All industries have been experiencing fluctuating circumstances since lockdowns began, which has created a lot of obstacles to overcome. But while many industries seem to be experiencing a calming of the waves, the automotive industry continues to rattle. Why? And what can you do about it in the coming year?
Short Product Lifecycles
While this isn’t a supply chain challenge that is particular to the coming year, the annual release of new models of car compounds automotive supply chain difficulties at every step of the process. Any missteps in calculating consumer demand or materials becomes more complex when prefabricated parts are obsolete in less than a year, leaving your business with lots of waste. This is why implementing a just in time logistics and manufacturing approach to inventory management is absolutely necessary.
All industries are expected to experience labor shortages in the coming year, but this is especially true for the automotive industry. Between an aging workforce, a loss in industry knowledge as the older generation retires, and a need for more education to enter the industry, new talent can be hard to come by. So it will be vitally important to prepare manufacturing schedules for a reduced workforce and utilize temporary staffing resources during lean times.
As a holdover from disruptions from lockdowns worldwide, many materials are still hard to get for the automotive industry. Really, there’s one in particular that has manufacturers coming up short: microchips. But there are other materials that, if not properly timed, can be difficult to source or expire before being used due to other holdups. When manufacturing expectations change due to shortages, it’s even more important to employ just in time logistics to ensure materials don’t go to waste and push back timelines unexpectedly.
Outdated Supply Chain Technology
For much of the automotive industry, supply chain technology for visibility, transparency, and communication hasn’t seen as much advancement in comparison to, say, ecommerce supply chains. This can impact manufacturing by obfuscating materials timelines, but it can also strain customer relationships with the inability to predict when their orders will be available. During a time when many dealerships have extremely low inventory due to shortages, having a highly transparent supply chain can build consumer confidence in ordering their ideal vehicle in advance.
Fluctuating Consumer Demand
Supply for automotive parts has been low for long enough that for quite some time, the industry has been experiencing extremely high demand for what’s available. But many factors have led to what is becoming less stable demand, including fluctuating interest rates, large series of layoffs, and the recession economists continue to predict for the coming year. Access to sophisticated consumer demand prediction software will be key to success in balancing inventory with long manufacturing lead times in the coming year.
Relief doesn’t appear to be within sight for the automotive industry in 2023, but our predictions for supply chains overall is for an ease in complexity. Highly specialized industries like automotive will take longer to see this change reflected, but it’s likely for 2024. In the meantime, ensuring you’re using the best possible supply chain technologies will help your business ride the waves another year. To learn more about what you can do to alleviate supply chain stress for your business, talk to our just in time logistics specialists.