Because of the global nature of today’s automotive supply chain, slowdowns or valleys in production programs are constantly on the minds of OEMs and others across the supply stream. With so many disparate parts of the world now in play with production, distribution, warehousing, or transportation hubs, holidays, seasonal lulls, and other brands of disruption in terms of productivity can not only be frustrating for various players in the automotive landscape, but they can also be significant pain points for companies who do not utilize this time effectively.
For example, take a recent article in the commerce publication MarketWatch suggested this past summer was atypical in terms of production levels - at least throughout Europe, primarily in Germany - with manufacturing continuing at a brisk pace throughout the usual summer slow season, many within the global automotive supply chain still experienced lulls in orders and planned production programs. With so many employees on vacation and crucial parts of the supply stream in something of a holding pattern as the industry prepares for the busy fall season, it’s tempting to view the summer months as nothing more than downtime - a breather from the harried spring ramp-up in production. Given the 24/7, 365-nature of today's automotive industry, this summer slowdown instance is just one example of periods when production can slow and productivity can wain.
But this begs the question: What are some of the tasks automotive companies can engage in during these slow periods to remain productive and prepared for when different parts of the supply stream come back online? How can companies use a holiday or production lull in one part of the world to their advantage in terms of maintaining productivity and remaining on-track to hit defined benchmarks or goals?
With that in mind, here are just a handful of ways planners and managers can make the most of these times to ensure smooth, continued production schedules and strategies without encountering bottlenecks or other significant breakdowns.
Examine Your Planning Strategy
Let's say a production facility in Asia is slowed due a national or regional holiday. This means production programs may be halted for days at a time. Given this lull, it makes sense given one of the first areas planners and managers should evaluate is their demand planning strategy. Doing so will not only help OEMs make the most cost-effective and efficient decisions for allocating orders to certain production facilities and ensuring enough inventory of parts to complete these orders, but it may also bring to light gaps or potentials for breakdowns in a company’s planning scheme.
For example, imagine an OEM has a production facility in Mexico and a hub in Europe. The facility in Mexico has experienced issues with making sure the right parts are in the right place at the right time for planned production programs, which, as the busy season approaches, could very well impact the functionality of the Europe-based hub - this is also something that may not be clearly visible during slower production cycles. Exposing this liability incentivizes planners and managers to leverage integrated planning solutions such as sequencing, order-slotting, and monitoring; or strategies such as, Plan for Every Part (PFEP) to ensure appropriate levels of inventory and that the Mexico hub has the necessary parts and resources to fill orders.
Curb Transportation Costs
Because customer orders and planned production programs decrease during certain periods of the year due to holidays or other production slowdowns, OEMs must respond with innovative, cost-effective methods of managing their transportation strategy. Simply put, it makes little sense to leverage a full-scale freight platform with whole containers when there is not enough product to fill those containers. This is where Less than Load (LTL) freight comes in handy in reducing transportation costs and creating greater visibility into a company’s freight strategy. LTL is ideal for moving small freight loads, often on an in-the-moment timetable, and OEMs have more capacity to react to surges in demand or disruptions to ensure a continuous movement of product without suffering the costs of FTL shipping (Full Truckload), which can be exorbitant especially for small or rush orders.
Other ways of reducing costs associated with the movement of component parts centers on an integrated container management solution to ease the burden of unloading containers within the yard. Container load management strategies account for a number of factors that often hamper more traditional methods of managing shipping. Weight distribution. Whether parts can be stacked and how. Methods of combining different part loads into one container for economy of space. These and other critical conditions are taken into consideration when leveraging a container load solution to provide planners and managers with ultimate transparency and visibility into how products are sorted in containers and at what volumes.
Evaluate Reporting Solutions
In today’s variant-rich supply network, the value of quality, real-time reporting capabilities to evaluate metrics for success and profitability cannot be understated. With production hubs operating in tandem across the globe and more coming online seemingly everyday in new and emerging markets, OEMs needs to leverage powerful reporting software solutions to achieve end-to-end visibility, transparency, and responsiveness across all touch points of the value chain. Periods of decreased production are perhaps the best time to take a good look at just how a company’s reporting platform operates, and whether deploying more detailed reporting strategies such as predictive analytics, forecasting, modeling, and other integrated systems will provide the value-added necessary to increase efficiency and foster lean principles. Because the ability to leverage a centralized data reporting and sharing source is critical in assessing the supply situation on a holistic level, companies should strive to streamline this process as much as possible to cut through functional silos and increase communication and collaboration.
As you can see, lulls or temporary slowdowns in production don’t have to mean decreases in productivity for all players in the automotive supply chain, especially for OEMs and manufacturers looking to increase their footprint in the global supply stream. Being proactive and taking control of your supply situation during these off-times can go a long way to ensuring a more productive peak season free of disruptions and bottlenecks, which are the achilles heel for all players in the automotive supply chain.