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The automotive industry houses one of the world’s most intricate and complex supply chains, depending mainly on outside businesses to deliver the thousands of parts required to finish production processes and produce high-quality goods. Companies in this sector are continually implementing new technologies, giving them access to more inventories and enabling the worldwide shipment of goods with the aid of a global logistics network.
However, despite these digital advancements, widespread dislocations in recent years have presented manufacturers with a slew of automotive supply chain challenges that impact delivery to the dealership lot. This article explains five of those challenges and why they are impacting inventories nationwide.
5 Automotive Supply Chain Challenges
All dealers should be aware of these five circumstances affecting manufacturers’ abilities to ramp up vehicle production and delivery:
1. COVID-19 Effects Still Linger After Two Years
Over two years since the COVID-19 pandemic began, the automotive supply chain still struggles to collect the necessary parts and produce enough vehicles to fulfill demand.
This long-lasting effect on supply underscores global supply chain volatility, which will require new strategies for anticipating and resolving unforeseen difficulties.
Those strategies might include:
- Offering better access to communications and data supplies
- Monitoring and warning of immediate supply problems
- Basing supplier partnerships on trust and communication
- Providing rapid and flexible onboarding as needed
Supply chains should implement these or similar procedures to combat an unpredictable environment.
2. Varying Positions on Sustainability Hamper the U.S. Supply
The auto industry has increased its attention to environmental issues in recent years, and, as a result, more manufacturers are building vehicles in ecologically friendly ways.
However, modern-day globalization allows manufacturers to ship parts from almost anywhere worldwide. Not all regions share similar views on sustainability and its role as a need versus a preference, which causes problems for the domestic supply chain.
3. The “Just-In-Time” Model Creates Visibility Challenges
Vehicles include tens of thousands of parts, and their successful production depends on supply chains that work together in harmony.
Blind spots at any link in the chain can considerably impact the entire procurement process, often including inventory shortages and sizeable delays. These dislocations are partly due to the industry’s “just-in-time” production methods, where a single oversight or mistake can have far-reaching consequences.
To combat these potential ramifications, parties across the supply chain might consider a deeper focus on:
- Monitoring all components at any point in their supply chain
- Maintaining broad perspectives of all communications
- Leveraging predictive analytics to share results immediately
- Simplifying procedures throughout the whole supply chain
4. EVs Introduce New Auto Parts
Due to electrification, future automotive supply chains will face new hurdles as OEMs battle the supply uncertainty of EV-specific components, such as:
- Powertrain batteries
- Drive system parts
- High voltage inverters
The vertical integration necessary for reducing potential hazards and exerting control over the arrangements to supply these parts is currently up for debate. One suggested solution is joint ventures with EV component specialists, though whether that can fully remedy the challenge remains unanswered.
5. The Russia/Ukraine Conflict is Increasing Metal Prices
The United States has imposed sanctions on Russia’s economy in retaliation for President Vladimir Putin’s involvement in the conflict with Ukraine.
Russia exports nickel, palladium, and other heavy metals needed to manufacture specific vehicles. Palladium is a considerable component of catalytic converters, while nickel is vital to the lithium-ion batteries used in electric vehicles.
It becomes challenging to locate those metals for production in facilities outside Russia. Alternatives for both materials exist in South Africa and Zimbabwe, but their costs are rising quickly, making them prohibitively expensive to acquire for manufacturing.
The Best Parts Importing Software is Critical
While dealers have little to no control over these and related automotive supply chain challenges, awareness is critical to acquire the parts you need when you need them. However, ensuring immediate availability for your service technicians requires software that conveniently imports those parts and the necessary information to your service counter.
Contact us today and discover how Affinitiv’s MPI can help your dealership keep better track of your auto parts to expedite delivery to the service department, quicken service appointments, and boost customer satisfaction.
All | September 19, 2023