Businesses across the automotive sector have endured a bumpy ride over the past ten years as the global economic crisis has had a crippling effect across the entire industry. Despite the hardships, things are finally starting to look up for the automotive industry. As highlighted by a recent report by the Scotia bank, the global demand for new cars is now soaring with double-digit growth across several key markets including China, Brazil and South America.
In a bid to capitalize on this growing demand for new cars, automotive businesses across the industry are shifting their operations up to a whole new gear. Over the next 3 years, manufacturers are expected to launch a record breaking 500 new models. In order to steer customers towards their products, it seems businesses across the automotive sector are taking a whole new approach to their product ranges.
Take for example Caterham Cars: while the British car company has built an international reputation for racing pedigree and iconic track-day sports cars, the Surrey based manufacturer has recently announced plans to team up with Renault. Rumors suggest the partnership could help Caterham enter the SUV market as well as develop a city car. Given that Caterhams’s past contributions to the motoring world have typically been high-performance racing machines which are produced in very limited numbers, this shift towards more mainstream markets is a surprising and somewhat brave move.
Many of the big car brands have also announced major product innovations. For instance, BMW has recently revealed an innovative new electric vehicle named the i3. Likewise, Volkswagen and Ford are expected to launch a whole host of new all-electric models. Given the vast amount of interest in the concept of electric motoring, perhaps this new vehicle will spark a revolution in how we travel.
While manufacturers often streamline production of new cars by utilizing similar parts across their entire product range, today’s cars are no longer standardized products. Growing lists of accessories allow customers to create a personalized vehicle which satisfies their exacting desires. This ubiquitous trend for customization calls for separate planning of a vast amount of components and thus adds complexity to supply chain planning.
Historically though, the automotive industry has struggled when it comes to accurately forecasting and planning for demand. When the market for new cars crashed in 2008, businesses at every level of the automotive supply chain had to strip back operations in order to survive. However, in 2010 orders unexpectedly picked up and a significant number of businesses were once again caught by surprise.
As a consequence of today’s ultra-lean supply chains, automotive suppliers and wholesalers may lack both the capacity and flexibility to fulfill manufacturer order requirements for the growing number of parts and components. Given that many of the new automotive components will be cost-intensive and may have limited product life cycle data, especially for electric vehicles, accurately planning inventories could prove more problematic than ever before.
However, through adopting intelligent supply chain technologies, automotive businesses can take a more proactive approach towards the challenges that lie ahead. Tools such as demand planning solutions and inventory management systems could enable businesses to identify and analyze the most critical supply chain data and thus optimize inventories accordingly. With accelerating demand and increasing product variety, taking control of inventories will offer considerable competitive advantage as businesses seek reliable and cost effective supply chain partners.
With the automotive industry showing no signs of slowing down, now is the time for companies to implement innovative supply chain solutions, or risk being left behind by their competitors at a time when market growth offers the potential for large-scale business progression.
