting sales are paramount for an automotive manufacturer to make informed decisions on planning. By doing so, OEMs can then optimise their production processes and make informed decisions about resource allocations and investments, as a result, they can reduce their costs fixed into warehousing and production.
- Production Planning: Forecasting sales helps the manufacturer to plan their production schedule. They can adjust their production capacity, workforce, and raw material requirements based on the data.
- Inventory Management: Accurately forecasting sales helps the manufacturer to manage their inventory levels. By knowing the projected demand, they can adjust their inventory levels to ensure that they have enough stock to meet customer demand without overstocking and tying up capital.
- Financial Planning: Sales forecasting is crucial for financial planning, including budgeting, cash flow management, and investment decisions. Accurate forecasts help manufacturers to make informed decisions about resource allocation, investment in R&D, and capital expenditure.
Communicating down the supply chain
The flow of information is an essential aspect of collaborating, with multiple stakeholders, suppliers, OEMs and distributors. Effective communication can help to ensure that all parties are involved and working towards key objectives. Provided there is room for adaptation and flexibility, with the right communication systems all parties can respond to changes quickly and help reduce costs for production.
In the automotive industry, there are channels that are commonly used to facilitate communication throughout the supply chain. These include:
| Electronic Data Interchange EDI is used to exchange information between suppliers, OEMs and stakeholders. With computer-to-computer exchange, it can help reduce paperwork and improve the speed and accuracy of communication. | Supplier Portals The portals that are used provide a centralised platform for suppliers to access and share information with the manufacturer, this typically includes purchase orders, schedules and quality requirements. |
| Collaborative planning, forecasting, and replenishment (CPFR) Improving the sharing of information and working with key partners to plan and forecast demand. Which improves costs and efficiency of the supply chain by optimising the inventory levels. | Customer Relationship Management CRM systems are pivotal for automotive dealerships and logistics support providers, this is used for managing customer interactions and sales. By doing so, the business can improve communications and provide insights to its sales and marketing departments. |
How to deal with changes
Global catastrophes have significantly changed the behaviours of businesses. However, we can implement some key systems into the supply chain management to increase its resilience and sustainability.
Diversifying suppliers: The tsunami in Japan in 2011, caused $199 billion worth of damage to the local infrastructure. An OEM based in the country was impacted severely by the damage due to their heavy reliance on local suppliers in Japan. Due to this they learned the importance of diversifying its supply chain and began seeking out more suppliers outside of Japan to reduce the impact of future disruptions.
Innovating with advanced technology: Blockchain technology has enabled OEMs to increase transparency and traceability in their supply chains, they can track the origin of raw materials and ensure that they are responsibly sourced. With the rise of climate change activism and the need for innovation to ensure that environmental damage regresses, this is a significant change that can be implemented for responsible sourcing.
Investing in reliance: The covid pandemic required automotive companies to rapidly adjust to address disruptions caused by factory closures, borders being shut down, and shortages of materials. Some companies invested in building redundancies into processes and systems that can ensure the continuity of operations. An OEM in the UK built a backup supply chain for critical electric components that were used in vehicles to facilitate production even if their primary supplier faced disruption.
SOURCE: Evolution Time Critical
Keyword: Evolution Time Critical: Navigating the complexities of the global supply chains for the automotive industry