Originally Published on: SpendEdge |Automotive Industry Challenges and Threats: Overview

Insights into Industry Threats: The global automotive market, valued at nearly $3 trillion, confronts substantial hurdles, prominently the ongoing chip crisis stemming from production issues in China and Taiwan. Beyond chip shortages, the sector grapples with challenges like inventory visibility, rising recall costs, and deficiencies in quality control processes.

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Disruptions from Input Shortages for OEMs: Global automotive OEMs are contending with persistent shortages, particularly in vital components like semiconductors. Despite robust demand, chip scarcities, dockworker shortages, and port congestion contribute to supply chain slowdowns and parts shortages.

Risks Introduced by Opaque Supply Chains: The absence of a unified view of goods movement, activities, and data across the supply chain impedes automotive players. Inaccurate data heightens the risk of pilferage, unauthorized sale of genuine goods, and the substitution of spurious ones, impacting business efficiency and profitability.

Persisting Quality Challenges: Quality remains a significant challenge, resulting in frequent and expensive recalls. Weaknesses in supplier quality management and pressure on suppliers to meet deadlines contribute to defective parts, necessitating reworking and incurring additional costs.

Innovative Shipping Approaches: Given the potential extension of the chip shortage into 2024, automakers may choose to ship vehicles without certain add-on features, allowing buyers to add them later. Exploring the rewriting of vehicle software for optimized chip utilization is also under consideration.

Assuring Access to Critical Materials: Automakers secure access to crucial materials, such as lithium, through exclusive contracts with large producers. This ensures a stable supply chain for materials vital to electric vehicles.

Enhanced Supply Chain Visibility: Leveraging web-enabled smart devices with sensors enables real-time monitoring of assets in transit, mitigating the risk of supply disruptions. This heightened visibility aids in addressing challenges associated with opaque supply chains.

Adherence to Quality Management Standards: Auto manufacturers must not only meet quality management standards but also ensure that suppliers adhere to defect-prevention specifications. This is paramount for preserving brand reputation and ensuring user safety.

Precision in Demand Forecasting: SpendEdge aids automotive industry participants in identifying cost-efficient supply markets while enhancing the accuracy of predicting customer demand. This facilitates the containment of supply risks and adept navigation of challenges like price volatilities.

Direct Oversight of Supply-Side Tasks: With proficiency in procurement, IoT technologies, and market analysis, SpendEdge provides solutions to augment visibility within automotive supply chains. Clients benefit from a comprehensive view of the supply base, enhancing real-time monitoring of supply chain activities.

Monitoring Supplier Performance: SpendEdge's supplier quality management process empowers companies to scrutinize the supply chain end-to-end, identifying and addressing quality concerns. Continuous scoring against industry peers is instrumental in managing supplier performance across key parameters.

Success Narratives: SpendEdge's collaboration with a Southern European automotive parts manufacturer resulted in evaluating its supplier base against industry standards. This partnership enabled the client to stay ahead of emerging technology trends and enhance products with new features.

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