Manufacturing passenger and commercial vehicles and other automotive goods is no mean feat—but neither is shipping them. Automotive supply chain managers face various obstacles, from cost pressures to volatility, that make their jobs a tightrope walk. And with the industry undergoing rapid evolution, more challenges are yet to come.
Here are some of the biggest obstacles facing automotive supply chain managers today—and strategies for conquering them.
Manufacturing costs are high, making it critical to protect margins
Between research and development spend, investments in new machinery and automation, utility costs, and the salaries of skilled workers, automotive manufacturing isn’t cheap. And since there’s little wiggle room with many of these expenditures, supply chain managers are under intense pressure to bring shipping costs down in order to protect already tight profit margins.
This is made more challenging by the fact that many automotive shipments are bulky and extremely heavy, preventing supply chain managers from taking advantage of some lower-cost options available to shippers in other industries. There are exceptions, of course, such as products created for aftermarket retailers, but even relatively small goods like tires can be expensive to move. Automotive shipments may also require specialized handling to prevent damage and reduce the risk of theft, especially for high-value shipments.
By utilizing a robust transportation management system (TMS) like Honeybee TMS™, staff are able to quickly and effectively identify the optimal shipping option for every order—whether that means moving vehicles and goods by air, land, or sea. The right TMS also provides more visibility into logistics operations, helping supply chain managers identify areas where costs could be trimmed.
Demand can fluctuate dramatically, so overstocked inventories can be costly
The automotive market can be highly unpredictable and volatile, often as a result of external factors that are beyond shippers’ control. Recalls can damage trust in a brand, causing demand to take a sudden nosedive. Trade and regulatory issues can make certain markets unprofitable or impenetrable. Changing attitudes, emerging transportation options in some cities, and an increasing focus on environmental issues may turn consumers away from vehicle ownership and toward alternatives like ridesharing and public transport.
All this uncertainty means it’s just not prudent for shippers to have overstocked inventories. To avoid costly overstock, it’s imperative for automotive supply chain managers to have a handle on their data. By monitoring order data in real-time and using this information to create accurate short-term forecasts, they can more effectively communicate with leaders on the manufacturing side to ensure production cycles are closely aligned with purchasing trends.
The just-in-time nature of inbound freight requires a high level of precision
Due to fluctuations in demand and the complexity of the manufacturing process, the automotive industry tends to rely heavily on just-in-time delivery when it comes to inbound freight. This makes it essential for all materials to arrive on time, as delays of even the smallest parts could result in massive disruptions across the production line.
To ensure that just-in-time doesn’t turn into just-too-late, logistics managers need end-to-end supply chain visibility, including in-transit tracking and real-time updates and alerts. Having a reliable network of carriers who can accommodate last-minute deliveries if something goes wrong can also go a long way toward minimizing the impact that delays have on production—and the bottom line.
Overcome the challenges facing your automotive supply chain
A complex industry requires the highest-quality tools. CTSI-Global works with numerous automotive shippers to ensure they have the visibility and control required to optimize their supply chains—and keep things moving smoothly.
Don’t let challenges slow your automotive supply chain down. Contact us today.