challenges automotive supply chain


The automotive supply chain consists of various systems and elements, all of which work together to create a management system that continues to grow as your customers and supply base grows. It’s an extremely complex process so ensuring that all the elements are functioning correctly is crucial in the continued running of the business.

Within a marketplace that is constantly changing under the stresses of the global economy, there are several challenges that the automotive supply chain faces. They can seem difficult and large-scale to the smaller sized businesses, however, having a strategic approach to your supply chain management can assist with approaching how these challenges will affect your business. Here are five challenges to keep in consideration when dealing with your supply chain.


Cost & Location

The constantly changing landscape of manufacturing means an increase in several things; innovation, technological advances and especially, consumer demand. Due to this, automotive manufacturers will be eager to see suppliers working locally, being able to be present in the locations where they have manufacturing bases. However, the cost of ensuring this is high and can be a task for smaller workforces. Evaluating the locations of business are crucial to optimising production lines however the possibility of relocating if needed can not only come at a high cost but also risk the ability to meet other client’s quotas and maintaining those quality relationships.


Inventory Management

There can often be a fine line between being correctly stocked and becoming under or overstocked and finding the balance between this can be somewhat difficult. It is a system that has to be closely defined and monitored to be able to maintain optimum functionality. Utilising processes and software that oversees your inventory can help you keep a firm stance on your inventory and so not acquire losses that can be avoided. Having a system in place that does so can allow you to make better-informed decisions regarding inventory.


Maintaining Control on a Global Scale

The automotive supply chain is on a huge international scale, with the larger companies having a clear presence in plenty of countries worldwide. Costs must be considered in every single aspect of the chain and moving towards a ‘just-in-time’ operation style can only be done if you have visibility of your full chain. It’s necessary to have full transparency and traceability and know exactly what occurs at every stage with data to support it. Once this is done, implementing software can help to automate the process to streamline it amongst the countries worked in.


Recall Issues

Amongst all industries, there can often be an issue with product recall and this can be for various reasons. To ensure that these are kept to a minimum as to not incur a cost to the company, processes must be in place. Quality Management systems and health and safety are pivotal in the automotive industry so quality control must be at the forefront of your processes. Having an error in this sense could affect several things such as your reputation with customers and especially tarnish your name within the industry which has long-lasting effects.


The Environment & Being Ethical

The 21st Century brings a whole host of issues that are new and important to customers worldwide. There is a myriad of regulations and quality standards that automotive companies must adhere to. They ensure that you fully responsible for the environmental and ethical impacts of your processes and these can be a challenge to maintain.


These challenges must be met head on to ensure your supply chain management is as polished as can be. For more information on how to tackle these issues, we offer a range of training and consultancy services covering process mapping and management, Inventory Management, Demand/Supply Management and Quality Systems as well as a library of AIAG publications and VDA publications.