Fueling Global Growth with an Empowered Supply Chain

As the lifespan of products in the automobile industry becomes shorter, there is a need to reduce the complexity of its supply chains. Some companies allow customers to customize their vehicles, which adds to the complexity. Additionally, changing technology presents challenges for automobile brands.

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The Economic Times and CapGrid arranged a roundtable and interviewed industry leaders to discuss the future of the automotive supply chain. Here are some key issues that were raised:Complexity: The complex nature of automobile supply chains is a characteristic that the industry could do without. The manufacturing of trucks, cars, and two-wheelers relies heavily on a global supply chain, which can be easily disrupted. In addition to supply challenges, uncertainties in trade negotiations further add to business challenges. Constant changes in manufacturing processes and consumer demand contribute to the complexity that supply chain managers must continuously monitor and address. Untangling the web of the supply chain could greatly benefit the industry, especially with an expected export market of $30 billion by 2026.

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Visibility and traceability: Example, for each mid-range car, there are at least 15,000-20,000 parts. Any delay in one part can disrupt the manufacture and distribution process, potentially leading to slowed production or even shutdown. Shortages in spare parts inventory result in revenue loss. Working with an expanded list of suppliers has become increasingly challenging for an industry that relies on the concept of ‘just in time’ supply. Having clear visibility of expected delivery can help reduce uncertainty. The industry can learn best practices for traceability from the pharmaceutical and food processing industries.

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New age suppliers: OEMs (Original Equipment Manufacturers) will need to collaborate with new age suppliers and help them develop their expertise, transforming them into long-term partners. Many companies are already working with tier two and three vendors to enhance their capabilities. New age suppliers should be aware of the increasing need for sustainability and reusable packaging. The industry should also encourage smaller suppliers to be innovative. Involving them early in future projects and adopting a collaborative approach will allow for valuable design insights and ideas.

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Skills: The future automotive supply chain will require a fresh look at the necessary skills. Re-skilling the workforce is critical for the industry to achieve “aviation-like quality” and prepare for the growing EV revolution in the coming years.


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