Adapting to Change in Automotive Supply

One of the most complex areas of supply chain is undoubtedly the automotive industry. Considering that more than half of the world’s automotive production is located in Asia, and that China accounts for a quarter of global production, we are faced with an extremely complex global supply chain network. Providing the necessary materials, parts and services in processes such as production and after-sales support necessitates supply chain collaborations. In the automotive sector, where technological, sociological and economic developments are reflected, trends, customer demands and expectations, sectoral developments and many factors related to them make renewal in this field a mandatory change in this field. The crises experienced in the supply chain during the pandemic process, the acceleration of technology and the increase in global awareness for sustainability awareness accelerate the wind of change in the supply chain in the automotive industry.

In the automotive industry, supply chain management is becoming increasingly important due to various developments such as increasing competition conditions, the consequences of globalization, changing customer expectations and the shortening of the service life of component products. It is stated that the number of suppliers among the raw material sources needed in the automobile manufacturing and manufacturing process generally varies between 6 and 10 levels. Likewise, it is stated that thousands of suppliers can play a role in the provision of final products. The network system created by such a comprehensive supply chain network and the management needs associated with this network also bring about a challenging network communication.

In the supply chain, the automobile industry, among other sectors, is undergoing a major transformation. As technology advances, artificial intelligence permeates every area, and customer expectations for high-tech products to accompany the comfort of the journey, there is a need to incorporate more connected experiences into vehicles. As such vehicle components change, so do the commercial operations associated with the supply chain.

Keeping abreast of social and economic changes that may affect the automotive sector and following analyses and reports on customer expectations are extremely important in order to anticipate new trends and tendencies. For example, today, two powertrains, internal combustion and electric, are included in vehicle production lines, while the epicenter of battery production is shifting to regional geographies. While the concept of sustainability, the most important global topic of the age, is reflected in the automotive sector and the trends in this sector, zero-emission technologies are being developed at a pace that requires fast and smooth returns. Following national or global market research on zero emission technologies and their application to automotive processes helps companies to create new opportunities in the markets and to protect and grow market share by making more informed and faster decisions. In this sense, proactive integrated automotive supply chain solutions enable businesses in this field to move forward faster, more systematically and with far fewer problems. In other words, change is reflected interactively on each of the global agenda, interdependent processes and issues.

Due to increasing customer demands and expectations, component supply has become more important than ever.  In parallel with the need for OEMs to produce more components, the mobility in their procurement process has also increased. The logistics and distribution crisis due to the Covid 19 pandemic, political developments, and general tensions in the economy have put a great strain on the supply process. Consequently, auto parts manufacturers experienced problems in timely delivery to world markets. This created a chain effect from the assembly line to the final delivery. Such slowdowns or disruptions cause a chain disruption in production with a domino effect. To ensure that all components proceed in a coordinated manner, a systemization is required that ensures the highest level of control, reliability and transparency. The implementation of the solutions required for the end-to-end automotive supply chain, from raw materials to logistics, from sales to the end consumer, is only possible with an innovative management vision that is open to change.

In the supply chain, the slightest paperwork error can result in millions of financial losses or loss of customer confidence. In a field such as automotive, which requires challenging operation processes and complex chain network solutions throughout the supply chain, things can suddenly turn into crises due to very simple human errors. The integrated provision of EDI solutions specific to company and business requirements systemizes and accelerates the operation of this process.

Logistics activities are also one of the most important issues in automotive procurement. Rational solutions, artificial intelligence-supported systems and strategies suitable for the workforce should be used to reduce logistics costs. On the other hand, in automotive, the procurement period varies according to important factors such as the production time of the company and the remoteness of the country, which makes risk management mandatory. Companies that pay attention to risk management in logistics gain the power to act much more strategically.