Top 3 Recent Automotive Logistics Trends, Part 2
In a series of blog articles, the Product/Solutions Marketing team explores new business challenges and innovation solutions to change the game and manage disruptions. The following are the insights gained from my discussion with Salim Shaikh, who leads Blue Yonder’s Automotive Industry Strategy, and James Peck, VP of Supply Chain Execution Presales, during a recent Blue Yonder Live and from webinars and automotive events that we prepared for.
In Part 1, we covered the complexities of logistics management in the automotive industries and the change in thinking about how to manage logistics. This Part 2 blog post will explore the next remedies and innovative solutions that will help accelerate digital transformations and attainment of benefits.
Disruptions and Remedies
Terence: Let’s continue discussing how automotive supply chain executives can better manage logistics needs/requirements. We mentioned disruptions and the added complexities. Are disruptions still very frequent and how are they impacting automotive supply chains?
Salim: In a recent conversation with Kelly Bysouth, the Chief Supply Chain Officer at IAC Group she mentioned wanting to “illuminate the network.” The magnitude and frequency of disruptions are increasing, whether it is because of Ukraine or the chip shortage. And as we discussed the automotive ecosystem is a complex network of logistics, third-party logistics providers, OEMs, Tier-1s, and Tier-2s. The supply chain was particularly impacted because any disruption in one node of the supply chain can send shockwaves throughout the network. Whether it is palladium , nickel or cobalt shortages or shipments getting delayed, it can have a repercussion throughout the network of the automotive ecosystem.
Having complete visibility and illuminating the network across the entire ecosystems is key so that the company can preemptively predict the disruptions and impacts as early as possible. It allows organizations to develop proactive risk mitigation plans to lower premium freight.
For example, if there is a port congestion or weather event affecting a truck on the road or a ship in the ocean, or a delay in the customs clearance or a COVID-19 shutdown in Shanghai, China, then supply chain operations can look at alternative, proactive risk mitigation strategies. They can get the items through an alternate supplier, they can expedite shipments, or they can attempt premium freight. Would this disruptive event cause a low stock or stock out situation?
It’s not just the short-term visibility that is needed, but also purchase order Advance Shipping Notice (ASN)-level visibility, longer-term forecast collaboration with suppliers, as well as collaborative forecast and capacity collaboration with customers, peers and suppliers. Having that end-to-end visibility is key.
Terence: James, you and the team have been helping customers manage disruptions. What are your recommendations?
James: We are seeing a lot more customers desiring to take on logistics functions themselves from a strategic perspective and embracing technology to help them manage more complexity. For example, if they have more lanes and port options, they might need solutions like dynamic planning to help think through different port options, versus the older approach of simple routing guides.
We are seeing companies moving from a very decentralized model of managing transportation and logistics to now investing in more centralized functions so that they can have better control. For example, as Salim mentioned, real-time tracking of products will give the big picture through a control tower managing everything in motion across that network, from a centralized perspective. They can track everything at rest, all the inventory that might be sitting at a warehouse, and their supplier and cross-dock locations.
They can see where they need to manage the exceptions and then drill down into actionable details. This is now truly the only way to really stop the typical process of coming into work daily and just firefight. Centralizing operations and having more robust capabilities in order to manage disruptions will continue to occur in post-COVID-19 times.
Terence: Salim and James, can you comment on the effects of omni-channel fulfillment on automotive supply chain operations and the solutions?
Salim: Pretty much all of the OEMs now have a direct-to-consumer model. And as the end consumer wants that flexibility to configure their vehicle with the relevant options and to get real-time predictive ETAs on when that vehicle will be available, it has driven the industry to excel in e-commerce during COVID.
If consumers want the vehicle of their choice, they are ready to wait for a month or two to get them. This has really accelerated the move towards omni-channel and e-commerce, not just for the EVs, but even for the aftermarket side.
I was speaking with the general manager at PACCAR, which happens to be one of our Blue Yonder customers. He told me that they envision the biggest competitor for the aftermarket space to be Amazon. With a direct-to-consumer model, both OEM and aftermarket markets would want real-time inventory visibility, whether it is for finished goods, vehicles at the dealers, or parts at their DCs across their network. This is so that when an order is placed from a dealer, from an end-consumer, from a distributor, or a retailer, they can respond with the accurate promise dates, based on actual lead times.
Visit this webpage about our First-to-Last-Mile Optimization solutions and for more information about the upcoming premier logistics event ProMat event participation in Chicago; please come speak to us at Booth #S3380 at the event. Learn more from the Unified Logistics and Omni-Channel Execution e-book.
More Insights to Come
In an upcoming Part 3 article, we will get more insights from James and Salim about innovative solutions for omni-channel commerce, fulfillment and logistics of the future.