Disruptions to the supply chain often hit without warning. Consider this scenario: Rob, a purchasing manager at an automotive Original Equipment Manufacturer(OEM) is in charge of managing the supply of imported parts for the OEM’s assembly operations. Due to a strike by West Coast port workers, shipping containers are not moving on to the next leg of their journey, on time. As the plant's inventory diminishes, Rob is facing the serious risk of a plant shutdown. Rob’s managers want answers.
- Exactly when will the plant run out of parts?
- Which model’s assembly line will be affected?
- What specific containers could be airlifted to keep the line running?
- What are the cost implications of this disruption?
Without a framework in place that can provide immediate answers to these questions, Rob will be hard-pressed to find solutions that will prevent a shutdown. For the hyper-connected automotive value chain, there is an opportunity, not only to manage disruptions better but also to get ahead of them.
Automotive supply chain challenges
Currently, many automotive organizations find issues in the supply chain difficult to identify and mitigate. Departmental silos create barriers to sharing information within organizations and make it challenging for departments to collectively identify and predict issues. Even after issues are identified, response time is often too slow to be effective. When corrective actions are taken, OEMs may not have the tools necessary to assess their impact. This lack of visibility can potentially render any action ineffective.
The automotive supply chain is already extraordinarily complex, and it’s only becoming more so. Today, software is embedded not only in the vehicle and its components but throughout the entire value chain. The industry’s growingdigitization—exemplified by smart robots, a connected ecosystem, and autonomousdriving—will play an important role in the supply chain, especially in logistics.
In the automotive industry, logistics encompasses the coordination of millions of parts daily, from thousands of suppliers globally via multiple modes of delivery. Adding to this complexity, vehicles, and aftermarket parts may leave manufacturing locations, warehouses and shipment yards, as completely built-up (CBU),semi knocked-down (SKD) or completely knocked down (CKD) units.
Throw in outside forces such as geopolitical storms, fluctuating currencies, volatile market conditions, and rising customer expectations it becomes clear that organizations must have a strong logistics framework in place to closely track material and product flows across value chains. For such a model to work efficiently, it should be self-steered rather than centrally steered, and should be able to map and track the lifecycle of any given part.
PACE: Building a digital supply chain
Just as the health of the human body depends on the consistent beating of the heart, a healthy supply chain relies on smoothly functioning logistics. A PACE-maker ensures logistics is functioning in a smooth and orderly manner (Figure 1).
Predictive planning and sensing, to balance demand and supply.
Agility to respond quickly to sudden changes, handle unexpected disruptions smoothly and cost-efficiently, and recover promptly.
Collaboration between internal (manufacturing, procurement, sales, after sales) and external (customer, suppliers, 3PL) stakeholders to fulfill demand efficiently.
Efficiency to reduce supply chain costs, maximize profit and competitiveness, manage volatility, complexity and disruption.