The automotive supply chain has many different aspects and is a very complex system. Companies who work within this industry have to be sure that their supply chain management system is functioning properly and that profits are growing as your customer base does. In reality, however, when the automotive industry continues to grow, challenges also continue to arise. Many of these challenges can be difficult and/or impossible to handle on your own if you are a small- to medium-size business. Strategic supply chain management must always be the top priority so that you don’t fall behind when these challenges appear. To prepare for some possible challenges you may face, here are the top seven supply chain challenges that are impacting automotive companies, and how a third-party (3PL) logistics company can help you overcome these obstacles.
Believe it or not, there is a sweet spot to inventory management. You should keep inventories well-stocked, but not overstocked. The automobile industry has been growing over the last few years, but that does not mean you need to oversupply yourself. You can maintain a balance by working with a third-party logistics partner. They use software that tracks and measured data about your inventory, and this data can inform you on which items are requested the most. When you have full visibility of the items you need to have well-stocked, you can make better decisions about what quantity of each item should be on hand each day.
Sheer Amount of Recalls
If for some reason, you have to conduct a large amount of product recalls, this can be a high cost your company. Failures in your supply chain services like this can be a long and complex issue that can tarnish your name, disrupt your system, and affect your customer reputation. Especially if you have a complex global chain, there is a higher risk of negative consequences. Your teams will need to trace and receive all of the affected products, and deal with quality control. When it comes to the automotive industry, the health and safety of your customers should be your number one priority. If you ever have to deal with an airbag inflator recall, it can severely damage your reputation and cause long-lasting effects on your business.
Control Over Supply Chain on a Global Scale
If you are an automotive manufacturer, distributor, or supplier, you’re providing and sourcing a wide range of products internationally. To contain costs, you must be able to move towards “just-in-time” operations. To achieve this goal, you must have a full visibility of each element in your supply chain, and have all the data necessary to create a plan for future growth. Third-party logistics companies can provide software that allows you to automate your process, and have full visibility at each stage.
Logistics Chain: Flexible and Reliable
When adapting to changes in demand, or responding to competitors, you must be flexible and reliable. In high season and low season, you need to be able to adjust and manage each aspect of your operations so that you are continuously profiting and benefiting from a good return on investment. It is a good idea to work with a third-party logistics partner, who is as flexible as you are, regardless of the conditions. Having a trustworthy and reliable partnership can guarantee a successful logistics chain.
Tracking the Geographic Expansion
It takes careful planning to grow your business, track your geographic expansion of customers, and add new facilities in different locations. To succeed, you’ll need a logistics partner who completely understands your processes, and can execute your plan in any location. They need to be aware of the local standards and conditions of the region, and should have a trustworthy and open communication with you at each stage of the supply chain.
Cost and Location
As the intensity of manufacturing increases due to innovation, consumer demand, and technology, vehicle manufacturers will want to see their suppliers working locally. Automotive companies will want their suppliers to be available in every jurisdiction where they have a manufacturing president. Each business location must be evaluated by the following factors: financing, relocation or recruitment of the workforce, rules and regulations of a new jurisdiction, maintaining client production output quotas and quality, optimizing production lines during the transition, closing down one facility and setting up the other, etc., considering cost and location requires effective financial planning, otherwise companies can miss out on profits.
Environment and Ethics
Supply chain management in the automobile industry involves a multitude of quality standards and regulations that make you responsible for the safety, ethical, and environmental impacts of you company. Your third-party logistics partner needs to understand these quality demands of your industry. They should have a recognized track record in providing solutions that meet those demands, and the internal controls necessary to manage the international challenges of your business.
Partner with LSS for Automotive Supply Chain Support
If you are looking for a reliable and successful third-party logistics partner to help you avoid or overcome these challenges, Lean Supply Solutions can help you. We make ourselves aware of supply chain management trends and issues in the automotive industry as they arise to help our clients get the most out of their operations. We understand the demands and obstacles that rise as your company grows, and we are committed to making sure your operations do not fall behind. Our third-party logistics, packaging, and supply chain management can streamline your processes for better success. By striving to ensure that the right products are provided to the right customers at the right time, Lean Supply Solutions is able to offer consistent, accurate, and quality results. To learn more about outsourcing to our 3PL distribution team, or to ask any questions, contact us at 905-482-2590.
- Published in Blog
Did you know that transportation costs can make up over half of a company’s total expenses and logistics? Factors like labour, global business growth, new market penetration, complex supply chains, and increasing the material prices are becoming more and more important when calculating transportation costs. Thankfully, transport integration has been saving businesses money by making their system work more effectively and at a better overall cost.
Integrated Transportation Solution: How Does It Work?
An integrated transportation solution works by adding an additional layer to existing transportation to optimize it and better serve a shipper’s needs. This dedicated solution provides shippers with greater coverage and flexibility to scale their assets as necessary. It provides reliability, customer service, and control that a shipper would normally expect from a private fleet.
Strategic Transportation Network Planning
The optimization process for integrated logistics begins with strategic planning. This entails planning an optimal transportation structure for a new market or product, and defining a cost structure. These costs can be reduced by the following:
- Optimizing the structure at large, and levering network synergies
- Optimizing processes like improving “empties” runs
- Optimizing packages such as increasing capacity levels, or using containers that are foldable
- Optimizing tariffs which can be achieved by re-tendering and benchmarking current tariffs
Digital Supply Network in Logistics
A digital supply network uses new technologies to change the way products are designed, sourced, made, moved, stored, and serviced in the supply chain. Transportation is a key component of the digital supply network, and it can help companies establish a competitive advantage and contribute to sustained and profitable growth. Implementing additional supply networks with an integrated transportation strategy is beneficial, and it has become central to a company’s growth. With this system, companies can gain a significant advantage over their competitors who still see transportation as a bunch of disconnected elements, rather than a vital, strategic, and unified system.
Multiple Transportation Management Systems
Transportation Management Systems (TMS) can help your business increase visibility, improve performance, and reduce spending. TMS software provides a variety of benefits that include better management, simple monitoring, stress-free integration, and aggregated data. This technology also provides superior customer service, intelligence, and flexibility by improving freight logistics and management, scheduling, operations, and reporting. There are different levels of integrated transportation systems, but with full integration, business can have a chance at gaining data that find real and exact results. TMS provides companies more visibility to adjust their capabilities and collaborate. If the TMS is not fully integrated, companies can easily overlook problems due to limited visibility.
Real-Time Freight Data and Analysis
Real-time freight data analysis allows you to run reports and make better decisions based on your trends and history. Access to such valuable data at your fingertips can empower you to see the total cost of your choices as a business owner, and prevent future expensive bad decisions.
Freight Management and Freight Costs
TMS is flexible enough to help you regain control over freight management, costs, and risks. It achieves this by accommodating custom company business rules, and ensuring all users follow the policies that guarantee efficient and cost-effective shipping.
Shipment Order Entry
The benefits of using an integrated transportation system are seemingly endless. One of the detailed processes involved is shipment order entries, such as the type and quantity of containers, the sender and recipients, and the pickup and delivery schedules. Having detailed processes like these at hand, will allow you to create strategic and tactical planning efforts.
Detailed dispatching refers to loads that were already modelled and adjusted to allocate single orders to another load. An integrated transport and logistics system can help you get the most efficiency out of this process.
Set Up an Integrated Transportation Solution with Lean Supply Solutions
Integrated supply chain software can add real value to your business and allow you the visibility to create a strategic, tactical, effective planning solution for your transportation department. If you’re a small- to medium-size business, it can be quite a challenge especially if you wanted to see growth. While you should be focusing on your marketing and customer service strategies, you may find yourself struggling to manage your supply chain as well. This is why outsourcing to a third-party logistics company is a great idea.
Lean Supply Solutions can help you if you are looking for a third-party logistics (3PL) company with the latest technology. We make ourselves aware of the rising trends in supply chain transportation and always strive to stay up to date with the latest automation technology. We understand that when correctly employed, automation can drive many benefits to help a company’s bottom line, whether it deals with robotics on the manufacturing floor, features that eliminate manual processes, or features that provide information seamlessly as needed. Logistics automation in a transportation management system can help drive efficiency, eliminate waste, and save you money in this department. We offer our clients consistent, accurate, and quality results through our services, which include product and shipment order fulfillment, warehousing and distribution, pick-and-pack fulfillment services, and more. To learn more about outsourcing to our 3PL distribution team, or to ask any questions, contact us at 905-482-2590.
- Published in Blog