A framework for automotive supply chain transformation in the digital era
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.
Figure 1: PACE for the supply chain
The PACE Forward
Let’s get back to Rob’s predicament.
Figure 2 depicts a basic PACE model that Rob’s organization can use to identify and manage disruptions to the supply chain. With sufficient inputs from both demand and supply sides, this model enables an organization to monitor the supply chain and generate any number of what-if scenarios.
Demand-side inputs:
Supply-side inputs:
Figure 2: The model for the PACE forward
With this model in place, Rob is now in a position to monitor not only the supply status but also to simulate future disruptions and generate potential solutions.
Figure 3 shows Rob’s simulation dashboard, which captures the current situation. All the shipping vessels and air carriers are arriving as planned. No part shortages are expected and all plants are projected to run smoothly.
Figure 3: Rob’s current dashboard - No parts shortage
Figure 4: Rob simulates - Shipping vessel delay
Figure 5: Model identifies impacted plants and models
Figure 6: Model identifies containers that need expediting
The systems in place enabled Rob to meet the PACE objectives.
Conclusion
With growth comes complexity. To effectively manage his supply chain, Rob has to focus on inbound operations while also maintaining visibility of the outbound operations in his company’s supply chain. As markets continue to grow and OEMs keep expanding their portfolios, production capacities, and geographic reach, executives like Rob will require:
Supply Chain Governance
Supply Chain Alignment
Supply Chain Optimization
To respond to the increasing complexity in the automotive supply chain, OEMs must move away from a forecast-driven approach to logistics and toward an approach that is methodical, demand-driven, and responsive end to end. Adopting the PACE framework is an excellent way to start.
Manik Singhal
Principal Consultant, Manufacturing Consulting, Consulting Practice, Wipro Limited.
Manik has over 15 years of experience in the automotive industry working in digital marketing, business process re-engineering, retail and institutional sales, supply chain management, including logistic optimization, global parts planning, and new model costing and planning.
As a member of Wipro’s Automotive Centre of Excellence, he is engaged in projects with global automotive clients. Manik holds an MBA from HULT International Business School.
Anand Batagurki
Principal Consultant Manufacturing Consulting Consulting Practice Wipro Limited
Anand has over 15 years of experience in the automotive industry working in business consulting, solutions definition and product development. He has led multiple transformational programs in various areas of supply chain management.
As a member of Wipro’s Automotive entre of Excellence, he is engaged in projects with global automotive clients. Anand holds an MBA from the School of Management, Indian Institute of Technology, Mumbai, India.
Get in touch: global.consulting@wipro.com
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