DETROIT—Global supply chains were sorely stressed by the COVID-19 pandemic, and the U.S. automotive sector was no exception. The magnitude of supply disruptions drove a 14-percent drop in 2020 new-vehicle sales compared with the year before, and now, just as widespread vaccination has started restoring a sense of normalcy, auto makers are facing severe inventory issues driven by a semiconductor shortage.
What can automotive companies do to address these urgent risks?
Transparency and visibility
Auto makers can start transforming their supply chains by promoting timely information-sharing about the status of orders, materials and finished products across their entire supply networks. Visibility on the demand side can be improved through a deeper, more timely understanding of customer preferences; this helps both auto makers and their partners more accurately forecast product demand and mix levels.
Increased network visibility into both supply and demand outlooks will enable faster risk identification and mitigation. An added bonus: Customer preferences fed through true multi-enterprise collaborations can be translated into real-time customer insights.
Culture of trust
Auto makers that want to foster a culture of trust across their supply chains should consider not only how information is shared but also how the value is shared by all partners. Barriers to information-sharing—whether within a company or between supply chain partners—often are deeply ingrained and the result of behaviors built over many decades. Addressing these behaviors is a complex process, but it starts with a simple shift in mindset—from "me" to "we."
Leveraging data, talent
It's evident that data is essential to digital enablement and efficient operations. However, a vast portion of supply chain data resides outside an organization's four walls, lying within the systems of suppliers and partners. There are several challenges to be addressed, from how is data collected and how is it measured to how is it then acted upon throughout the supply chain? Fundamentally, supply chain partners need to transform into data-driven and insights-driven organizations by defining new ways of working.
Actionable steps
Here are ways organizations can move forward to transform their supply networks:
- Set clear expectations.
- Define the benefits for everyone.
- Implement a formal supplier onboarding program as well as processes and metrics for supplier performance management.
- Invest in strategies such as critical buffers, alternate sources and/or tooling that will improve supply chain resiliency.
- Establish a data policy to determine access rights, privacy and sharing permissions, and data safeguards.
- Create cross-functional teams that span the value chain with clear issue-management plans and escalation paths.
