Changes In The Automotive Supply Chain

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We are currently entering an era where connected vehicles are becoming the new norm. As a consequence, the market is experiencing an increased penetration of various vehicle safety systems, the growing consumer demand for electric vehicles (EVs), and a sharp rise in mobility sharing technologies. In addition, autonomous vehicles are starting to peer over the horizon, with experts predicting them to become commonplace sometime within the next decade or so. 

According to recent reports, the 2018 automotive electronics market was estimated at around $285 billion. Between 2019 and 2030, the compound annual growth rate (CAGR) is expected to be at around 7%. While more mature automotive markets and leading companies are slow to change or are even stagnating, an increasing number of consumers are opting for shared mobility solutions over car ownership. A wide range of dynamic automotive industry changes is creating a key opportunity for electrification, digitization, and connectivity. 

Imagine a scenario in a not so distant future where you’re driving your electric car along the highway, when all of a sudden, your car gives out an alert suggesting that you pull over and await assistance. You may be a bit alarmed or even annoyed, not really knowing what’s going on. But luckily, your autonomous vehicle didn’t just tell you that something was wrong. It also alerted a nearby garage, giving it a detailed description of what parts were affected. Within several minutes, the service professional pulls up, requiring no explanation about what happened. He just picks up the tools and parts he needs and gets you up and running in no time. And once the work is done, the repairman’s systems will automatically send data back to the car dealer, informing them about the issue and replacement parts. In doing so, the manufacturer will also know how often certain parts or systems fail, and if they need to produce more of those parts. Such a scenario could become a reality in the near future. 

So, what are the changes that are happening in the automotive supply chain and the auto industry as a whole? 

The Internet of Things

Given the many technological advances over the past decade, the above scenario is not far from becoming a reality. In fact, the Internet of Things (IoT) is fundamentally changing the way vehicle manufacturers, suppliers, dealers, and owners are engaging with each other. Just like in the example above, IoT systems and devices within the vehicle made it possible for both the driver and the service professional to get alerts in real-time, greatly increasing the speed and effectiveness of the repair. Without those connected sensors, it would have been likely that the driver would have continued along the road until that part would have completely failed. This could have resulted in not only financial but also physical damage. 

And it’s not just the vehicles that will be equipped with IoT systems and devices. Increasingly, the entire automotive value chain is capable of offering real-time production and logistics feedback. By capturing and analyzing IoT data, as well as implementing changes influenced by this information, stakeholders within the automotive production scheduling and logistics process can improve their risk management by more efficiently avoiding disruptions and improving overall supply chain visibility. This means that the entire global auto industry is set to become smarter and more data-driven, not only having a deeper and more comprehensive view of the manufacturing and logistics processes but also of the automobiles themselves.


Mobility as a Service

The emergence of ride-sharing apps, car-sharing services, and other similar innovations are pushing more and more people to think of cars as less of a commodity and more in terms of them being a service. These trends are putting vehicle manufacturers, automotive companies, and auto supply chain managers in a somewhat unusual position. As vehicles start being used by more than one driver, the ability to extract mission-critical data through predictive analytics from the vehicles (rather than the drivers) is becoming indispensable. Without these capabilities, customer feedback would become scattered and disconnected within a diffuse user base of drivers. As such, auto manufacturers will lack the usable and actionable information when it comes to analyzing performance, determining the next sourcing requirements, and designing new products. 

For this type of information-sharing connectivity to become truly value-additive, it’s essential that, with data integration, the right information will be made available to the right stakeholders and at the most opportune time. While it’s useful for a vehicle to alert the manufacturer that a particular component was replaced, it is not enough. That information will also need to make its way to the production managers and inventory management planner. After all, they will be able to keep track and meet the demand for that particular part over the long-term. 

On a similar note, performance feedback must also make its way to product designers so that they can make the necessary adjustments and improvements. Achieving such a level of information transparency can seem like a daunting task. However, any effective automotive supply chain planning solution should, at least, make this transition somewhat possible. 


3D Printing

Another major change that will affect global supply chains and leading companies in the industry is customization. When it comes to the issue of Industry 4.0, one of the main topics that keeps coming up is the additive manufacturing process, more commonly known as 3D printing. This technology has tremendous potential to transform the automotive environment. It doesn’t only apply to the highly-customized part production lines and products but also for the creation of a more diffuse and smarter value stream. 

If we are to look back at the scenario from the beginning of the article, let’s consider what would have happened if the affected part wouldn’t have been readily available for the repairman? In a supply chain execution that also contains additive manufacturing process capabilities, that specific part could have easily been “printed” at a nearby facility and quickly transported to the site. This process could avoid potentially time-consuming shortages and also cut costs and improve profit margins on transportation from plants or warehouses farther away. 

While this example only scratches the surface of what 3D printing can achieve, it’s safe to say that the automotive supply chain will continue to rebuild itself around smarter and leaner workflows. Coupled with the effects of ride-sharing apps, these technological advances will only put added pressure throughout the supply chain to increase data visibility and connectivity. 

With RedBird Logistics as your partner and logistics provider, you will have a key opportunity to take advantage of these changes and stay ahead of the competition. By using our global supply chain management solutions, you will be able to cut costs, improve your supply chain visibility, risk management, and lead time, and increase your profit margins and inventory management, all the while preparing you for the future of the automotive industry. 

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