Automotive Supply Chain Issues
Welcome to Time Critical Update by Evolution Time Critical – the emergency delivery specialists. Providing you with the information you need to help you keep your supply chain running.
Survey shows supply chain disruption is top worry for manufacturers
Recent research from the Business Continuity Institute (BCI) and the business standards company, BSI, shows that 35% of manufacturers are extremely concerned about potential supply chain disruption. Supply chain complexity is cited as being the fastest growing cause for concern, with 77% of companies identifying this factor. These concerns are magnified in the automotive industry, where supply chain failure can cost millions of pounds and be the cause of long-lasting reputational damage.
“Vehicle manufacturers are displaying a growing awareness of the crucial role played by having a robust supply chain, which has led to increased visibility at all levels and an ability to react quickly to signs of unrest,” says Evolution Time Critical managing director, Brad Brennan. “The globalised supply chains operated by a number of major vehicle manufacturers have been enabled by evolving attitudes at senior management level, the provision of contingency through emergency logistics and analysis of lead-times, forecasts and operations. Greater supply chain dependability has also allowed for higher-risk strategies and a more flexible production footprint – while the cost of failure increases, the chances of doing so are reduced.”
Automotive production continues to intensify and diversify with the introduction of new models and an increasingly boutique approach to trim specification, which heightens the potential damage caused by supply chain disruption. The operation of more complex supply chains, often involving a broadening range of part numbers from an increased number of companies and at shorter intervals, means that the dependence on the safety net provided by emergency logistics has never been so elevated.
Potential transport delays in face of new UK passport control
A new regulation regarding passport control is causing uncertainty for automotive freight, as communication of new laws and the roll-out of monitoring software leads to potential delays out of the UK. Details of all travellers leaving the UK by air, sea and rail transport are to be recorded, and it is thought that the exit checks could particularly affect cross-channel ferry and Channel operations.
Trials held at the end of 2014 suggested that the new system could increase trade check-in time by a third, and be almost doubled for recreational passengers. The uncertainty over the potential consequences of new exit checks means that it is vital for the automotive supply chain to consider contingency action to safeguard against any potential delays.
“New systems may be in place and staff trained, but how will the infrastructure cope when under pressure, or if new software experiences glitches? There is always uncertainty when a new system is introduced, but this can be protected against,” says Evolution Time Critical operations director, Andrew Hampson. “We are advising companies who frequently export from the UK to prepare a contingency plan in case the worst happens and long delays are experienced – a failsafe plan of action will provide the security required to prevent any negative impact to the supply chain.”
Exit checks began on 7 April, and are to be phased in gradually to help minimise disruption, with all passports scanned but only 25% of travellers’ details verified in the first month. It is the verification process which will take longer, and the Government aims to verify 50% of travellers after a month of operation, and all travellers by mid-June. Whilst no substantial delays have been reported in the opening 24 hours, uncertainty remains over possible delays at the UK’s main port, Dover, and the country’s key trade route.
Lack of proactive supply chain contingency compounds fallout from US port delays
Prolonged delays experienced at Westerly ports in the US affecting the automotive supply chain recently highlighted of the benefits brought by proactive supply chain contingency and ultra-responsive logistics. Up to 70% of the country’s Asia-sourced imports arrive to the affected ports – which were hit by labour disputes – including vehicle components. Adverse weather caused further delays, but the lack of contingency meant that disruption had already impacted the supply chain: one major vehicle manufacturer was forced into running over 5000 cars behind schedule.
“If effective contingency plans were in place when the port delays first emerged then the widespread disruption to the supply chain could have been reduced,” says Evolution Time Critical director, Steve Risby. “Delays are worsened if, at the sign of disruption, effective contingency has to be planned and then put into action, rather than rolled-out swiftly and efficiently. The head start afforded by contingency planning can prove crucial in shortening the period of supply chain disruption. Starting on the back foot makes it more difficult to implement alternative routing in time.
“This series of delays brings into focus the importance of effective supply chain management, including contingency planning, as a way of helping to optimise production strategies,” continues Risby.
The knock-on effects will be elongated as suppliers work to fill gaps in parts supply and make up for periods of reduced manufacturer productivity. Risby warns: “Initial supply chain disturbance makes manufacturers and suppliers vulnerable to further disruption, and the only way to safeguard against this is through proactive, robust contingency planning and fast implementation.”
Automotive industry faces supply chain skills gap
In April last year Evolution Time Critical warned that the demand from vehicle manufacturers for supply chain professionals exceeded available supply, and this has been corroborated by recent research carried out at the Supply Chain Management Centre, Maryland, US. Evolution stated that too few professionals were entering the workplace, that many were nearing retirement age and that a changing industry required evolving competencies that placed added pressure on training and recruitment. A senior research fellow has since found that between 25-33% of supply chain professionals are “at or beyond retirement age”.
“OEMs that we have been in contact with have expressed difficulty in recruiting suitable supply chain professionals, which is a situation that is set to intensify as the skills gap left by a shortage of fresh expertise entering the industry grows,” says Evolution Time Critical managing director, Brad Brennan. “As the surge in retirements continues as expected in the coming years, as a short-term solution logistics providers are well placed to offer assistance to relieve the mounting pressure placed on the automotive industry’s remaining supply chain professionals.
“Evolution has grown with the automotive industry, adapted to meet its needs and enabled the implementation of bold strategies through the provision of emergency logistics expertise – our in-house team consists of top logistics talent from a range of disciplines, which we hand-pick and then nurture to become automotive emergency logistics experts that are invaluable to the industry. If the dearth of automotive supply chain professionals is to be overcome, then vehicle manufacturers must begin working to attract the next generation of logisticians before the talent pool runs dry,” concludes Brennan.
Supply chain boost as post-economic crisis automotive industry a simplified world
The supply chain that emerges post-economic crisis has evolved to meet the demand of a booming automotive industry. Company closures during the downturn mean that fewer companies are supplying a growing industry, during a time at which investment in developing production hubs and infrastructure is increasing, production is intensifying and the drive for optimising production efficiency focuses.
“The automotive industry is currently more fiercely competitive than ever before, and the expectation for Tier suppliers to display the ability to supply globally is evident: although the number of companies interacting is reduced, physical supply chains are more complex due to globalised production, model and trim variance, and the anticipation of clearer supply chain visibility,” explains Evolution Time Critical head of business development, Graham Little. “The agile production footprint exhibited by vehicle manufacturers dictates that suppliers must meet heightened demands for increased quality at the same price and without jeopardising supply chain fluidity. The demands are high, but the rewards great, and the support provided by emergency logistics expertise is crucial.”
