Supply Chain & Logistics 101: The Automotive Supply Chain Challenges

For original equipment manufacturers (OEMs), suppliers, and investors, the future of the automotive supply chain will bring new opportunities – but not without danger. 

The evolution of supply chains will depend on investments in these systems that have been severely affected by the Covid-19 pandemic, how they pass through the legal and regulatory landscapes, and how they mitigate risks.

What does automotive supply chain management entail?

Automotive Supply Chain is a type of supply chain management that focuses on the automotive industry. This is linked to complete cycle chain management, which starts with the supply of raw materials from suppliers and ends with the delivery of items to customers.

Production Parts Availability

The provision of replacement parts plays a critical role in the automotive industry's supply chain. Procurement services must also be reliable and provide a high level of customer satisfaction. Differences in vehicle parts and components necessitate different preparations at all times.

This is due to the automobile model and customization options available to each vehicle owner. Important parts must be readily available to car owners for an extended period of time. Some German automakers, for example, sell original automotive parts that are more than 30 years old.

Purchasing Production Parts

In general, the automotive industry's supply chain is comparable to those of other industries. The acquisition of spare components, engine assembly, display design, and display design are all sequential processes in product production.

The problem is to ensure that the spare parts utilized are always in compliance with the product's standards, lines of work, and design. The necessary components must always be on hand. If this is not the case, the previous work order may be altered.

Warehouse for storage and assembly

Last but not least, supply chain management and manufacturing are critical. Some automakers distinguish between the two. To be sure, all current warehouses must comply with national and international warehouse standards in order for the supply chain to function properly.

The Struggles Facing Automotive Supply Chain Systems

Poor Quality Assessments - Proper quality is responsible for making sure that automobiles satisfy production specifications and are in good working order when they reach consumers. Failures and recalls can result from a lack of auditing, resulting in a loss of reputation and profits.

Changing Consumer Preferences - Vehicle demand is determined by consumer trends and preferences. When consumers change their minds about what they want or how they want to receive their products, the automotive supply chain must adapt.

Lack of Cost Visibility - Machinery, manpower, R&D, suppliers, materials, and shipping are all major fixed and variable expenses for automotive manufacturers. It will be difficult to calculate precise price points and profit margins without a sufficient level of visibility into expenses.

External Factors' Influence – Environmental upheavals, trade agreements, and a worldwide health crisis are just a few examples. This can have an impact on a factory's capacity to run, procure raw materials, and deliver inventory on time.