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Friday, 31 July 2020 17:28

Four Automotive Supply-Chain Problems, and How to Fix Them

Written by Rob Bailey, Wards Auto

Index

The auto industry is at the forefront of needing immediate supply-chain transformation.

That’s especially the case when considering change that historically has taken 10 years must now occur in a matter of months because of COVID-19.

 

To further complicate things, there’s foggy visibility across supply chains. That haze stems from poor real-time integration between various data sources, both within and between companies.

 

Basically, for the auto industry, too many parts being sourced from too many countries means too much risk. What had been working is now broken.

 

Here are four problems---and ways to fix them.

 

Pivot quicker with local sourcing

 

Although sourcing from low-cost countries with complex global supply chains has been working for decades, the how---and where---of automakers’ source components is changing.

 

One of the key lessons from the COVID-19 crisis is that the automotive industry must prioritize developing local supply chains, enabling quicker pivots.

 

Even with more expensive parts and labor, it’s still more costly to automakers if they’re forced to shut assembly lines over supply issues.

 

From logistics systems offering local warehouses to the auto industry reducing the number of component variants, the efficiency and transparency of the supply chain has never been more important.

 

Overhaul legacy software systems

 

Getting product from Point A to B is only part of the problem. The automotive industry’s delicate supply chain is less about the physical movement of the goods. Instead, the fragility resides around the legacy software systems and stagnating processes to move product and business data.

 

A tremendous amount of raw-material production is sourced from China, so when COVID-19 hit, production of automotive parts virtually halted.

 

Knowledge around the availability of raw materials is uneasily shared through data systems. A lack of knowledge caused confusion and panic in automotive sectors.

 

Optimize data transparency

 

As the virus spread to the U.S., local assembly lines halted because of insufficient data on available parts.

 

In some cases, businesses hoarded products, while other assembly lines were immediately converted to handle other tasks, such as ventilator components.


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