Automotive Supply Chain Strategy

Demand fluctuation is a natural occurrence within the automotive supply chain, caused by changing customer needs, travel times, and the life span of equipment, among other things. The bigger a company is, the more suppliers it has (suppliers that must work together), and the larger the impact when demand fluctuates.

Variations in demand can amount to 4 percent or more of the total cost of the end product. As demand fluctuates, sometimes upwards of several hundred percent compared to forecasts, it becomes more difficult to exploit capacities and create sufficient flexibility. Individualizing products to “batch size 1” makes economies of scale far more difficult to realize and thus leverage.

Using process-oriented planning and control systems, A.T. Kearney helps companies improve transparency and simplify supply chain processes. With an integrated MRP system, companies can make realistic and realizable forecasts across their borders early on, and then reorganize accordingly. Ultimately, the entire distribution network handles demand fluctuations more effectively when the entire supply chain is more flexible and transparent.

A.T. Kearney's Automotive Supply Chain Expertise Includes:

• Planning and control systems — we help automotive companies develop systems that are process-oriented and occurrence-based
• Integrated materials requirements planning (MRP) systems — projects focus on improving integration across company borders to provide an early warning
• Optimization of distribution networks —  we work with automotive companies to increase the flexibility, transparency, and reaction times to changing market conditions

For a follow-up discussion, Contact The Automotive Consulting Practice.