If you want to know about the most complex industry in the world, that is the automotive industry. The automotive supply chain industry that manufactures vehicles is becoming exceptionally global with every passing day, second only to the electronic industry. With the already complex system of the automotive industry sourcing that spreads out to the third-parties, manufacturers, and suppliers across the globe, the automotive sector is becoming additionally complex due to globalization. Globalization increasingly demands the automotive sector for more practical solution from brands and vehicle manufacturers. Besides, there are customer demands both new and changing ones, changes in the procedures of manufacturing products, and the disruptive trends that have strong influence on the network of finished automobiles and raw materials.

Adding these things up, the automotive supply chain managers have a huge pressure of minimizing costs, mitigating risks associated with manufacturing process, optimizing distribution and manufacturing, and ensuring right products are delivered to the right organizations and at the right time. So, there is indeed a huge number of challenges faced by automotive supply chain organizations. Keeping these challenges in mind, you still want to get through these issues swiftly. If this is what you want solely, you have landed on the right page. This context will help you cope with these challenges and turn them into sources of competitive advantage.


Inbound Logistics

If you want to reduce your outbound logistics efforts, you sometimes have to take the back seat- optimize the resources and dedicate your valuable time to look after the inbound logistics efforts. If you are capable of handling the inbound transaction details smoothly, assessing the network designs perfectly, and controlling the transportation network, you can undoubtedly improve service times, reduce the use of asset, and minimize cost. Leveraging the innovative supply chain design tools in to the automotive industry is what industry professionals prefer doing nowadays. Let’s see how automotive industrialists are leveraging these tools to build efficient supply chain.

  • Selection of facility- An automotive manufacturer of the automotive industry sourcing faces the most vital challenge when deciding on the sourcing techniques. These challenges are often classified into two categories ‘low-cost vs. local’ and near-shore vs. off-shore’ challenges. One can easily optimize the location decisions throughout the supply chain by using modelling tools and technologies. By using these, companies can conveniently identify the tradeoffs across the cost elements.
  • Optimization of product-flow path- A company owner has to choose from a myriad options when moving the products from supply chain system through manufacturing and eventually to distribution. The flow-path of a product is decided by making these collective set of choices through the entire supply chain. Putting smart algorithms in to action and modelling the substitute flow-path options is the best way to determine how the guesswork would work, and ultimately provides a fruitful reference in the conference room discussions.
  • Optimization of transportation route- One can effectively optimize the transportation route by working in collaboration with either simulation or supply chain optimization. While you consider the constraint structures and realistic costs, you can use transportation routes and other advanced algorithms to reduce the inbound shipment costs. Doing these will help you figure out what exactly will happen when network designs of the transportation routes are changed. This will also help you identify more efficient ways of moving products from supplier to production if any problem arises.
  • Selection and analysis of consolidation center- Consolidation centers can serve as the area for gathering smaller shipment with reduced transportation costs for companies that deal with multiple suppliers.


Facility and Manufacturing

In a global sourcing scenario, in order to keep in sync with the automobile shift to different quantities and to new regions and changing cost structure and suppliers, one should also change the inventory levels and facility locations. Let’s see how this can be done:

  • Production footprint- one can easily balance an organization’s existing capacity by modelling and analyzing the production footprint. This can be done by adding the additional production and investment requirements. You might have to invest a huge sum in specific locations or move the production capacity to other locations within the network completely.
  • Network optimization- If you are starting off with exploring the various supply chain designs for your automotive industry, this is the way of doing it. You can identify the improvement areas related to sustainability, cost, and service, and ultimately save up to ten percent of the total supply chain cost.
  • Inventory optimization- in a supply chain, inventory usually serves as the insurance against variability. And when it comes to variability, its biggest source is demand, which is highly unpredictable. One way of classifying and thoroughly assessing the demand patterns is by improving the ordering behavior and looking after end-to-end stocking level.


Outbound Logistics

Nowadays, automotive manufacturers are using transportation network and supply chain designs ease the decision-making power of outbound logistics. Let’s look at few examples to understand this better:

  • Evaluating new strategies, modes, and lanes- Automotive manufacturers are using modelling tools and technologies to recognize prototypical DC-to-consumer processes, create prototypical pick-up-routes, assess work schedules of driver, determine the combination of LTL/FTL and ideal mode mix, determine how to use assets in the best way, and perform analysis based on service.
  • Considering new delivery options- Automotive manufacturers are considering new delivery options. A domestic manufacturer could assess the service time and cost of utilizing Chinese supplier’s logistics network directly instead of contacting the US.
  • Backhaul optimization- Automotive manufacturers of global sourcing agencies are using transportation route organizing technologies to structure prototypical multi-stop path. Because when you design the transportation network strategically, you make the game more efficient.


There are huge gaps between the outbound and inbound sides of organizations. This is mainly the scenario with the large automotive industries. This gap is mainly responsible for business owners who make uninformed decisions and also due to a lack of attention on the complete supply chain industry. A complete analysis of the total landed cost can effectively unite the outbound and inbound operations. This can also help quantify the supply chain costs and activities and fulfill the demands of a customer.

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