Emerging trends of a modern, agile supply chain14 December 2016 | Brad Brennan
The automotive industry is evolving. The pressures experienced by suppliers are altering, to which manufacturing and supply chain strategies are having to adapt.
We have seen intricate supply chain balancing come to the fore as carmakers aim to streamline operations; the result being fewer parts moving more quickly between a greater number of locations for rapidly proliferating model ranges.
As increased pressures and time contraction continue to impact, the emergence of crisis contingency provided by emergency logistics is a vital factor to effectively safeguard operations.
In fact, it could be argued that the existence of emergency logistics specialists enables the industry to adapt and become bolder with its policies and manufacturing strategies, but that is another topic…
Supply chain balancing is pivotal to maintaining stability within a rapidly evolving automotive supply chain based around single-source driven strategies.
Of course, problems are inherent to any higher-risk production strategy, and the ability to react fleet-footedly is required to avoid potential supply chain fracture.
For example, a vehicle manufacturer recently faced line stoppage if vital material stocks were not urgently replenished following a supply failure – a Class 3 UN1993 hazardous material was required, which had previously been packaged for road transport to a European sister plant and was therefore not suitable for the time-sensitive air charter required to bridge the potential supply chain breakage.
Working with a dedicated emergency logistics specialist provides access to the required know-how to counter otherwise unforeseen issues, such as the ability to arrange late night specialist dangerous goods packaging, check legislative requirements and make all the necessary logistical arrangements to ensure deadlines are met and, most importantly, that production continues.
While such issues may not be commonplace, the ability of suppliers and manufacturers to respond swiftly and efficiently is key: a solitary production delay can cost millions of dollars in minutes.
Standing idly by before going faster
Supply chain balancing is central to many logistics strategies, but it is supplemented by emerging trends such as production idling, which is becoming more widespread in Europe and the US.
Introduced as a method to temporarily reduce production of vehicles as a response to revised sales forecasts or pre-launch rundown of outgoing models, production idling is the pre-planned, additional downtime designed to optimise costs and inventories.
However, the potential threat to ongoing supply chain solidity posed by production idling is the ability of manufacturers to return to full production efficiently – costly delays incurred here can easily exceed the savings made by originally operating a production idling strategy.
The potential, wider supply chain impact of production idling can be assessed by looking at the chosen method of phasing-in the policy – issues can be proactively protected against where idling is staggered over time, but a sudden reduction of output can pose problems for suppliers that are more difficult to overcome.
For instance, a drop in demand could account for a large percentage of some suppliers’ output, leaving them with conflicting scheduling and workforce difficulties that could jeopardise their ability to ramp up production once demand returns to pre-idling levels.
In instances where the ability of suppliers to increase demand post-idling has been compromised, emergency logistics expertise is able to provide an analysis of supply routes, as well as existing and alternative production locations, to help provide a crucial time advantage that eases a return to intensified production.
It is also able to provide a safety net when a production restart has left reserve stocks depleted as a result of factors such as conflicting lead times.
The emergence of trends such as production idling and supply chain balancing are indicative of an automotive industry aiming to streamline operations while also offering more new models, packed with greater levels of new technologies, than ever before.
Manufacturers are now aware of not only the costs of supply chain failure, but the benefits that can be brought by strategic planning of higher risk strategies and the steadfast protection of practices provided by working with a dedicated emergency logistics supplier.
As OEMs continue to develop agile production strategies that are robust yet fleet-footed, the supply chain will continue to evolve at speed.
Brad Brennan is managing director of emergency logistics provider, Evolution Time Critical.