The automotive industry is a unique industry that involves multiple moving parts. As a result, the automotive supply chain systems are complex and have to be constantly tweaked as per the changing economic scenarios of demand and supply. Any car manufacturing company which loses focus on its supply chain solutions runs the risk of falling back on production and thereby impacting both short and long-term sales potentials.
When the global economy is on a positive upswing the focus of car manufacturing enterprises is rightly in their supply chain systems. After all automotive supply chain solutions alone can address the need of growing inventories, assembling parts from various OEMs and managing any issues that may come up in manufacturing and distribution.
Key Automotive Supply Chain Challenges
Although the automotive supply chain is an intrinsic part of the automobile industry as a whole, there are multiple challenges being faced in the automotive supply chain world. The challenges become even more significant when the car industry encounters rising sales and a period of consistent growth.
Keeping Inventories Well Stocked: Keep the inventories well stocked and not over or understocked is by far the most important supply chain challenge. While automobile manufacturers are adopting automated automotive supply chain solutions that can help them keep their inventory levels close to perfection, any period of sluggish sales may put off the inventory management. Keeping up with the increasing sales volume can also become a challenge for supply chain managers. This challenge can be even tougher if it is coming post the period of long sluggish sales or economic slowdown. For example, post the global 2008 economic slowdown it was the automotive supply chain solutions that paved way for a better sales scenario for car manufacturers globally.
Bypassing the Product Recalls: Whenever a car manufacturer orders for car recalls, it puts an added pressure on the supply chain mechanism for the automobile manufacturer. Of course, predicting such product recalls may be a tough task but almost all major car manufacturers have been forced to order product recalls across the globe. For example, over 13 car makers issued a recall for a massive number of 652,000 cars in the US alone in March 2017 because of an issue with their airbags. All the product recalls often need to be re-engineered putting pressure on the supply chain timelines of the car manufacturer.
Constant Demand Volatility: Different markets have different needs and different product likings. Car manufacturers are often caught at managing to balance their supply chains with production timelines for each such geographic area as per the impending demand. The constant demand volatility owing to various economic parameters in such area also adds up to compound pressure on supply chain management.
Predictive Analytics to the Rescue for Automotive Supply Chain Solutions: The automotive supply chain solutions are taking a cue from the use of predictive analytics helping to predict future trends and be market ready for any such eventuality. It is no surprise that many of the car manufacturers across the globe are today opting for automotive supply chain solutions with their prescriptive and predictive analytical ability.
Smart and Autonomous Vehicles Can Be a Game Changer for the Automotive Industry
As the world of car manufacturing braces itself for a massive change with the onset of smart and autonomous vehicles, automotive supply chain solutions are likely to be entirely different than what they are today. The reason behind such a massive change is the fact that with future cars, the supply chain would not only constitute of engines, spares, and car parts but essentially software and technology.
Cars, as we know today, are likely to change from a mode of transport to an entertaining mode of transport surrounded by technology. More than the physical performance of the vehicle, consumers may be looking at the value the car offers to them during the ride including comforts and smarter solutions. This would mean supply chain solutions will have to be radically different and offer development platform for such autonomous vehicles. Industry experts equate the changing scenario in the automobile market similar to what it was in the mobile communication industry just before the launch of the first Smartphone. Many strong feature phone manufacturers lost ground as new enterprises riding on technology and developmental supply chain platforms made a successful transition to become new industry leaders.
While automotive supply chains are facing a big challenge to keep pace with the increasing car sales, the future of automotive supply chain requires a radical change thanks to the new world order of smarter cars.