Automotive Logistics Solutions for a Challenging Industry
When it comes to the automotive industry, logistics can be especially challenging.
Moving cars (and their constituent parts) around the globe is a complex business, particularly when you have to juggle multiple suppliers and consider everything from smooth-running assembly lines to the transportation of finished vehicles.
In this blog, we’re exploring some of the biggest challenges automotive logistics providers face and how today’s supply chain solutions can help surmount them.
What is Automotive Logistics?
Automotive logistics describes everything to do with the automotive supply chain, from delivering the vehicle parts and raw materials for production to safely transporting a finished concept car to a prestigious auto show, ready for display.
The whole process breaks down broadly into three main parts:
The inbound logistics phase covers the delivery of components to automobile manufacturers. This is never a simple operation: A manufacturer might source different parts and pieces from multiple suppliers worldwide, with all the associated safety checks and customs duties. And once the components have reached their destination, logistics service providers have a part to play in the manufacturing process, for example, by ensuring just-in-time delivery of these pieces to the production lines to help cut costs and make the manufacturing process more efficient.
When the vehicle has been produced, it’s on to the outbound phase. This covers shipping from an automobile manufacturer to a distribution center or dealer. Again, distribution is a complex process, more often than not involving multi-modal transportation, including road, rail, air, and ocean freight. Outbound logistics might also include vehicle storage, last-mile delivery, and special handling services, for example, for motorsport vehicles.
The story doesn’t end when the finished vehicle rolls off the truck and into the dealer’s yard; in fact, it’s far from over. Once on the road, a shiny new vehicle will need spare parts – and all the logistics services that go with them, from stock management in the warehouse to picking, packing, and shipping orders. Then there’s return logistics to consider, sending car parts or even finished vehicles back to the manufacturer.
The Biggest Challenges for Automotive Logistics Providers
If ‘most difficult logistics’ were an Olympic sport, the automotive industry would scoop the gold medal time after time. Automotive supply chains are famously complex, hitting the headlines over the past few years due to the worldwide disruption to the supply of microchips, which delayed production and resulted in longer lead times.
Here, we take a closer look at a few of the biggest supply chain challenges faced by the industry:
Complex Supply Chains
If you’ve ever come across the concept of a tier supplier, you have the automotive industry to thank. The term originated in vehicle manufacturing, where a tier 1 vendor who supplies a key component (a car seat, for example) relies on a tier 2 vendor for their parts; this vendor, in turn, relies on a tier 3 vendor, perhaps for raw materials. Multiply this by everything required to build a car (steering wheel, tires, motor, etc.) and factor in all the different countries where these vendors might be based, and the supply chain starts to look very complex.
Regulation can be a headache at the best of times, and when you add global supply chains to the mix, it becomes even more complicated. Regulations governing quality standards, health and safety, and the storage and transportation of components can vary from region to region, making it challenging to ensure compliance in the automotive supply chain. Special permits may be required for shipping military vehicles, for example. And that’s before you’ve even started to move a vehicle or spare part across international borders – a process that brings customs and tariffs into the equation too.
Rapidly Changing Technology
Spoiler alert: Technology, as we’ll see in the next section, is an important solution for automotive logistics. But accelerating advances in technology can present challenges too. The move from ICE (internal combustion engine) vehicles towards EVs (electronic vehicles) has widespread implications for the logistics industry, such as strict legislation surrounding the storage and transportation of batteries, which are classified as dangerous goods.
Volatile Customer Demand
Predicting consumer demand is always tricky, but the road has been particularly bumpy over the past few years. First, the market was rocked by the Covid-19 pandemic, which changed consumer habits and led to a huge drop in demand for cars and other vehicles. Now, customers are navigating the subsequent economic fallout and the global impact of rising inflation. This affects the entire supply chain and creates volatility in demand for production parts.
The automotive industry is on notice to get greener, and while consumers are very much driving this trend, the rise in electronic vehicles is just one indication. Compliance is another, as environmental regulations are introduced or tightened in different countries around the world. New EU legislation, for example, will require 65% recycling by weight of lithium-ion batteries by 2025.
Exploring Automotive Logistics Solutions
Managing a multitude of moving parts in a rapidly changing landscape, automotive logistics is a complex process requiring creative, cost-effective solutions.
Here’s how providers of these services are meeting the unique challenges of their industry head-on:
Whether you’re talking about production logistics, spare-parts inventory management, or ocean freight, there’s just no substitute for industry expertise. Partnering with automotive experts or specialized contract logistics services is essential if you want to navigate international regulations, customs requirements, and all the different health and safety standards.
Expert knowledge comes into its own with the transportation of specialist vehicles, such as motorsports or military vehicles, which need very careful handling. And as the electronic vehicles market grows, it will be increasingly important to access EV expertise, whether that’s to do with transport regulations or best practices around battery recycling.
While the pace of change can present its own challenges, technology is a big part of the solution, and innovation is key. New technologies such as artificial intelligence, the Internet of Things, and machine learning can all be leveraged to help manufacturers manage a complex web of suppliers across multiple tiers and locations.
Control towers, for example, capture and analyze real-time operational data to give you complete visibility of your logistics and help you make the most informed decisions around supplier management, shipping, and distribution.
Gartner’s predictions for the automotive industry in 2022 identified agility as one of the key factors in success, and streamlining processes has been a long-term trend in automotive logistics. One element of this is just-in-time production – managing deliveries so that you only hold the materials and components you need so that they’re available when you need them.
Continuous improvement is another important innovation in the automotive industry. By constantly looking for ways to improve, companies can cut down on waste, streamline operations, and realize significant cost savings.
The best automotive logistics services are designed with the environment in mind. Solutions include reverse logistics so that spare parts can be returned to the manufacturer for reuse or recycling; transport planning to optimize shipping routes and transportation loads to minimize the impact on the environment; and packaging management, with an emphasis on reusable packaging.
Leaner manufacturing processes can play a part, too, with just-in-time logistics helping reduce unnecessary waste.
Bringing the Ziing to Automotive Logistics
At Ziing, we understand how important it is to deliver automotive components into the right hands on time, every time, to keep your business moving and avoid bottlenecks in the supply chain.
We harness the power of technology to create innovative, data-driven solutions, and we work with expert partners in the industry to ensure flexible, timely delivery of essential parts and components every day of the week.