How auto companies can build a future-ready supply chain

The automotive industry is witnessing a significant transformation with regards to profitability and sustainable growth. And the aspect that has garnered everyone’s attention is supply chain and logistics. To put things in perspective, there are 20,000 parts on an automobile that are sourced from across the world.

Making sure that these parts are available at any point in time is one of the biggest and the most complex challenges faced by automotive companies. To combat this problem, several companies are embracing digital technologies to create new business models and strategies.

Now, let’s focus on how auto companies can build a supply chain that is future-ready and maintains optimum inventory and service levels.

According to reports, businesses that integrate modern technologies in their supply chain can enhance service levels while reducing up to 30 percent of costs. While creating a future-ready supply chain, auto companies need to be on top of the latest trends that are shaping the industry.

For instance, ever-changing international trade policies, the continuous evolution of environmental and safety regulations, and even cybersecurity issues are all contributing to the auto supply chain puzzle. A recent study, named The Smarter Supply Chain of the Future, revealed that supply chain executives face five major challenges: visibility, risk, cost containment, customer demands, and globalisation.

To tackle these challenges, auto companies not only need to create an efficient supply chain but also a future-ready one that comprises three main characteristics:

• Integration
• Intelligence
• Smart technology

Integration

Future-ready automotive supply chains need to be highly integrated for information sharing, collaborative decision making, and managing inventory in real time. Most of the smarter supply chains are even connected across extended dealer networks. Hence, it’s imperative for automobile businesses to leverage platforms that seamlessly integrate disparate systems like WMS, ERPs, TMS, and third-party logistics systems.

This ensures that the right information is visible to the right stakeholder at the right time. It also ensures that KPI benchmarks, be it 3PL performance or route efficiency, are based on holistic data and not just from siloed sources. A highly interconnected network of systems allows dealers, distributors, and auto companies to manage inventory better and not lose business due to service delays.

Intelligence

To be future-ready, automation and the speed of delivery execution will take centre stage for automotive companies. That is why there is a rising reliance on artificial intelligence-driven technologies and advanced analytics, which help companies evaluate complex and dynamic risks and gain a better insight into them.

Technologies such as machine learning will not only help in interpreting data but will be instrumental in developing intelligent vehicles and factories of the future. Analytics helps boost efficiency with intelligent forecasting, inventory management, and dynamic pricing of parts.

With regard to improving logistics operations, intelligent tools with dynamic routing capabilities can drastically optimise fleet utilisation. To proactively deal with disruptions in transportation and delivery operations, such tools help auto companies plan efficient delivery by considering some of the most exhaustive constraints like driver-route mapping, pickup windows, delivery windows, no-entry time windows, tonnage, empty miles cost, and running and waiting costs.

Smart devices

Use of Internet of Things (IoT) enabled devices in an automotive supply chain provides better visibility — the key building block needed to address rising costs and risks, changing customer expectations, poor delivery-fleet productivity, and inefficient route planning. Insights from data generated by IoT-powered devices can later help supply chain and logistics stakeholders become proactive when it comes to mitigating risks.

To build future-ready supply chains, automobile companies will have to think of new ways to achieve success in the digital age. Companies need to liberate true human potential by transforming their workforce that can take their collaboration with disruptive technologies to the next level. A future-ready automotive supply chain can tap into instrumentation, interconnectivity, and intelligence to lower costs, ensure on-time in-full deliveries, increased customer experience, and handling exceptions better.

(Edited by Evelyn Ratnakumar)