Giving wings to supply chain for the wheels that drive the world

ET Spotlight

The Economic Times and CapGrid organised a roundtable and spoke to industry leaders to ideate on the future of automotive supply chain. Here are some key issues that were raised:Complexity: If there is one characteristic of automobile supply chains industry can do without, it is its complex nature. Manufacturing of trucks, cars and two-wheelers are increasingly dependent on a global supply chain, which can potentially be disrupted at the slightest impact. As if challenges of supplies were not enough, uncertainties in trade negotiations are adding to business challenges. Constant changes in manufacturing processes and consumer demand are adding to complexity that supply chain managers have to constantly monitor and address. With an expected export market of $30 billion by 2026, untangling the supply chain web could give it a big boost.

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Visibility and traceability: With at least 15,000-20,000 parts in each mid-range car, for example. A delay in any one can slow down the manufacture and distribution of critical components can result in the production line getting impacted or, worse, shut down. Inventory shortage for spares means a loss in revenue. For the industry that executed the concept of ‘just in time’ for supplies, working with an expanded list of suppliers is getting increasingly challenging. For as much as possible, having a clear visibility for the expected delivery could help cut down uncertainty. The industry may also have to learn the best practices for traceability from pharma and food processing industries.

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New age suppliers: Original equipment manufacturers will need to work with new age suppliers and develop their expertise so that they can turn into long-term partners. Several companies are actively working with tier two and three vendors so that their capabilities can be enhanced. New age suppliers need to be sensitised to the increasing need for issues like sustainability and reusable packaging. Industry also needs to work with smaller suppliers to make them innovative. Early stage involvement and collaborative approach in future projects will allow for design insights and ideas from suppliers.

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Skills: Tomorrow automotive supply chain will need skills that must be looked at afresh. Re-skilling the workforce will be critical for the industry to look at ‘aviation like quality’ or prepare for the EV revolution that will get bigger in the coming years.