How to Improve the Automotive Supply Chain
Russia’s recent invasion of Ukraine has affected the supply chain even more. Experts had predicted a return to normal by 2023. So, no one wants to put a definitive timeline on it.
The automotive supply chain took one of the hardest hits. Limited supplies and shortages negatively affected the market during the pandemic.
Supply chain managers have become an essential part of companies. They need to renegotiate contracts and manage current supplies. So, have you considered sourcing your parts in the United States?
If not, we have a must-read article for you. For instance, in our guide, we talk about current automotive supply issues and why contracting locally can make your company more resilient.
Keep reading on for more information!
Current Automotive Supply Chain Issues
There are two key issues relating to the global automotive supply chain crisis:
- COVID-19 pandemic
- Semiconductor chip shortage
Additionally, the pandemic created issues in overseas shipping and employee shortages. The semiconductor chip shortage requires extensive manufacturing. Even small delays can have a substantial effect on the entire market.
Types of Automotive Supply Chains
There are three primary tiers to the automotive supply chain. Vehicles have around 30,000 parts, including bolts and screws. The first tier encompasses companies that produce raw materials.
Secondly, you have in-between suppliers who produce components for cars and other industries. These are known as Tier Two Suppliers. For example, companies that make semiconductors.
Therefore, these are the bulk supplies for vehicle production.
Lastly, you have Tier One Suppliers. They manufacture finished parts that they sell directly to the OEMs. Mayco International falls into this category, supplying Instrument panels, door panels, and other finished parts to OEMs like Stalantis, Cadillac, and Tessla.
How to Improve Automotive Supply Chain Management
A strong automotive supplier or auto parts supplier is key to improving automotive supply chain issues. However, weak relationships hinder the entire process, from early production to vehicle sales.
Global industries are strong players. Therefore, they have caused many hiccups in the industry. A supply chain manager should look at renegotiating or strengthening relationships.
Another crucial element is developing other contracts with local manufacturers. Partnering with American companies can reduce dependence on global suppliers. These contracts ensure you have adequate parts for final production.
Diversifying your contracts also makes your business more resilient against future global disruptions.
Next, consider optimizing visibility. Use automotive parts and manufacturing platforms that use AI technology. Technology-based platforms help you identify:
- Where your automotive parts are
- Shipping times
Lastly, implement risk management plans. Your team must implement risk mitigation and contingency plans. Identifying and prioritizing risk management prepares your team and industry.
Improve Your Automotive Supply Management
The automotive supply chain took a large hit. Luckily, there are solutions you can start implementing. These include teaming up with local tier I and II suppliers.
Mayco International provides customers with engineering, design, and manufacturing services. Above all, we are headquartered in Michigan, ensuring you have timely shipments and re-orders.
You need a reliable automotive supplier when crises hit. Mayco can help you transform your ideas into products. So, check out our full services list and see how we can make a difference for your company!