The automotive industry has one of the most complex and convoluted supply chain structures in the world. Besides, the increasing globalization, volatile market conditions and dynamically changing customer demands pose several challenges in the automotive sector. Therefore, it is essential to have an effective operational strategy in place and a series of automation tools for supply chain management. More importantly, it requires a centralized software interface to proactively manage different aspects of the automotive supply chain.
In the automotive sector, as a company grows and expands to new horizons, it is often plagued with all sorts of operational challenges. It includes regulatory compliance, data handling complexities, logistics, and distribution challenges. That said, supply chain software development for the automotive industry could be a crucial step towards streamlining mission-critical workflows.
In this post, we will discuss the main challenges that are often encountered in automotive supply chain management. Subsequently, we outline the significance of supply chain management solutions and how supply chain software development aids in overcoming these challenges.
Also, Read Industry 4.0 and Its Impact On The Automotive Sector
Common Challenges In The Automotive Supply Chain
Successfully running automobile manufacturing units could be increasingly difficult in the absence of a centrally managed supply chain software. A majority of automotive manufacturers face several difficulties with supply chain and logistics that often lead to resource wastage and operational challenges. This in turn, severely impacts the company’s overall profitability due to increased backorders and product recalls. Let’s move ahead and discuss the common challenges that automobile companies face in their day-to-day supply chain management operations.
Inventory Control and Stock Management
In the automotive industry, inventory management could be a back-breaking process since we have to deal with enormous quantities of spare parts required for manufacturing. It is essential to keep inventories well-stocked in advance, but sometimes problems also arise due to overstocking. Overstocked inventories in the automobile supply chain majorly contribute to resource wastage and add to overhead costs that could be minimized otherwise.
Custom supply chain software development would ensure that inventories are efficiently managed and stocks are available in optimum quantity. Besides, it significantly reduces resource wastage and brings effective time and cost savings to the organization.
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Scaling Issues With The Supply Chain
Scaling issues are quite common in the automotive supply chain, especially when expansion is on the cards. During the expansion, the automobile manufacturers have to make their products available to a new segment of customers. These potential customers might be having different needs and expectations that need to be addressed to corner the market. For instance, cars with manual transmission systems are still dominant in the Indian market. Whereas, developed countries like the US, UK, and many European states prefer their automatic variants. Therefore, automobile companies must scale up their manufacturing and supply chain processes in accordance with the varying customer needs.
Developing custom supply chain software enables automobile companies to gain full visibility into all elements of the supply chain. Furthermore, they can analyze their target audience to scale and optimize their supply chain in the given area to deliver maximum customer satisfaction. A custom-built SCM solution offers several BI tools for intelligent decision-making that aids in capturing the market.
Challenges With Logistics Management
As a manufacturing company grows, it results in increased dependency on logistics for shipments, consignments, and procurement of raw materials. Under normal circumstances, improving logistics services requires increased manpower that ultimately shoots up your overhead expenses. Ideally, it is advisable to collaborate with third-party logistics (3PL) companies and let them handle the logistics operations on your behalf. Nevertheless, many companies prefer to have their own workforce for logistics management due to privacy and quality-related concerns.
In both cases, supply chain software development renders increased visibility into logistics operations, enabling automobile companies to keep close tabs on their shipping activities. Above all, it plays a critical role in accelerating the order fulfillment cycle and delivers improved customer experiences.
Product Recalls and Backorders
For obvious reasons, the increased number of product recalls and backorders could prove costly for automotive companies. Not only does it impact their revenues but also tarnishes their brand reputation in the market. Failures in the supply chain often lead to product mismanagement that sometimes becomes the main reason for recalls. Similarly, poor supply chain management practices also result in increased instances of backorders that may cause major financial losses.
Understandably, custom SCM software would help automobile manufacturers to overcome the aforementioned challenges while augmenting their upselling and cross-selling efforts.
Also, Read The Importance of Data Analytics In Supply Chain Management
The Bottom Line
The COVID-19 pandemic had an adverse impact on the global economy, causing major losses across several industries. The automotive sector was amongst the worst affected areas as automobile sales declined sharply in many countries. Now that things are starting to improve with several relaxations in lockdown restrictions, automobile companies don’t want to leave any stone unturned. Understandably, small and medium-sized companies in the automobile sector are more at risk of losing their business due to the pandemic. That said, it is high time that they should consider investing in supply chain software development to upscale and future-proofing their enterprise systems.
At Oodles ERP, we provide end-to-end SCM development services to streamline operational complexities in the automotive sector as well as other industries. Our custom supply chain software development services are conducive to addressing the industry-specific needs of our customers using next-gen technologies. We use open-source platforms like Odoo, OFBiz, and ERPNext to solve complex business problems, yielding significant time and cost savings. For project-related queries, drop us a line at [email protected].
