Fueling Supply Chain Efficiency

In a competitive and increasingly global marketplace, more and more companies are making an effort to better understand their supply-chain processes in order to enhance profit margins and bolster the bottom line.

Understanding the different ways to optimize a company’s supply chain no longer is a luxury; it has become a necessity. Automotive supply chains are increasingly complex and, in an industry where cost, quality and timeline pressures are intense, grappling with that complexity is an urgent priority.

To optimize their logistics and supply-chain management strategies, automotive manufacturers need to have the ability to track large amounts of data across the globe to provide a high-level overview of where supply chain time and money are spent. This includes targeting specific pain points that can be ameliorated or eliminated with precisely targeted and timely data.

With that in mind, industry decision-makers need to be familiar with the tips and best practices associated with maximizing their automotive supply-chain efficiency. That includes an understanding of how to create an effective supply-chain platform that provides detailed data and feedback for dealers and suppliers to help target specific pain points, and, in turn, save time and money.

An Evolving Global Ecosystem

One of the factors that makes the automotive supply chain different than that of any other industry is simply the stakes involved: shutting down an automobile manufacturing plant is enormously expensive and disruptive, perhaps more so than any other industry.

The automotive industry was one of the first to utilize such a high proportion of parts and manufactured components from around the world as a global network of low-cost suppliers emerged. With that came the inherent supply-chain and logistics challenges.

While sourcing internationally, a continuing push for lower costs is one of the factors that has helped globalize the automotive manufacturing supply chain.

Manufacturers opening facilities overseas in order to service domestic markets abroad also has contributed. For many U.S. brands, a permanent presence in China (that makes it possible for them to establish a foothold in the Chinese domestic market) is an absolute necessity.

Costs and Consequences

Intense cost pressures are an ever-present automotive industry pain point. Finding the next low-cost manufacturing option (North Africa being next on the list) is such a priority that optimizing supply-chain logistics to facilitate those strategic moves becomes correspondingly critical.

Inexpensive labor may offset the carrying cost of the transportation required to operate an overseas manufacturing model, but in order to make the financial calculus work out, the supply chain has to be as efficient as possible.

In this industry, time is money, and overcoming the logistics burden and cutting through the complexity of an international manufacturing model is critical.

Relationship Building

One of the most important and impactful steps auto manufacturers can take is to ensure they are valuing relationships. Far too many industry players have grown accustomed to treating suppliers like a commodity.

It is worth noting that our foreign competitors do it differently. That kind of relationship building and problem-solving is something U.S. OEMs strive to accomplish, but often fail.

Work to identify and retain responsible partners you can work with to establish true collaborative synergy, respect and understanding of issues. That partnership – and the ability to work through challenges together – is a huge step in the right direction with regard to streamlining and simplifying your supply chain.

When possible, apply that same collaborative approach to a trusted and experienced logistics and supply-chain partner. Make sure your partner is capable of fully and seamlessly integrating with your existing systems.

The best providers are able to adapt and integrate to the custom needs of each individual client (instead of making you accommodate their processes), and can help you make giant leaps forward with regard to optimizing your logistics and supply chain.

Eyes Front

Traditionally, automotive-supply-chain managers have tended to look in the rearview mirror by evaluating data that is a week or more old and trying to figure what they could have done differently.

Instead, decision-makers would be wise to ensure their organizations are looking forward. Technology is the key here: powerful new tools that unlock predictive, rather than retrospective, analysis, identify hidden opportunities, maximize efficiencies and generally operate in a more nimble and opportunistic manner.

A proactive and forward-facing approach not only can anticipate and avoid potential disruptions, but also enable manufacturers to take advantage in real time of opportunities to reduce costs. A new generation of flexible tools can help cut through the complexity and deliver the kind of simplicity and efficiency that makes a meaningful and potentially dramatic difference to the bottom line.

Brandon Stallard is CEO of Argus Logistics, a non-asset based, full service logistics management provider.