How Volkswagen Mexico is digitalising its supply chain

Global conflicts, lack of transport capacity and inflation are but a few challenges the automotive supply chain is facing in Mexico, but according to Koltai, the effects of these could be mitigated by digitalisation. Koltai said these challenges, alongside few transport alternatives and high demand on industrial sources because of nearshoring, are leaving Mexican logistics firms and OEMs at risk.

Expanding on the above issues, Koltai said a lack of railcars is creating a bottleneck, and labour shortages are worsening the impact on finished vehicle logistics. 

He added: “The transformation to electrification, as well as sustainability as a priority and changing legislation of labour laws, when combined, means there is a supplier base which is weakened, and after a few problematic and difficult years they are still not getting back on their feet today.”

To prevent these problems causing changes to production sequences, missing parts in assembly processes, or even production lines halting, Koltai said OEMs need to have more data on the supply chain.

“To mitigate this, you need to have a clear picture of what is going on,” he said. “But past data alone isn’t enough. The desired situation is to have prediction of suppliers’ incidents, such as critical part numbers, backlogs and expedited material. You really need AI to look through all this past data and the impacts on production. You need AI to always be analysing it in the background.”

This is a huge undertaking, even for VW. Koltai said that while the carmaker is further improving its digitalisation programme to include AI, the company is “not able to handle the amount of data received” on its own. It has partnered with a Mexican AI specialist firm because of this to sort the data and flag it back to the OEM.

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Koltai said that with the help of the AI supplier, a digital risk matrix can be built, which shows suppliers who have had incidents in the past two-day period, and also which suppliers have had increased incidents. VW Mexico then puts this data into a risk assessment and to find patterns and understand why the incidents may be taking place and if they are expected to continue. 

VW Mexico plans to continue to expand its use of AI, according to Koltai. “Our next target is that, with the help of big data and with daily deviations, we will have immediate predictions on how likely it is that we will have a problem, and we can react as quickly as possible and get specialist help to understand what the deviation is and how it can be mitigated.”