Why Automotive Supply Chains Need End-to-End Visibility

When you sit in a car, do you ever stop and think about all the pieces of the supply chain puzzle that had to work together for this machine to be available to you? With over 30,000 parts in a typical car, the supply chain involves numerous stakeholders spanning the globe. The complexity of the automotive global supply chain network highlights the importance of robust supply chain management and end-to-end visibility. It encompasses a multitude of interconnected processes and entities, including raw material extraction, component manufacturing, assembly lines, logistics, and distribution channels. This global network involves numerous stakeholders such as Tier 1, Tier 2, and Tier 3 suppliers, original equipment manufacturers (OEMs), logistics providers, dealerships, and aftermarket service providers. Each of these players operates in different regions and countries, contributing to the complexity and scale of the supply chain.

Automotive supply chains have become even more complex with new technologies. Today, the two drivetrains – internal combustion and electric – are sharing space on vehicle production lines. The epicentre of battery production has shifted to regional geographies, and technologies to reduce greenhouse gas (GHG) emissions are evolving at a pace that demands quick and seamless turnarounds.

With increasing customer demands and expectations, the automotive supply chain has become increasingly complex. By having a clear view of every step in the supply chain, companies can anticipate potential disruptions, optimise operations, and ensure that the final product—a car that you can rely on—is delivered seamlessly.

The Complexity of Multi-Tiered Supply Chains

The automotive supply chain is a multi-tiered system involving various stages and players. Tier 1 suppliers provide direct parts to OEMs, while Tier 2 and Tier 3 suppliers provide components and raw materials, respectively. The supply chain also includes logistics providers, dealerships, and aftermarket suppliers, making it a highly interconnected system.

Consider the journey of a single component, like a microchip. It might start its life as raw silicon mined in one country, then be shipped to another country for processing into wafers. These wafers are then sent to a fabrication plant in yet another country, where they are transformed into microchips. The microchips are then distributed to various Tier 1 suppliers who integrate them into larger systems, such as the car's infotainment system or engine control unit.

Other parts of the car, like the steel frame, might begin as iron ore extracted from mines in a different part of the world. This ore is transported to a steel mill, where it is processed into sheets of steel. These sheets are then shipped to automotive plants where they are stamped and assembled into the car's body. In some automotive companies, the cars are built atop a few very large, very complex aluminium alloy castings. These bolt together to form the entire chassis, with front, centre, and rear sections that replace hundreds of discrete parts that would need to be joined together to form the car’s chassis. The seats you sit on might be upholstered with leather sourced from cattle raised in one country, tanned in another, and finally stitched together in a factory located somewhere else. The tires could be made from rubber harvested in tropical regions, combined with synthetic materials produced in chemical plants, and then moulded into shape in specialised factories.

All these components, along with thousands of others, converge at assembly plants where skilled workers and advanced robotics piece them together into the final product. This intricate dance of materials, parts, and processes requires precise coordination and timing to ensure that everything arrives at the right place at the right time.

Managing this complex network requires advanced technological solutions and meticulous planning; companies should work with logistics providers with expertise in both the global and local parts of the industry. Logistics providers play a crucial role in this process, managing the transportation of parts across vast distances and through various modes of transport, including ships, planes, trains, and trucks. They ensure that each component reaches its destination efficiently and on schedule.

The Importance of End-to-End Visibility

End-to-end visibility is crucial in managing the intricate and expansive automotive supply chain and leads to actionability -- the ability to not only see and understand the data across the entire supply chain but also to take meaningful and timely actions based on that data. Here’s why:

1. Efficiency: With complete visibility, companies can monitor the flow of materials and components in real-time. This allows for the optimisation of operations, reducing lead times and minimising costs. For instance, if a delay is detected at any stage, alternative arrangements can be made promptly to avoid bottlenecks.
2. Risk Mitigation: The ability to see the entire supply chain helps companies identify potential risks early. Whether it's a natural disaster affecting a supplier, geopolitical tensions, or a sudden shortage of materials, having real-time data allows companies to take proactive measures to mitigate these risks. This could involve rerouting shipments, finding alternative suppliers, or adjusting production schedules.
3. Customer Satisfaction: End-to-end visibility ensures that companies can meet delivery deadlines and maintain high standards of product quality. By tracking every component and process, companies can ensure that any issues are addressed before they impact the final product. This reliability enhances customer satisfaction and builds trust in the brand.
4. Predictive Capabilities: Advanced technologies like AI and machine learning can analyse data from across the supply chain to predict potential disruptions. For example, patterns in data might indicate an impending shortage of a critical component, allowing the company to take pre-emptive action. Blockchain technology can also provide transparency and traceability, ensuring that every part of the supply chain is accountable and secure.
5. Resilience: In an interconnected global supply chain, disruptions are inevitable. However, end-to-end visibility enables companies to build resilience by quickly adapting to changes. Strategies such as diversifying suppliers, nearshoring production, and maintaining inventory buffers are more effective when companies have a comprehensive view of their supply chain.
6. Collaboration: Visibility fosters better collaboration among all stakeholders in the supply chain. When every player, from raw material suppliers to logistics providers, has access to the same information, it enhances coordination and communication. This collaborative approach ensures that everyone is aligned and working towards the same goals.

These actionable insights help automotive companies to make informed decisions, improve efficiency, and enhance overall supply chain resilience.

Case Study

Sazgar Engineering Works Limited, known for its specialisation in the 3-wheeler segment and its recent entry into the 4-wheeler market, faced significant challenges in managing its supply chain. These challenges included fluctuating ocean space, frequent delays, economic turmoil in Pakistan, import bans on auto parts, and complex customs procedures. This impacted their supply chain reliability, created communication issues with suppliers, required navigation of economic and regulatory hurdles, as well as the need to improve operational efficiency with inventory control.

An integrated logistics provider offered a comprehensive, customised solution to address these challenges. Key components of the solution included:

• Integrated Supply Chain Management: The provider took care of planning, order validation, cargo movement visibility, and provided the info and the tools for Sazgar to properly schedule production.
• Communication Facilitation: The provider deployed a Chinese-speaking representative to facilitate seamless communication with Sazgar's Chinese suppliers.
• Cost Optimisation: Long-term rate agreements and flexible alignments helped stabilise finances and improve inventory control.

Benefits:

• Enhanced Visibility: The integrated supply chain management provided Sazgar with real-time visibility into their supply chain, allowing them to anticipate and mitigate potential disruptions.
• Improved Communication: The deployment of a Chinese-speaking representative bridged communication gaps, ensuring smoother operations.
• Operational Efficiency: The solution improved inventory control, reduced transit losses, and ensured on-time delivery, contributing to overall operational efficiency.

Sazgar Engineering Works Limited was able to overcome significant supply chain challenges through its work with an integrated logistics provider. By providing end-to-end visibility and tailored logistics solutions, the provider enabled Sazgar to enhance their supply chain reliability, improve communication, and achieve operational efficiency. This example highlights the tangible benefits of implementing visibility in the automotive supply chain.

Conclusion

Achieving end-to-end visibility in the automotive supply chain is not just a strategic advantage but a necessity in today's dynamic and complex market. By leveraging advanced technologies and partnering with integrated logistics experts, automotive companies can gain real-time actionable insights, optimise operations, and mitigate risks effectively. This comprehensive visibility ensures that every component arrives on time and in the right sequence, maintaining the smooth operation of assembly lines and enhancing overall efficiency.

As the industry continues to evolve, the ability to anticipate and adapt to disruptions will be crucial. Companies that invest in end-to-end visibility will be better positioned to navigate challenges, meet customer demands, and maintain a competitive edge. Embracing these strategies will pave the way for a more resilient and agile automotive supply chain, capable of thriving in an ever-changing global landscape.

Be ready for disruptions and complex supply chains! Read more about Maersk’s work with the automotive industry here. You can also listen to a recent Beyond the Box podcast featuring Antonio Fondevilla, Global Automotive Vertical Head of Maersk. Partner with Maersk and enjoy a connected, simplified and integrated end-to-end supply chain experience supported by our people, processes, network and technology.