What is resilience and why is it important in automotive supply chains?
Most simply, resilience is the capacity to recover quickly from difficulties, and is often thought of as strength or toughness. When talking about supply chain resilience, the meaning is largely the same. Supply chain resilience is the capability to adapt in order to prepare for unexpected or unforeseeable events, the ability to respond to disruptions and, above all, overcome them and recover. It is key to note which companies & services contribute to a successful supply chain. Within the automotive industry especially, every aspect is critical and so every aspect also needs to be resilient, from the suppliers themselves, to the Time Critical delivery company businesses choose to partner with. A supply chain can only become resilient with cooperation and cohesiveness.
The reason supply chain resilience is so important in automotive is due, in part, to the automotive sectors’ need to reconfigure their supply chains. This is thanks to the increasing reliance within the automotive industry on technology and tech suppliers, which enables a more lean, flexible and Time Critical supply chain.
This, in turn, means traditional suppliers are forced to compete with tech companies, trying to defend their position within the automotive industry’s value chain. These traditional automotive suppliers are therefore adapting to become more like the tech companies as much as possible. OEMs within the automotive sector are having to make their supply chains more resilient to mitigate the potential risks that this ‘new age’ of suppliers can cause, exposing existing supply chain vulnerability. Strong Time Critical logistics partners and providers are needed to help curb this potential vulnerability and prevent it from becoming a weakness.
Three key factors of resilience:
- Illumination: Illumination means identifying the risks that exist within the supply chain and then developing an end-to-end risk profile and risk management plan. If this is done for every risk within the supply chain, it will help to plan and understand the areas where resilience is most needed in different areas.
- Transformation: Using and prioritising the risk management plan and transforming it into a roadmap that shows how it can become an effective mitigation strategy for your supply chain.
- Monitor: Monitoring brings together the key elements of the illumination and transformation. Risks must be mitigated successfully utilising the tools and processes that make up the logistics strategy. Supply chains must also be continuously monitored in order to ensure risks do not reappear and, if they do, that they are dealt with in an appropriate and time critical way.
How to build resilience into your automotive supply chain?
In the wake of Covid-19 and other disruptions, supply chain leaders within the automotive industry have had to find a balance between resilience and efficiency to secure their networks. The pandemic has been unique in impacting everyone globally. Some localised disruptions, such as natural disasters or unrest in a particular place, while no less serious, usually only affect a part of a supply chain. Time Critical Logistics partners are crucial when it comes to navigating these difficult circumstances, and can be your most vital asset when working to keep your supply chain resilient. Many of those managing automotive supply networks are adapting to their changing priorities and working to understand the most important aspects of their processes. There are a number of key ways to successfully build resilience into your automotive supply chain.
#1. Inventory and capacity safeguards
Buffer stock capacity is a sure-fire way to increase supply chain resilience, irrelevant of the industry. Buffers can be expensive if managed inefficiently, however, so it is important to strike the right balance.
Keeping some of the more common regularly required automotive parts on-hand can be helpful; equally, having a reliable, efficient Time Critical delivery partner who can deliver automotive parts that are less frequently needed can give you peace of mind, while still maintaining a resilient supply chain.
#2. Managing network diversification
If Covid-19 and the gradual return to normalcy have taught businesses anything, it is that any element of a supply chain can cause the whole thing to collapse. With different parts of supply chains recovering at different rates and times, it was immensely difficult for supply chains to regain their footing. As a result of this knowledge, many companies are branching into either multiple supply locations or those with offices and branches around the world.
Whichever direction businesses choose to go in, a reliable Time Critical delivery partner – a crucial player in every supply chain – needs to be adaptable. A Time Critical logistics company with a global reach (be it with hubs or depots in various countries, or trusted partners worldwide) is an invaluable resource, as is flexibility. Logistics providers and companies who used the pandemic hardships to help themselves in becoming as adaptable as possible while continuing to provide an efficient Time Critical service have not only survived and cemented their reputations as resourceful, but are also ideal for an industry as fluid and ever-changing as automotive. Automotive supply chains cannot be made resilient without a reliable Time Critical provider and choosing the right one is crucial.
Supply chain disruptions can and do have severe implications on the companies affected, in a number of ways including financial and reputational. These impacts can be even more detrimental to the automotive sector, as hold-ups can halt manufacturing, which can create further consequences.
Disruptions are usually unavoidable – such as natural disasters (or even global pandemics!) – and can greatly affect supply chains globally. In the automotive industry, this supply chain breakdown results in almost finished cars not being able to be shipped due to missing parts or components. Multisourcing is a clear way to overcome this obstacle.
The issue, of course, with multisourcing is that it can sometimes complicate supply chains, which is effectively taking a step away from the resilient model. It can make the difference in times of need however, and therefore needs to be done properly. If correctly implemented, the positives will not only outweigh any possible negative impacts but these can be mitigated altogether.
Businesses need two things in order to have multisourcing deliver the significant benefits it can create. The first is an in-depth, detailed knowledge of your automotive supply chain. The second is a reliable Time Critical logistics partner who can provide Urgent delivery service that is essential in the automotive sector. Only by having these two elements can multisourcing create a stronger, more resilient supply chain.
There are, of course, countless other ways that your business can build a resilient supply chain that is designed for the future. The benefits are clear and undeniable, especially within the automotive industry, which is ever-changing and evolving with advancements in technology and manufacturing processes.
Yet to really experience these benefits to their fullest, your company needs a supply chain that is thoroughly understood at every stage, from beginning to end. An unparalleled Time Critical delivery partner who can support you throughout your whole supply chain is an essential component of any resilient supply chain. Without their partnership, your supply chain could easily collapse.
Royale International is one such Time Critical logistics company who prides themselves on their ability to adapt, grow and evolve alongside the businesses they work with, helping them to construct resilient supply chains within the automotive sector. With over 25 years’ experience in providing the highest quality service and Time Critical shipments, Royale International is the obvious choice when it comes to creating and updating your supply chain to be resilient and streamlined. For more information on how Royale International can help your business to move forward, click here.