How logistics are playing a critical role in the automotive industry

Many businesses have experienced difficulties and hardships during a very turbulent time as a result of the global pandemic. One industry that was hit especially hard was the automotive industry, with an estimated market decline of 7.31% in 2020. Such a sharp decrease in demand resulted in a halt in production and an inability to predict the future of the automotive market. As the world began to recover, however, a steep increase in demand saw the rebound of the automotive sector, causing a ‘boom’ in production. 

Despite the firm-footing automotive businesses find themselves post-pandemic, the way in which they operate has changed and evolved. The pandemic exposed the vulnerability of global supply chains, and therefore Time Critical logistics companies have come to play even more of a critical role than before for these businesses. Due to the sector’s rapid development throughout the second half of 2021 and ‘22, automotive logistics are instrumental in cost reduction across the supply chain, as well as ensuring companies are able to get the parts required to maintain production and manufacturing. 

Just-in-Time Ordering 

Just-in-Time ordering is a service many Time Critical logistics companies offer; however, it is a new route for automotive businesses. Traditionally, an automotive company would have a large amount of inventory on hand. This type of approach to inventory management has become far less desirable after the hardships experienced by the sector in recent years. High levels of inventory amount to high costs, so Just-in-Time logistics offers businesses a way of avoiding this form of ‘management’, and choosing an option that benefits them better. 

Read more: Just-in-Time ordering: reshaping the automotive industry’s recovery from the chip crisis  

By opting for Just-in-Time ordering, the need for warehouse space to store stock is removed, which alone can mean huge savings. At the same time, there is less inventory on hand. By holding high levels of stock, companies are spending unnecessary amounts of money on Time Critical parts and components. These may not be used or, due to the rapid changes and advancements in technology, may become discontinued, meaning even more lost revenue. Ordering Time Critical parts and components only when they are needed helps to both streamline the supply chain, and make it a simpler, easier-to-manage aspect of the business. The reduction of inventory holding costs, and improved turnover is of huge benefit, and these kinds of logistic processes are helping the automotive industry to evolve, grow, and move forward in a positive way. 

Increased dependency on logistics 

The industry’s dependence on effective, efficient logistics does stem from the difficulties experienced during the pandemic. China was the first country to close its manufacturing industry, a decision that sent shockwaves throughout supply chains globally. The automotive sector was equally affected by this, which resulted in supply shortages and an inability to get the required automotive parts. The sector was able to handle limited availability during the slump throughout the second half of 2020, and 2021, but when demand escalated once more, the shortages became a serious problem, putting the success and continuation of many automotive businesses in jeopardy. 

The outcome of this was and is an increased reliance on logistics. Time Critical logistics companies were able to navigate the difficulties companies were having and worked hard to alleviate the issues, which has been a huge positive for automotive companies worldwide. Not only were these Time Critical logistics companies able to get the industry the necessary parts and components to keep their production lines operational, but also to ensure lower overall costs. Businesses also benefit from shorter lead times when employing effective logistic processes, and thus improved customer satisfaction. The reason for all of this is thanks in part to the transition to Just-in-Time ordering, and to the decision of the businesses to outsource their logistics to a company with experience. 

Choosing the right Time Critical logistics provider 

The importance of logistics is not in any doubt for the automotive sector, but just as important is choosing the right Time Critical logistic company to partner with. Due to the complexity of automotive supply chains, many automotive businesses are seeing the benefit, and therefore opting to outsource their logistics to a third party. The assistance experienced logistic companies can provide is unparalleled, and can make the whole business model simpler. 

Businesses want to create a relationship with the Time Critical logistics company they choose to partner with, and therefore it is necessary to decide and determine what an automotive business would require from a Time Critical logistics company. 

Royale International is a Time Critical logistics company with more than 25 years’ experience working within automotive industry logistics. With an understanding of the needs of businesses in the automotive sector, Royale International offers an unparalleled service. Specialising in Just-in-Time delivery, Royale has worked with businesses of all sizes, from small start-ups to Fortune 500 companies. Royale International can also provide you with a dedicated account manager who has worked either in or with the automotive industry. For more details on how Royale can help your business’ automotive industry logistics, please click here: https://www.royaleinternational.com/services/time-critical-services/