Why Auto Industry Growth Increases Logistics Technology Requirements

BlueGrace_AutoParts-

In 2015 the US automotive industry witnessed a record 5.7% increase in sales over 2014 to 17,402,659 light-vehicles according to the Automotive News Data Center. The good news continued with Bank of America Merrill Lynch’s annual industry outlook, in which it expects annual sales to top 20 million vehicles by 2018.

According to Merrill Lynch, the continued growth is attributed to solid consumer confidence, a steady job growth since the 2008 recession and an increase in total miles driven by Americans. 2016 started off well for the industry, however May-June “month-to-month” comparison dipped slightly. In the month of June, cars and truck sales were good for Ford which reported a 6.4% increase in sales, Fiat Chrysler was up 7%, Honda was up 3.2% and Nissan reported its best June ever, by being up 13.1%.

Strong Demand For Cars And Light Trucks

The continued strong demand for cars and light trucks in the US is particularly helping the growth in cross-border trade between Canada and Mexico. In fact, so much so, it’s common for trucks to sit and wait for long hours to enter the US and vice versa. Congestion is a problem in which the three governments as well as transportation carriers, are working towards solving.  Meanwhile, the tracking of finished vehicles and parts needed for assembly plants, has to be monitored at all times to keep the industry rolling.

This ‘just-in-time’ business model that many automotive manufacturers ascribe to, begs the need for complete transparency within supply chains.

This ‘just-in-time’ business model that many automotive manufacturers ascribe to, begs the need for complete transparency within supply chains. Whether its congestion on the border, a work stoppage at an assembly plant or a natural event, such as a snowstorm, disrupting a particular location, automotive manufacturers need to respond asap and adjust inventory as needed to keep all assembly plants humming.

Logistics Technology Is Playing A Larger Role

As a result, technology is playing a larger role and is turning the industry upside down with innovations like on demand 3D-printing of parts, and the tracking of shipped parts from manufacturing directly to the assembly floor. Many automotive manufacturers are already utilizing 3D-printing technology for specific components and even more are tracking their part deliveries with amazing accuracy that leads to additional productivity and profits.

Parts manufacturers need to better track and maintain their supply chain to keep up with the new demands placed on them by the automotive manufacturers

Auto parts logistics is shifting, bringing parts closer to the manufacturer. This is creating an impact on transportation demands, not to mention potential change in warehousing locations and inventory management. The parts manufacturers need to better track and maintain their supply chain to keep up with the new demands placed on them by the automotive manufacturers, and may need to utilize a Third Party Logistics (3PL) provider, to keep up with these demands. A 3PL can take current and past shipping data and determine the most effective methods for a parts manufacturer to work with the new freight window scheduling of the the automotive manufacturer while maintaining and even increasing cost savings.

Automotive Manufacturers Team Up With Technology

As the automotive manufacturers increase the technology used to produce their vehicles, the current parts manufacturers’ supply chain can become out dated very quickly. These logistics changes have resulted in redefining the automotive industry into a technologically advanced supply chain monster. The automotive industry continues to reinvent itself and its supply chain will likely change as well. Auto parts manufacturers will need to be more collaborative with its partners, such as a 3PL, to transform each of the major supply chain components including sourcing, manufacturing locations, warehousing as well as transportation.

 

 

Print Friendly