It is imperative for automotive Original Equipment Manufacturers (OEMs) and suppliers to work in tandem, so they can streamline operations and meet the rapidly changing requirements of today’s fast-paced market.
How are suppliers working with OEMs?
Adopting lean principles and training employees
It is what is known as embracing lean principles – by adopting continuous improvement practices, value stream mapping, and standardized work, companies can considerably minimize waste, enhance product quality and boost efficiency. Suppliers are continuously analyzing and reviewing processes to identify areas of waste and opportunities for improvement.
Ongoing training is also being provided to staff to ensure they have the necessary skills and knowledge required to implement and sustain lean principles. Employees are now equipped with the latest industry insights, trends, and technologies. Coaching programs are being developed so they can improve performance, in order to apply those skills in improving business. They are encouraged to take on new challenges and provide opportunities for cross-functional and international exposure. Thus, a workforce is being created to manage the complexities of the supply chain, while driving growth and innovation.
Optimizing inventory management
Effective inventory management is especially important for time-critical deliveries in the automotive industry. Automotive suppliers are using the latest technologies to manage inventory levels more efficiently and ensure that products are being delivered on time. By developing dedicated and streamlined supply chain management solutions, they have reduced lead times, improved inventory accuracy, and minimized costs, ultimately increasing customer satisfaction. It has given suppliers a competitive advantage in the market.
The automotive industry faces a growing need from consumers, regulators, and other stakeholders to adopt environmentally friendly practices as well. By optimizing inventory levels and reducing unnecessary production, suppliers have been able to minimize carbon emissions as well. Being sustainable ensures that suppliers can mitigate risks associated with environmental and social issues.
Digitization matters
This aspect has totally transformed the automotive supply chain by enabling better collaboration and visibility. By leveraging state-of-the-art technologies such as the Internet of Things (IoT), artificial intelligence (AI), and blockchain, supply chain processes have been automated. Suppliers can now provide OEMs with the necessary tools to better track their products and raw materials, gain real-time insights into their operations, and improve efficiency. Since suppliers are able to detect bottlenecks immediately, they take corrective action in order to address those problems. Using digitally integrated solutions, suppliers ensure that time-sensitive materials are delivered intact and within the designated time frame. They can address issues such as volatility in schedules. For instance, suppliers can configure how to restructure shipping schedules if they find out on Sunday about being unable to ship on the following day, due to an assembly plant closure.
Develop strong networking
Effective network management is crucial for the success of automotive OEMs and suppliers. To bring down expenses, improve quality, and respond to market demands, solid networking is required. This involves collaboration, communication, and trust, where both parties work together to identify and address issues that arise. Proper networking management involved setting clear expectations and mutually agreed-upon goals. Establishing a shared understanding ensures that both parties work towards achieving them collaboratively. Regular meetings, joint problem-solving and shared performance metrics can help create mutually beneficial and sustainable partnerships that help automotive suppliers and OEMs stay competitive in a rapidly evolving market.
The automotive supply chain is indeed complex and dynamic, as it involves suppliers, manufacturers, distributors, and retailers, whose processes are integral to each other to deliver quality products to clients. There will be many challenges such as new demand and forecasting models, along with flexibility and adaptability in the supply chain network, but if automotive suppliers can successfully collaborate with OEMs, it is possible to overcome these hurdles.
