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Top 5 Challenges Impacting the Automotive Supply Chain

The automotive industry is not only competent but thriving. It is one of the significant influences on a country's economy wherever there is an established industry. However, maintaining a supply chain for something technically complex and has 100s of different moving parts can be a little hectic. So naturally, a task such as this comes with its share of challenges.

Big players in the automotive industry keep a constant check on their supply chain management practices. This is because so much can be optimized just by keeping up with the latest trends. Unfortunately, these challenges have become too challenging for small and medium automotive companies since they are constantly exposed to changes. In one way or another, most of these changes are supply chain-related. This is why strategic supply chain practices must be the top priorities of such companies.

So let's have a closer look at some of these challenges that adversely impact the automotive supply chain.

1. Overstocked Inventory

Although the automotive industry is booming, overstocking can also be fatal to the growth of the company. It just means that the company has capital tied up in inventory. A booming growth still doesn't mean extensive production, which is what over-stocked inventory does. On the flip side, an under-stocked inventory is just as bad of an idea. Correctly estimating the demand and required supply of each individual part is necessary. Drawing out such intricate plans may need professional expertise, which a 3PL partner like ARK India can provide you with. With such expertise, you can make better informed and planned production decisions which can also be carried out by them.

2. Rising Recalls

Recalls in the automotive industry are common, but they are also some of the most damaging faults of the supply chain. Fixing such issues can be very costly and can tarnish the name and brand value of the company. It also disrupts the entire chain and can cause a lot of loss potentially. Therefore, tightening up the process and ensuring every step of the way is well monitored and planned to extreme detail is highly necessary. Especially when it comes to the automotive industry, these things need to be paid special attention to since a faulty product could mean a fatal vehicle for the end customer.

3. Just-In-Time Operations

Another supply chain essential is to incorporate just-in-time operations. What this means is that everything is orchestrated in a way that happens just in time. This way, you neither have an overhead of inventory nor do you lag behind on timelines because of being short. Implementing such practice needs professionalism in supply chain management to make sure time is being managed like clockwork. One way to manage this aspect of the process is by automating a lot of the process.

4. Adapting to Change

As mentioned in the introductory paragraph, big players in the industry always keep one eye on the constantly changing trends. Not doing so can be the undoing of many such small-time companies.

Change is inevitable, and one must adapt to it as soon as possible to maintain a competitive edge. Therefore, changes in supply chain practices, but tweaking them according to outside factors like customer demands and supply of parts, must be taken care of.

5. Abiding by the Environmental Ethics

This is something that any business dealing with manufacturing faces. Factories are constantly under scrutiny for what they do to the environment with their emissions. Every country has specific rules and regulations regarding what is allowed and what is not. When an automotive company operates globally, it must comply with the country's rules. Avoiding getting into regulatory issues is the last thing one wants.

The automotive industry is a multi-billion dollar business globally. For it to adapt to changes and bring forth smoother operations is an absolute necessity. Managers should keep with current trends and make certain significant changes to ensure that supply chain practices are up to the latest standards, which helps round up more profits in the bigger picture.