Automotive Supply Chain driven by Strong Data Demand

October 6, 2015 Pieter Kinds

Being able to rely on seamless and consistent data is the way forward for the automotive industry, that has taken pole position in the digital business revolution.

That is one of the conclusions coming out of the Automotive Logistics Global conference last month in Detroit. Many senior supply chain executives are fully aware that their business is digitalizing and they need to shift gear, but very few leaders have the right tools in hand. Therefore, a high percentage of managers feel there not up for the transition yet says Gartner, the independent American information technology research and advisory firm.

“The focus is on optimising profitable delivery of customer value and no longer on the optimisation of costs and the utilisation of assets,” states Gartner’s leadership partner Scott Dewicki. “Governance models on areas such as sales and operational planning (SOP) is one of the means by which insights into customer value and demand are shared across functions so that decisions that balance company financial objectives and the delivery of customer value are quickly and consistently made.”

Automotive logistics data

Like any other industry, the most important factor when mining the large amount of data available today in the automotive supply chain is making it actionable. Automotive Logistics published some interesting numbers last September. In the US alone there are 14 OEMs and 400+ suppliers with millions of transactions being recorded daily, including more than 280,000+ parts movements. Add to that the 250+ LSPs and the 17,500 dealers and you have a rich source of information.

“In the automotive industry there is lots of data available to analyse and draw a perspective,” according to Tom Kroswek, senior director of supply chain excellence, at Ryder. Kroswek specifically stresses that the supply of data needed to be seamless and consistent, and it needed to be visualised. Optimising that data with various tools now at the industry’s disposal allowed companies to work at a strategic level, such as using inventory analysis at the tier one supplier level to show how to lower inventory cost, explained Kroswek. “Sales and operations planning is where automotive companies are putting in the effort to clear up the data,” he added.

The role of Freight Invoice Data

The traditional and basic function of freight audit & payment is ensuring freight invoices are correct: if a forwarder is meant to ship by sea but bills for airfreight, the discrepancy will be flagged up so the shipper or the freight audit company can investigate.

Companies are driven to freight audit by a lack of control, compliance and visibility of their freight and freight spend. Financial regulations are also playing a part: companies must have visibility and control of their financials and, for multinationals, this is exceedingly difficult. Where outsourcing freight audit is a commodity in the United States, European companies are still discovering the true benefits. Moreover, US companies are more focussed on cost savings, whereas in Europe, companies are generally more interested in the data they obtain from the audit.

Shippers with an advanced freight audit solution are able to use the data to monitor carrier performance, identifying any carrier which is regularly late, levies inaccurate invoices, or damages cargo more frequently than other carriers. But carriers benefit, too, because they usually get paid quicker. Besides that, the data serves a ground stone function in tender processes and transparent cost-serve reporting on the shippers side.

European Automotive Industry on the rise

The European market represents more than 17% of global sales and is expected to grow by +5% in 2015. 2014 has seen positive growth in the Automotive industry; European vehicle production is growing with new cars sales on the rise. Growing complexity is driving the need for more efficient asset utilisation as supply chain strategies evolve with more localization, globalisation, platform standardisation along with changes in networks and the need for greater operational efficiency. Re-engineering and optimisation of the supply chain and logistics, with a global mindset is essential to the longer term growth strategies.

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