Worldwide population growth and the surge in the number of automobiles on the road go hand in hand. Today, the automobile industry is worth almost $700 billion annually, a 113 percent increase in the past 30 years. Along with China, the U.S. remains one of the largest automobile markets in the world, both in terms of production and sales. Regardless of where these vehicles are being produced, competition is stiff. To remain competitive, auto manufacturers are turning to a host of supply chain optimization strategies.
Inventory Optimization
It’s common for large corporations to use spreadsheets for sales forecasting and inventory control. It’s just very outdated and inefficient. Leveraging an automotive supply chain planning solution for this task to create a more visible and effective supply chain is the growing trend. One success story in this regard is UNIMAX, Quebec’s largest tire retail network.
UNIMAX has 600 points of sale and a major distribution center with a capacity of half a million tires as well as three smaller warehouses. In the past, the company only ordered tires when inventory levels dipped and didn’t consider other factors as much as they should. A supply chain planning solution allowed them to create more accurate forecasts, consider seasonal demand, and factor in supplier lead times. Also, the transparency of the system allows the company to view inventory across all warehouses as well as partner stores, enabling them to fill orders faster and create more satisfied customers.
Supply Chain Analytics
The quality of the automobiles produced each year is improving, but these machines are also becoming increasingly more complex. Innovations in technology and regulatory scrutiny are resulting in a jump in auto industry recalls, which can be difficult to manage with antiquated supply chain systems.
Supply chain analytics are helping auto manufacturers to prevent, prepare for, and manage these industry recalls so that they are less costly and disruptive. By taking a more proactive approach to product quality and safety, industry leaders can improve their products, achieve higher levels of customer satisfaction, and protect their brand.
Managing Supply Chain Disruptions
If there is one thing that auto manufacturers now understand, it’s that this is a global industry that can no longer be isolated or compartmentalized. Key components generally source from all over the globe, and a comprehensive system is now required to manage a host of potential supply chain interruptions.
In the past, separate departments would track supply risk factors such as financial performance, delivery, and quality metrics. External factors that affect the supply chain might include currency, regulatory, and other country risks. Potential internal disruptions include labor issues, demand levels, and capital equipment. Today, an integrated supply chain management system will compile critical data and give recommendations.
The automotive industry remains highly competitive, and these companies are tasked with balancing innovation and efficiency with each new model. 2015 was a record year for new car sales in the United States, with 17.5 million cars and light trucks sold to a value of approximately $570 billion. Auto industry leaders are faced with the job of continuing this momentum by providing the highest quality products at the most competitive prices. Gaining a handle on the supply chain by levering technology solutions is the first step in doing just that.