Traditionally, automotive supply chains operated in relative stability with long product lifecycles and established supplier relationships. Today, the automotive industry is amid one of the biggest transformations of the past century and needs to manage the many shifts currently happening, including:
- The trend towards electric vehicles and vehicles with an increasing software content, enabling advanced capabilities such as advanced driver assistance systems.
- Value chains becoming increasingly global, complex and dynamic, with a need to understand the multiple tiers.
- A new go-to-market approach moving beyond the traditional dealership distribution networks towards omni-channel and direct-to-consumer (DTC).
- The transition from a supply chain management method aligned with longer product lifestyles towards a more flexible model that allows more dynamic vehicle configurations to meet market demand while also addressing potential disruptions.
Each of these industry shifts leads to greater complexity in supply chain planning and management. The increasing chance that disruptions impact global supply chains means that planning and management teams need to address issues quickly to keep production on track and reduce margin erosion.
As a result, scenario planning must become a core component of automotive supply chain management and planning processes more collaborative across the n-tier supply chain.
While facing these new complexities, automotive manufacturers often think they have to choose between prioritising complexity and managing the speed of decision-making. However, next-generation planning platforms are now available that enable OEMs to achieve greater end-to-end supply chain visibility—helping detect disruptive events more quickly—and better and faster decision-making.
There are multiple ways in which next generation planning platforms can play a role in building resilient automotive supply chains.
Breaking down organisational siloes
It’s not uncommon for OEMs to function in a rather fragmented and siloed manner, which not only impacts operations but also planning capabilities. Next generation planning platforms are able to link information from across various departments (including operations, finance, procurement, supply chain management) and act as a single source of truth that brings various stakeholders together. Considering that short-, mid-, and long-term planning are usually separate, such platforms can help create more digital alignment among the different planning horizons.
Leveraging AI for deeper insights
AI-enabled, next-generation planning platforms can incorporate multiple internal and external data sources. This can enable more robust planning capabilities, as platforms collect critical data—such as real-time supplier interactions, risk management signals, regulatory compliance, and procurement and sales activity—and turn it into insights that inform planning teams’ efforts.
Enabling a more holistic approach to supply chain risk management
Mitigating supply chain risks is crucial for OEMs, and next-gen planning platforms can help them proactively respond to potential risks and minimise the impact on production. When risk assessment data is linked to planning data, this information becomes connected to suppliers and the orders that will be affected. This allows a planning team to proactively identify and assess how a particular risk impacts its suppliers and demand, allowing it to modify supply chain plans to minimise the potential disruption. A next-generation platform can also gather relevant data sets mapped to specific suppliers and determine if any anticipated shipments will be impacted by a supply chain risk.
To gain the full benefits of a next generation planning platform, automotive manufacturers need to see these platforms as a catalyst for strategic change across the organisation. The ability to connect multiple data sources and information, foster greater collaboration across teams all the way to suppliers, and drive data-driven decisions and learning can truly transform planning and decision-making, giving OEMs the platform to make faster and better decisions in an increasingly complex and rapidly evolving business environment.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Written by Patrick Lemoine, Vice President of Global Industry Solutions at o9 Solutions.
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