The last few years have seen certain events in the automotive sector, due to which supply chains have been heavily affected. Be it the pandemic, the pirate attacks, etc., all have been challenging and have led to the overhaul of logistics strategies as a result.
According to the global VP of manufacturing and energy, Jason Clark, the automotive sector is indeed feeling the pain of the geopolitical tensions, and some of the supply chain shocks go on to underscore the network fragility. But thanks to rising tech capabilities as well as a heightened stress on supply chain management, businesses may as well be better positioned to overcome such kinds of crises.
Mirko Woitzik, the director of intelligent solutions for Everstream, happens to have a front-row seat to such an evolution. As per him, what once upon a time used to be a very niche kind of function is now the subject of boardroom discussions.
It is well to be noted that Evertream happens to offer real-time supply chain tracking and also evaluation of risks to multinational companies having umpteen suppliers by way of guiding decisions based on logistics and procurement.
As per him, due to the solutions they offer, customers are in know of where their ships are and can also see if there could be a port closure, a strike at a port, or a storm at an airport. The point is that one has the time to reroute in such a scenario, and that too ahead of time.
As per Clark, the days of unimpeded global trade have taken a backseat, and realities such as steep geopolitical conflict and human rights regulation have led to the scrutiny of every element of the supply chain.
As per experts, there are no significant changes expected to the just-in-time supply chain model that happens to be employed across the sector; however, there are many other ways that manufacturers may as well protect themselves from challenges and disruptions.
Companies might as well look forward to getting a larger pie of product engineering in-house or, for that matter, localizing production.
The capacity commitments with logistic providers can very well be renegotiated, and a re-evaluation can be done on the present inventory policies just as they were during the pandemic.
In addition to this, companies might as well conduct sourcing analysis to make sure that they know exactly where the components and raw materials come from, go ahead and setup an early warning system to flag-off issues, and also have a dual sourcing alternative wherein two suppliers for the same components are contacted.
The assistance of AI
AI has gone on to enter the supply chain logistics chat, with companies making use of technology to delve deeper within supply chains.
One of the reports from Cleo, which happens to be an ecosystem integration software company, says that 33% of businesses are moving towards generative AI, especially to combat disruptions in the supply chain in 2024, said the director of industry solutions, Frank Kenney.
Notably, Everstream makes use of AI models that are trained on customer and historical data so as to gauge events that can very well disrupt supply chains and, at the same time, come down hard on finding information pertaining to sub-tier suppliers.
As per Woitzik, analysts may not be able to find out 10 to 15 events that may be potentially affecting their respective supply chains. AI is used to make those severity evaluations with huge boxes of data. The fact is that AI gives analysts the most ideal information so that it can be filtered down and only the ones that would make the biggest impact be focused upon.
Project44 made use of predictive analysis post the Baltimore bridge collapse so as to have an estimation on what percentage of goods got re-routed to other ports.
By way of advanced analytics, automotive companies can as well go ahead and predict the disruption impact as far as their inventories are concerned, and that too in real time. Assessment of inventory that’s at risk, where the company has stock padded, and where it will have to be redistributed to prevent delays are some of the many things that can be taken up.
There could still be opportunities for companies to make more effective use of AI.
In a recent report, a software company called Coupa found out that, in spite of the potential benefits of AI, only less than a third of the CFOs are looking to make the utmost use of AI for procurement.
To use an obsolete technology is no longer an option for companies, the company’s senior director of supply strategy said in a statement. As for Woitzik, he would rather want to see much better integration of the numerous supply chain management systems that businesses use. Making these systems talk to each other is where the majority of the efforts will be put in in the next 5 years, he says.
