In 2016, the U.S. auto industry sold a record 17.6 million vehicles – down slightly to 17.25 million in 2017 – with incentives such as rebates and low-financing packages driving much of those sales. Those packages can cost up to $3,000 per vehicle, so automakers are turning to their supply chains to wring out costs to support those marketing strategies.
To deliver value to the enterprise, tier suppliers and original equipment manufacturers (OEMs) are relying on third-party and fourth-party logistics providers to manage supply chain networks holistically.
The supply chain is an integrated part of the manufacturing process, with just-in-time deliveries commonplace for most OEMs and top suppliers.
Manufacturers look to 3PLs and 4PLs to optimize pickups between suppliers and several manufacturing plants. To enhance efficiency, an auto manufacturer might seek higher velocity of inbound parts via smaller shipments that are picked up and delivered more frequently to keep inventories low.
Guided by business intelligence gleaned from advanced analytics, an Enterprise Logistics Provider can help drive out costs incrementally, developing processes to handle density reductions, tighter shipping times and increased demand for on-time deliveries to support reduced inventory levels. The goal is to reduce the requirements to fund inventories to ease pressure on the balance sheet.
Complex parts like transmissions require hundreds of components of all different shapes and size, each with its own part number and supply chain path. For repair parts, the supply chain is similar to retail, with seasonal variations and parcel deliveries for dealers and direct-to-customer fulfillment.
When it comes to vehicle production and launches, manufacturers are engaging their logistics suppliers in front-end planning that focuses on execution in terms of measuring and monitoring through a continuous improvement lens. For lower-tier suppliers, a 3PL/4PL may act as more of a logistics support provider in situations when smaller companies don't have a dedicated logistics department.
As a partner, an Enterprise Logistics Provider can help design network solutions to optimize locations for logistics centers, inventory points and manufacturing centers. A thorough network analysis can also manage risk to identify potential points of failure and develop contingency options to improve resiliency. A supply chain must also be tested with worst-case scenario simulation to minimize impact of a disruption in the network. Lean principles and focus on just-in-time delivery can help identify efficiencies, but a supply chain that is also resilient will protect against catastrophic failures.
Partnering with an Enterprise Logistics Provider, automotive manufacturers are able to convert fixed costs, such as inventory, insurance or transportation, into savings as they realize new efficiencies in their manufacturing, supply chain and logistics systems.
Unlike a traditional 3PL, Transportation Insight uses a Co-managed® Logistics model that doesn't limit shipping options to a specific mode and maximizes your deep carrier relationships. We provide tools and technology for full supply chain support, delivering access to the best transportation lanes, service, technology, processes and analytics.
Shippers who want to manage logistics themselves are also partnering with Enterprise Logistics Providers to elevate their knowledge through a co-managed platform that offers access critical tools, from best-of-breed transportation management systems (TMS) and Lean value stream mapping to supply chain analytics. Blended expertise between shippers and Enterprise Logistics Providers produces exponential results with customized, integrated solutions in domestic transportation, international shipping and warehousing.
Transportation Insight can help shift your automotive supply chain into high gear.