The automotive industry’s complex supply chain interconnectivity
Alex Ramírez, sales manager at EP Automotive, talks about the sector’s pain points that can be translated into a compelling need for premium solutions in time-sensitive logistics.
The automotive sector today experiences a series of external factors that increase the complexity of its processes. If we add to these factors such an important link as globalization, we notice that the automotive industry faces a great day-to-day challenge: orchestrating its supply chain complex interconnectivity.
Automotive suppliers are spread all over the world. To assembly some vehicle models, auto-parts arrive from maybe thousands of different companies, from different countries. Connecting this ecosystem is quite a challenge: OEMs, Tier 1 and 2 require extremely high-quality communication channels and logistics plans to coordinate the movement of each part, ensuring that it reaches the right place just in the required time.
Therefore, these automotive companies demand premium and time-sensitive logistics services.
Over the years, addressing and solving challenges in the industry, I have managed to identify and understand in depth four of the main pain points that generates this urge for premium logistics plans.
1. Delivering quality supplies and auto parts
Luxury and economic vehicles have something in common: all Tiers involved must obey to meticulous specifications when building and delivering each of its parts.
In case of any failure, the material will be rejected and, in case of recurrence, probably the supplier will be replaced. Thus, freight forwarders (FFW) working for the industry must be prepared to offer time-sensitive logistics solutions in the event of a production interruption due to issues related to the quality of the material received.
I can exemplify this situation with a practical case: A Tier 1 hires us to move a 53” box of its auto parts to one of the world’s most important OEMs.
A couple of days later, they are informed that 70% of the parts did not reach the required quality level.
Now an entire segment of the automotive supply chain must work against the clock. The Tier 1 looks for critical cargo services both to get urgently quality supplies from its suppliers (Tier 2) and to send ground expedited (“hot shots”) replacement parts, so as not to lose the contract with the OEM.
The companies involved need to have an experienced freight forwarder able to offer alternative solutions, routes and rates. This is not a time for saving: it is time to find the best solution with the right freight forwarder.
2. Continuously deliver prototypes
Unexperienced freight forwarders may underestimate how fast prototypes must be submitted, approved and sent to the automotive industry’s production lines.
I have another quite common example, one that could be avoided selecting the right time-sensitive solutions provided by a specialized FFW: A Tier 1 presents an OEM a prototype of valves for electric vehicles. In a week, it requires expediting seven flights from Hong Kong to the United States, each with 3 to 15 pallets of samples that must be examined by the OEM.
Once the valves are approved, the Tier 1 can sit with the FFW to design a long-term delivery plan for the parts approved by the OEM.
In this scenario, it is essential to count on reliable direct communications with the FFW to activate a time-sensitive delivery plan.
This case also presents a business opportunity that’s part of the most robust companies in the sector long-term business plans: the possibility of programming a number of critical solutions to respond to prototype requests –by year or even longer terms– without affecting the project’s financial health.
3. Answering fast to forecast changes
Even in moments of crisis such as ours, some large OEMs experience changes in their sales’ forecast.
Despite being positive from a commercial perspective, this situation requires immediate action from its Tiers to guarantee the necessary supplies to increase production.
In a situation like this, for example, an Ocean Freight service that was efficient to supply the initial forecast should be replaced fast and with a great synchronization of efforts for an Air Priority service to prevent disruptions on the OEM’s production line.
4. Launching impeccable new projects
Each new OEM project triggers the need for Tiers to adapt quickly to new processes and equipment.
Just think about the need to change thousands of molds, in a challenging schedule, to align all parts to this new supply chain process.
This situation does not only involve a time-sensitive need, but the development of a premium logistics project that includes solutions for oversized or special dimensions cargo, that must also reach plants in other countries in a very limited amount of days.
These four scenarios are just a small picture of the current automotive industry’s challenges and, consequently, the importance of developing blind-trust relationships with highly specialized FFW to answer to situations that become critical.
At EP America’s vertical EP Automotive, we have a deep understanding of the automotive supply chain’s pain points. We know the contingencies’ risks in just-in-time (JIT) and just-in-sequence (JIS) processes and how to attack them.
How can we find the par excellence time-sensitive solution for the Automotive Industry?
When determining which could be the best critical cargo product or reacting with alternatives that must effectively solve an automotive company supply chain unplanned interruption, we must know exactly:
What type of material needs to be transported
What are the collection and delivery deadlines
What is the client’s comprehensive need
Understanding how the customer got to the point of needing an expedited solution to transport a certain product is essential to design the correct plan, within the time the customer needs it.
Freight Forwarders that do not comprehend the dynamics of the automotive industry’s idiosyncrasies will end up offering whatever solution they have at hand, without considering the consequences of using a conventional product in a critical situation.
To select a critical cargo supplier, an automotive company must consider some key points such as:
What is the structure that a freight forwarder has to “put out my fire”?
Did the FFW really understand my need? Does its offer make sense to me, does it give me peace of mind and confidence?
Does it have the ability and flexibility to offer time-sensitive product alternatives to solve my situation? Multimodal solutions, too?
Is it within my budget?
Is its scope global?
Will my product be tracked and monitored throughout the entire process?
Each of these considerations is crucial. In a market where every minute counts –and a delay can result in a hefty contractual penalty– investing in premium, time-sensitive logistics services could end up saving the manufacturer significant amounts of money.
Specific solutions for a fast and accurate industry
In EP America’s EP Automotive team, we speak the language of the automotive industry. This vertical was developed more than 10 years ago and now it is positioned on the market as a team of experts, leader in logistics solutions for this sector.
Mastering the automotive logistics’ technical details, we can choose the best solutions when designing the best plan.
From the critical cargo Control Tower, we offer the market 24/7-365 cargo monitoring, with a high level of specialization, the possibility of activating more than one solution for each project, risk prevention and immediate capacity to react to any incident.
We build and share analysis, anticipating external and internal factors that can add or subtract from the solution to be executed. Openness and transparency in our plans translate into visibility and control for our clients.
Our formula for success to serve the Automotive Industry with the level of precision demanded is simple:
Take control of the urgent situation
Analyze and identify risks
Select the most suitable solution
Team up with the client and provide peace of mind, security and trust