Cost Optimization Opportunities in the Automotive Supply Chain

Cars, motorcycles, and other motor vehicles certainly aren’t cheap, especially on the luxury end of the market. But while these items may come with a high price tag, manufacturers face increasing cost pressures that whittle away their margins. The prevalence of rebates and low financing options in the industry can cut profit per unit substantially, making it critical to find cost-saving opportunities throughout the automotive supply chain. And some of the greatest of these lie in outbound logistics.

This might not be evident at first glance. Motor vehicles tend to be bulky, heavy, and somewhat specialized in their shipping needs, making it harder for automotive supply chain managers to find viable and reliable lower-cost transportation options. And with free delivery often offered, it can seem inevitable that logistics remain a loss center.

While it’s challenging to cut automotive transportation costs, it’s not impossible. What’s more, by embracing a few key opportunities for cost optimization, supply chain managers can ensure their department not only protects the bottom line but also adds value to the business in other ways.

Opportunity #1: Mitigate the risk of theft

With automotive parts being high value, cargo theft is a serious problem in the automotive industry. Depending on the value of the units stolen, the loss of a single container could cost shippers upwards of hundreds of thousands of dollars in lost revenue—not to mention the costs associated with sending replacement vehicles to the buyer. This doesn’t just hurt the bottom line: the shipping delays resulting from the theft (particularly in the case of custom orders, which may take longer to manufacture) could do irreparable damage to the shipper’s relationship with their client.

There are three main steps that automotive supply chain managers can take to mitigate the risk of theft. First, they can work with carriers that invest in cargo security and have a good track record of secure shipments. Second, they can keep security top of mind during shipment routing—the fastest route might not be the safest, and the risks of taking unsafe routes frequently outweigh the benefits. Third, they can enhance visibility into the movements of their goods. Real-time in-transit tracking and communication make it much easier to identify when something is awry with a shipment, such as when a truck deviates from the planned route—allowing shippers to rapidly alert the proper authorities and make contingency plans.

Opportunity #2: Automate inefficiencies away

Lost productivity is an insidious drain on profits. It’s like termites: difficult to spot until it’s too late. In the automotive supply chain, it often shows up in the form of time-consuming manual processes and inefficient administrative tasks that do damage on multiple fronts—from increasing the risk of costly mistakes to creating frustrations that contribute to staff turnover.

By harnessing logistics software such as a leading-edge transportation management system (TMS) that automates these time-sucks away, automotive supply chain managers can streamline their processes and relieve the burden on staff. As a byproduct of this greater efficiency, employees have more time to focus on providing superior customer service that drives future sales.

Opportunity #3: Audit, audit, audit

With automotive shipping already coming with high costs, failing to audit every freight bill is sheer madness. Duplicated invoices, unnecessary accessorial charges, and other invoicing mistakes are more common than many shippers realize, and by allowing these bills to be processed without correction, automotive shippers may be flushing thousands of dollars down the drain.

Freight audit is one of those time-consuming administrative processes that can contribute to lost productivity, so handling it in-house is rarely the answer. Relying on an experienced outsourced provider allows supply chain managers to put money back in the bottom line without the hassle. In doing so, they also unlock greater insights into their spend that can be used to further cut costs.

Optimize your automotive supply chain

At CTSI-Global, we help automotive shippers optimize costs, efficiency, routing, and everything in between—so they can focus on keeping their supply chains moving.

Don’t let transportation costs drive your profits down. Contact us today.

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