June 30, 2023 By IBM Supply Chain 3 min read

The average age of the US light vehicle fleet is now more than 12 years old, which means that they are going to need parts for maintenance​ sooner rather than later. Pair that with a semiconductor shortage amidst global car sales that are forecasted to top 69 million, and you can understand that disruptions in the automotive supply chain would be detrimental to the industry.​

Many companies are beginning to recognize that rebuilding supply networks is imperative to remain viable in a rapidly transforming global automotive sector. For example, the chip shortage has been a call to action for both original equipment manufacturers (OEMs) and suppliers. On a parallel track, companies have been trying to stay on pace to accelerate the transition to electric vehicles. ​

Automotive supply chain facts

  • Up to 50 percent of unscheduled downtime is due to a lack of spare parts or stockouts (The Importance of Inventory Optimization in MRO, July 2015, Aberdeen Group)

So, how can the automotive industry ensure they are addressing these challenges and evolving to meet the needs of the market?

3 tips for accelerating the path to a more resilient and sustainable automotive supply chain

1. Monitor supply to minimize production delays and reduce the time needed for critical supply chain disruption management.

Supply shortages can lead to line outages, manufacturing delays, out of stock issues and lost revenue. Automotive organizations can address inefficiencies in their supply chain by improving monitoring and forecasting to ensure that they have clear visibility into the availability of materials for manufacturing, especially for hard-to-procure components such as semiconductors, rare earth metals or other battery elements.

2. Optimize maintenance inventory, increase reliability, and ensure production schedules are met.

Many automotive organizations are enduring costly production losses due to downtime from lengthy maintenance issues. Why is this happening? A lack of MRO inventory visibility can lead to a lack or obsolescence of key parts. By assigning criticality to assets and items, it’s possible to drive better stocking decisions and free up working capital which can be tied up in maintenance parts that are costly to store.

3. Provide an enhanced ordering experience to customers while accelerating growth and profitability.  ​

B2B companies are under unexpected pressure to deliver digital experiences on par with those in the consumer space, and capturing customer loyalty is trickier than ever.​ Yet dealers and retailers are struggling to find parts easily and meet promise dates to their end consumers.

This is compounded by the fact that many B2B automotive organizations still rely on custom Enterprise Resource Planning (ERP) systems or legacy technology that function in siloed environments​. Gaining better real-time inventory visibility equips organizations to be more proactive when it comes to inventory management, enabling them to reduce blind spots and properly fill orders with more efficient deliveries​.

How IBM Supply Chain solutions can help

IBM Sterling OMS​, which earned multiple market leadership awards as recognized by G2, provides an enhanced ordering experience to customers while accelerating growth and profitability. With IBM Sterling Order Management, automotive businesses can simplify complex B2B inventory actions with dynamic inventory control, deliver the perfect order consistently, and reduce manual effort and costly errors by digitizing processes and automating workflows​.

IBM MRO IO​ helps automotive organizations optimize inventory with more accurate forecasting and budgeting to manage fluctuating demand cycles, increase reliability, and ensure production schedules are met. It also enables automotive industry professionals to assign criticality to assets and items to drive better stocking decisions, save warehouse space for critical materials.

IBM Supply Chain Intelligence Suite​ can monitor supply to minimize production delays, reduce costs, and facilitate streamlined and tighter collaboration, teamwork, and communication. Blockchain enables manufacturers to respond to demands for greater variety with shorter lead times and avoid counterfeit parts.​

IBM Consulting: Supply chain services for automotive

IBM Consulting is a global leader in supply chain consulting with a global ecosystem of
partnerships, proprietary access to IBM’s own technology, research and Expert Labs. Our industry expertise, end-to-end approach from strategy to implementation, and dedicated sustainability practice, ensures your supply chain can adapt to today’s challenges and prepare for future opportunities, while minimizing risks, reducing costs, and driving continuous improvement in both environmental and social performance.

IBM Consulting helps the world’s leading Automotive and Manufacturing companies like Toyota design and build intelligent, resilient and sustainable automotive supply chains that accelerate sustainable growth, boost efficiency, and deliver the next generation of mobility solutions.

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