Automotives and their parts have built a global industry that dates back decades. Even with technological advancements, the industry has gone bigger and stronger, marking a great share of the worldwide economy.
The automotive industry accounts for about 3 percent of the world’s economic output. In countries where car and other automotive manufacturing is present, this percentage is even bigger being Germany, Mexico, Japan, and South Korea’s pillars of economic output. Studies assert that if you view the automotive industry as a country, it would be the sixth-largest economy in the world. A global gross revenue of almost 2.4 trillion dollars is what the industry is creating.
For many people, owning an automobile represents freedom and economic growth, be it individually, on an enterprise level, or even at a community level. Owning a personal automobile gives people the freedom to live, work and play in an unprecedented, previously unimaginable way. This is especially true for places where no public transportation is available on a massive scale.
In this article, we’re going to address logistics concerns in the automotive industry and how better and more efficient logistics can boost an already huge economy and propel it to a stabler role in the world’s economy, people’s lives, and sellers’ profit and reputation.
The automotive industry supply chain
Technological advancements in the past decades have dramatically enhanced the automotive industry. With all its complications, modern ways and processes in handling delivery and logistics have sprung up to adapt to the changing conditions of global logistics.
When we talk about supply chains, we’re speaking of all the companies and individuals that are involved in the production of goods, from parts and other commodities to completed goods. Logistics is made up of processes that involve shipment, storage, delivery services, transportation, and commercial shipping.
Whatever part of the whole logistics chain requires the greatest quality of service at the lowest operational cost possible. Particularly with automotive logistics, intricacy, attention to detail and significantly efficient infrastructure are basic requirements to ensure the success of delivery and shipment.
Basic model of automotive logistics
While the whole supply chain of production is established, automotive logistics comes along with it. In every step of the supply chain, there is a corresponding logistical process to deliver materials and goods from point to point. There are two main modes in which automobile transportation methods can be organized.
First, first-party logistics (1PL), which are logistical processes that involve the transportation of materials and semi-finished goods from one enterprise to another to enable the completion of the finished product.
In this mode, the focus is on massive manufacturing capacity and steady supply and demand as a precondition. When handling 1PL, integrated logistics facilities and a robust pool of human resources are requirements.
Another mode is the highly open, third-party logistics (3PL) which is more useful as a logistical approach when handling and managing end-of-supply chain companies, finishing product manufacture near the target customer base. Overall, it also lowers shipping costs, decreases shipping times, and enables greater development of the process on the large scale. Customization is even more possible when using this approach.
Solutions for automotive industry logistics
Being one of the most complex supply chain and logistics industries there is, the automotive industry heavily relies on third-party companies to deliver thousands of parts that are needed to complete the manufacturing processes of automobiles across the world.
And because there are a lot of processes involved, consumer expectations also do not fully collide with the world’s transition to a system of same-day shipping, online-only interfaces, and doorstep product delivery. But, in spite of more tempered expectations, automobile customers still expect to receive their vehicles at a reasonable time (usually from a few days to months) and at a reasonable cost.
Logistics makes up about 3 to 5 percent of a vehicle’s total production cost, which puts lowering the cost of logistics in a prime position to lowering the total cost of the vehicle in general. Cost advantages are created when the logistics operations are well-managed and the saved costs can be realigned to greater investment, performance improvement, and enhancement of features and quality improvement.
These things can be achieved via:
Proper planning. Production resources, tools, equipment, and the overall capacity of each plant, warehouse, and other facilities must be deliberately and properly allocated. Systems of management and distribution must be properly put in place so that bottlenecks, stockouts, and lack of capacity can be avoided. Aside from logistical requirements in physical infrastructure, companies that engage in the delivery of goods can arrange to have enough skilled operators available to maintain sufficient capacity at all times. When a budget, resources, and technology are available, digitizing production flows can help increase transparency and provide you with a larger picture of your total logistics capacity.
Consider automation and new technology. As a business person, it’s a great move to examine the whole process and the methods you employ in moving automotive parts and finished products around the production line. When you begin looking deeper into your own production processes, you will be able to find ways to optimize and make the process leaner. In doing so, you can also determine which parts of the processes can be automated, albeit in parts at the beginning. You are also free to use customized software that can reliably track materials from the time they’re received in the facility until they are shipped out. Untrackable inventories are avoided to provide for an overall better fulfillment process.
Value talent and reward employees. Finding the right people and taking care of them is the key to success in logistics. With well-trained and skilled engineers, you are in an optimal position to keep up and align with the ever-changing and dynamic demands of the industry. Investing in your team and giving them proper compensation, training on skills and systems, and handing out opportunities for career development and progression gives your business a head start in achieving greater excellence and a holistically higher quality of work.
Warehouse management. Sometimes, putting in a large amount of inventory in permanent storage facilities can be counterproductive. Nowadays, when business processes are largely dependent on existing demand, and with the truth that some markets can be unpredictable at times, it would be best to adopt a just-in-time approach for a more flexible production environment and a more responsive supply chain. This way, you would avoid the situation that your products linger in storage for a time longer than expected. In the case that you run out of space, you can also avail of warehouse and storage space in offsite facilities. Parts and materials will also be delivered on a just-in-time basis making sure your storage costs are more aligned with what your enterprise needs at every moment.
Efficient transportation. There are benefits of the production system that one can miss out if logistics and transportation are not at their optimum. There are many opportunities to increase transportation efficiency such as new technology of tracking routes in truck cabs, transmitting data to you on a real-time basis, giving you location and issue reports for faster troubleshooting.
Innovations and the future of automotive logistics
Lean supply chains. Lean supply chain management is based on the following principles:
- elimination of any losses occurring at each stage of production,
- speed of implementation,
- flexibility in implementation of new solutions.
Reusable transport packaging. Consider using more lightweight and durable materials in transportation such as foamed polypropylene.
How a logistics engine like Locad can help your automotive business logistics
Many aspects of logistics warrant heavy consideration should you decide to pursue selling pet food in e-commerce channels. These very real issues that require urgent solutions may be too overwhelming for you to manage alone. That’s why you’ll need the help of our trusty friend – the logistics engine. Considering the complexity in managing fulfilment and logistics in the automotive industry, it’s a smart move to outsource and partner with a logistics engine to streamline your processes.
The logistics engine is the latest innovation in end-to-end fulfillment and logistics. It is a masterful combination of groundbreaking and integrative software, bolstered by a strong and stable infrastructure network of warehouses, hubs, and third-party logistics (3PL) partners. The end goal of a logistics engine is to handle your logistics from end-to-end, so you can refocus energy on other aspects of the business you deem important.
Here are some of the ways using the services of a logistics engine like Locad can help your automotive business achieve greater heights:
Storage. Locad offers a vast storage hub network that is available to sellers domestically and abroad. The stock is stored and delivered from the nearest hub to the location of the customer. This ensures faster delivery and more intelligent inventory, allowing you to assign and reassign inventory depending on the progress of your orders and sales. Aside from preventing stock-outs, intelligent inventory also ensures that the stock you place will not stay for too long. This can run aligned with a just-in-time approach. The advantages of knowing where your inventory is, the amount of stock in each place, can help you make smarter decision for a more optimal rate of sales compared to the regular storage and stock monitoring.
Picking, packing, and packaging. When you sign up for Locad’s services, all you have to do is take care of the part wherein you send your products to a warehouse hub for storage. From then on, as your orders come in, the hubs will be alerted as soon as confirmation of orders is done. Afterward, employees who are professionally trained in handling the fulfillment of orders in bulk will do the picking and packing for you. And because they are professionals with vast experience in fulfillment, you will not fear errors in packing, labeling, and shipping. Since automotives are complex and would necessitate a more intelligent, specific approach, you might want to talk out with a logistics engine service agent on how to best move forward for the benefit of your business.
Order management. Orders from all your integrated marketing and sales channels will pour into one hub awaiting your management decisions. In just one system called the Control Tower, you can see all incoming orders whether from any of your existing marketplace channels such as your own dedicated website or third-party automotive marketplaces. From the Control Tower, you can also control inventory and reassign items based on current demand. What a neat way of maximizing sales by allotting inventory in a more intelligent way. Knowing how many orders you’re receiving at a certain period will help you in prioritizing which orders should be delivered each day or each week.
Compliance with standards. Locad’s professionals and the logistics engine’s third-party logistics (3PL) partners are among the most reputable institutions and experts in the end-to-end fulfillment and logistics industry. With top-standard infrastructure and protocols, you can be sure that your orders are handled safely and soundly. What’s even better about Locad’s logistics engine is that it recommends you the best 3PL partner for specific items, so if you’re looking for 3PL providers who can deliver parts with varying specifications and recommended handling approaches then most probably, Locad can help you find the perfect fit.
Tracking and troubleshooting. Although most of automotive orders come with more tempered expectations, we still must avoid delays at any cause. Prolonged delays in delivery may cause some serious repercussions. In case problems are encountered along the way, you’ll be notified right away so you can also notify your customers. Aside from location tracking, Locad also presents you metrics about your best-performing and even the worst-performing products so you can troubleshoot right away, and make better decisions moving forward.
By now, we’d like to think that we have already convinced you to optimize and streamline your processes so you can better serve your customers who are waiting their lives for the freedom and convenience they could get with a personal automobile. Have it safely delivered for greater satisfaction!
