January 14, 2021
What a year it’s been for the automotive industry! Changing industry drivers and business models, the relentless march of technology, political turmoil and to top it all, a global pandemic. These elements have certainly redefined the concept of "interesting times."
The impact has been keenly felt up and down the entire supply chain, highlighting major vulnerabilities that come from a system that is globally dispersed, logistically challenged, geopolitically sensitive, and overly lean.
However, despite all the ups and downs, there have been some valuable lessons learned that will ultimately help make the industry stronger, more resilient, and better able to weather the inevitable storms that will surely come again at some point in the future.
The following are some of the key takeaways for building greater supply network resilience:
- Increase intra- and inter-organizational visibility and collaboration across the entire, end-to-end, value chain in order to reduce risk and build trust, which are foundational for supply chain resilience.
- Consider building in some "give" in the supply chain - i.e., not operating in such an excessively JIT and tightly-coupled mode. To be sure, there would be a tradeoff with higher costs, but these tradeoffs would be offset by a greater ability to withstand shocks without causing massive disruption. Perhaps these costs could be considered a "risk premium," in a sense.
- Identify and develop backup suppliers/trading partners where possible, so as not to be overly dependent on any particular one.
- Use tech tools such as Infor Coleman AI and Infor Birst advanced analytics to automate aspects of the supply chain, and identify patterns and trends to mitigate risk, increase speed and reduce errors.
- Incorporate scaled and agile practices for greater sense-and-respond capability.
- Reimagine and transform the supply chain from a cost reduction focus to a collaborative engine of growth.
- Balance the move towards greater transparency and collaboration with adequate security controls.
- Recruit and retain the right talent to make it happen.
Perhaps, however, the most important lesson is this: the automotive industry needs to permanently change its culture to one of increased collaboration and transparency, and not return to its old, siloed and 'throw it over the wall' ways of doing things.
This culture change must start at the top with the leaders driving the change and showing the way. Furthermore, the realization that we are all in this together - from the dealers all the way through to the smallest tiered supplier - will be fundamental to enabling this change.