Varying Specs Pose Logistics Challenge for Suppliers

The increasing variance of specifications in OEM demand is making planning more challenging for suppliers.

A survey by Derby, U.K.-based emergency-logistics specialist Evolution Time Critical shows after a decade of efficiency improvements through stock optimization, warehousing of components is on the increase.

The survey shows OEMs’ growing production flexibility in response to customer demand has led to the requirement of larger stocks.

“A high diversification of special models in the automotive market and unpredictability of market demand is contributing to the trend for last-minute or fluctuating component requirements,” Evolution Time Critical says in a statement.

Emergency logistics expertise can help bridge potentially unstable links in the supply chain as a hedge against volatility in demand, and analysis of existing operations can help plan for supplier shortfalls or future stock excess, Managing Director Brad Brennan says,

“We are seeing Tier 1 suppliers having to respond to more last-minute orders, which is driving their need to adapt safety stocks or alter assembly lines,” he says.

“We have witnessed an improvement of inter-plant communications as suppliers seek methods of providing a contingency for unplanned orders, as stock is balanced across a company’s facilities and not just a single warehouse location.”

Brennan says communications between logistics providers and suppliers becomes increasingly critical as the supply chain becomes potentially convoluted.

“Accurate market forecasting is of particular benefit to Tier 1 suppliers, but for some OEMs actual demand this year is 10% lower than anticipated,” he says. “Even OEMs with traditionally inflexible scheduling are varying from forecasts on a more regular basis, which leads to problems with component and material scheduling.”