POV: The rapidly evolving and ever-so-complex Automotive Supply Chain

Supply chains around the world are in a state of metamorphosis in the wake of multiple disruptions. In this new world, automotive supply chains have probably been one of the worst hit; in fact, the semiconductor shortage still haunts the industry. However, the pandemic did teach us how to re-imagine processes – big and small – in order to stay afloat even in tricky waters. In this conversation with Jayant Athawade, General Manager – Commercial (Automotive), DP World, we ask him the nitty-gritties of managing automotive supply chains in a constantly changing and complex environment.

Q] How can realtime visibility help overcome automotive supply chain challenges? How can it be improved? 

The global automotive sector has faced complex supply chain challenges arising from the geographic diversity of customer markets and centers of production and assembly. This has been compounded by the rapid disruptions due to the Covid-19 pandemic and changing trends like increased globalization. Automotive OEMs, thus, need highly visible ‘just in time’ management of inventory for materials, spare parts, new and used finished vehicles, repair, and aftermarket products across the value chain. They also need the ability to manage exceptions in the supply chain, so that risks may be mitigated.

Therefore, the need for real-time visibility right from the production planning stage to the point where the end-product is delivered to the customers is critical. DP World’s leading network of ports and terminals, fully multi-modal transport connections and logistics services, and leading-edge digital management systems combine to deliver expert, customized and flexible end-to-end supply chain solutions for automotive OEMs, which makes their complex supply chains more visible, controllable, cost effective and sustainable.

Our digital platform, CARGOES.com offers real-time visibility into all the shipments moved through DP World’s integrated supply chain network and multimodal transport channels, along with the severity of exceptions, if any. This greatly improves the overall efficiency of operations.

Q] What is your stance on the impact of shortage of raw materials, particularly semiconductors, on automotive supply chains?

Semiconductors are an essential element in almost every industry. Cars are increasingly becoming computers on wheels, with more and more embedded electronics. As most of these systems on automotives are controlled by semiconductors, their importance for the automotive industry has increased greatly. Indian OEMs are largely dependent on imports to meet their semiconductor needs. To reduce this dependency, the government has announced several policy measures to boost the domestic production of semiconductors. The Production-Linked Incentive (PLI) scheme announced in 2021 encourages semiconductor and display manufacturing locally. However, the bigger challenge for the automotive industry is the availability of electric vehicle (EV) batteries.

Q] How can one improve warehousing facilities to ensure a seamless automotive supply chain operation?

The pandemic-induced disruptions sharpened focus on maintaining adequate inventory for automotive OEMs. Warehousing facilities are crucial for inventory management. For seamless automotive supply chain operations, it is important that the flow in the upstream and downstream channels is not disrupted. To ensure swift movement of inventory across the automotive supply chain, warehouses should have greater synergies amongst their people, processes, technologies, governance, and across inbound and outbound processes.

This is an abridged version of the original interview published in the December 2022 issue of Logistics Insider magazine. Click here to read the complete interview.

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