The Future of Automotive Industry
Automotive suppliers must meet OEM-driven expectations for ensuring on-time delivery. Part of this challenge is centered on proper planning. Suppliers have always faced difficulty in managing fluctuating planning requirements received by OEMs. Planning becomes even further complicated as it moves down the supply chain with lower tier suppliers often having to carry “just-in-case” inventory, or worse yet, not having the right part available to ship.
As we look into the future, planning is only going to get even more difficult with the expected increase or ramp-up of electric vehicles, autonomous vehicles and mobility projected through 2030. However, the question remains — will the momentum continue or will there be bumps in the road ahead? Many unforeseen issues can happen that can potentially change the projected course to support these demand shifts, such as economic downturns, geopolitical risks, insufficient infrastructure and even consumer preferences.
Five Steps to Address Future Planning
Organizations should consider adopting sufficient planning tools to manage through this uncertainty by leveraging these five steps:
- Increase demand visibility over long time horizons to properly supply long lead-time parts by customer, product, geography and location.
- Optimize procurement plans for critical components and end items, improving service levels and reducing logistics costs, especially for long lead-time parts such as electronics
- Increase global visibility at both the item and product line levels, resulting in better capacity planning.
- Make more accurate and timely supply chain decisions due to better visibility of the entire supply chain.
- Increase margins by reducing costs in distribution, production and procurement activities, and through reduced inventories and less obsolescence.
Planning for Success
To succeed in this complex and disruptive future environment, automotive manufacturers need solid planning tools in order to anticipate demand changes and the effects on procurement, production, distribution and network inventory as quickly and accurately as possible. Accurate forecasts combined with better supply chain visibility enable manufacturers to reduce inventory, improve efficiencies and accurately deliver on-time quality products in a cost-effective manner.
Leading experts suggest if you are not prepared today, your company may be extinct in the not so distant future as the current disruptive environment in the automotive industry moves forward. What is your plan?