Automakers Continue to Face Supply Chain Challenges

Supply chain issues afflicting the global automotive industry range from semiconductor shortages to geopolitical upheavals, which are making both automakers and suppliers rethink about their supply chain strategies.

The current Ukraine-Russia conflict has already led to dire projections about a further fall in demand for vehicles owing to non-availability of metals like Nickel, and Palladium as well as Neon gas used in semiconductor manufacturing.

Supply chain remain a challenge for the automotive industry. assessing material availability has become a daily occurrence. Given the chaos the industry has experienced over the last two years, experts say the ability to take supply chain difficulties in stride is essential.

Last year, the automotive industry’s global production levels fell by 10 million vehicles due to shortages involving raw materials and computer chips. For the automotive industry, computer chips sounded the first alarm. With a runup in demand for electronic devices, electronics makers squeezed out automakers, and suppliers at every step of the supply chain. Compared with the semiconductors in personal devices, chips in cars aren’t as sophisticated

The computer chip shortage was just one problem. Auto Manufacturers also faced increased freight or shipping times. Finding carriers and locations where goods can be quickly loaded or emptied is a struggle. Railroads are also backed up. Ocean [transportation] was backed up 13 to 15 days, and then railroad [transportation] was backed up an additional 10 days.

On top of that, the cost of a container has increased tremendously. Over-reliance on too few suppliers forced automakers to rely on locations and companies that might not be so reliable.

Experts stress importance of communications, digital planning and monitoring tools to stay abreast of supply chain problems, make contingency arrangements.

Our future articles to address what strategies can automakers and suppliers implement to overcome the uncertainty posed by these issues. How can they make their supply chains more resilient and flexible? What are the possible aftereffects of some of the futuristic scenarios in which new geopolitical conflict zones exist, the role of ESG becomes more manifest, manufacturers further expand their footprint to developing regions, and alternate maritime trade routes become available?

By Tara Thompson  (Tabibe) and Rob Longo, editor