Effective stock balancing crucial for robust supply chain continuity
After a decade of efficiency improvements through stock optimization, components stored in warehousing is on the increase. A survey of how vehicle manufacturers are responding to a changing trend in the automotive industry’s production footprint, carried out by emergency logistics specialist Evolution Time Critical, found that the increasing variance of specification in OEM demand makes forward planning more challenging. Exacerbated by production agility providing flexibility in line with customer demand, this unpredictability has led to the requirement of larger stocks, and it is the effective balancing of this stock which is coming under increasing scrutiny.
A high diversification of special models in the automotive market and unpredictability of market demand is contributing to the trend for last minute or fluctuating component requirements. Emergency logistics expertise can help bridge potentially unstable links in the supply chain to provide contingency for volatility, and analysis of existing operations can help plan for supplier shortfall or future stock excess.
“We are seeing Tier 1 suppliers having to respond to more last-minute orders, which is driving their need to adapt safety stocks or alter assembly lines,” says Brad Brennan, Evolution Time Critical managing director. “We have witnessed an improvement of inter-plant communications as suppliers seek methods of providing a contingency for unplanned orders, as stock is balanced across a company’s facilities and not just a single warehouse location. Communications between logistics providers and suppliers becomes increasingly critical as the supply chain becomes potentially convoluted – careful planning can provide clarity.
“Accurate market forecasting is of particular benefit to Tier 1 suppliers but, for some OEMs, actual demand this year is 10 per cent lower than anticipated,” says Brennan. “Even OEMs with traditionally inflexible scheduling are varying from forecasts on a more regular basis, which leads to problems with component and material scheduling. Long lead times on particular components can result in supplier shortage and the requirement for sourcing of reserve supplies and suitable logistics solutions, or, conversely, substantial amounts of surplus stock, all of which drives down supply chain and production efficiency.”