Top 7 Challenges Impacting the Automotive Supply Chain
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.