The Automotive Sector Continues to Suffer from Supply Chain Issues

Supply chain issues are once again in the spotlight after media reports have emerged that owners are angry at having to wait months for supplies of critical car parts.

The automotive sector, which has always been considered to have an advanced approach to supply chain management, is still suffering from the lack of supplies. In many cases these parts are critical, causing a real headache for luxury brand manufacturers and dealers, especially in their after sales operations.

There have been reports of expensive cars parked in garages and forecourts, unable to be driven due to the lack of available parts, leaving owners extremely frustrated and disappointed.

What is Causing the Hold Up?

The reasons for these supply chain issues can be many, but two causes under the spotlight are concerned with the reliability of IT systems and existing buffer stock strategies.

The IT systems are primarily concerned with the procurement of parts and warehouse management. Whilst companies tend to increase buffer stocks at their distribution centres as they upgrade their systems, a combination of teething problems and inadequate inventory levels can lead to the problems described.

In many of these cases, very little is known regarding issues with existing suppliers and questions need to be asked in relation to the buffer stock strategies deployed and the current visibility and understanding of critical parts.

With the sales of cars showing a recent sharp increase in the U.S., these challenges faced by the automotive sector illustrate how important supply chain management is, both for driving business performance as well as preserving and enhancing a business’ reputation.

Even the most sophisticated of companies operating in sectors with an advanced approach to supply chain management can get it wrong.

 

About Tom Teixeira

Tom is the London-based Practice Leader, Integrated Risk Management, where he focuses on aerospace, oil and gas, mi…
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