Explaining the Automotive supply-chain problem - Part 1

Ford in America, and other automakers have been very clear with their messaging - COVID-19 is to blame for the delays in delivery expectations for their products. The current state of strained supply-chain problems being experienced is being solely attributed to the global pandemic.

If you know anything about the auto industry you will be fully aware that to manufacture any type of motor vehicle you need thousands of parts, components, sub-assemblies, and sophisticated electronics that go into today’s modern vehicles.

Disruption for both automakers and their extensive ecosystem of suppliers presents a massive challenge.

FACT 1: The exact number of parts that go into a car varies widely from car to car, but what’s the average? Typically, you can expect that there are about 30,000 parts in your vehicle, from the smallest nut or bolt to the big heavy stuff like the engine itself.

FACT 2: The automotive industry brings together some of the most globally complex supply chains for any consumer industry in the world today.

FACT 3: Vehicles are many things: transportation, recreational, industrial, agricultural, commercial, mobile computers, style statements, and status symbols. Each of these aspects is heavily dependent on a global fulfilment supply-chain.

COVID-19 has made it extremely hard to react and manage end-customer expectations making this disruption to the automotive supply-chain a major headache.

It’s not the obvious items like tyres or large-scale fabricated metals that’s the issue but the tiniest parts, like semiconductors, that are creating the longest delays.

The American government has already ordered a review of critical supply-chains. It includes the companies that supply materials for the semi-conductor chips that go into today’s vehicles. But that’s just one solution to the many exposures that automakers around the world will need to identify and mitigate for.

In last month’s newsletter we talked about the lack of semi-conductor chips on the shelf of most automakers as just one part of the slow down with the auto supply-chain. Major automakers like Ford and GM need a transparent and collaborative view into the health of their key suppliers. Every decision the key supplier makes ultimately affects the auto company and their performance.

The only true way to know the strength or health of those supply companies is to obtain that information straight from the supplier themselves, as their viability depends on healthy financial supply-chain suppliers.

Automakers don’t have it easy, their supply chains are exceptionally complex, and they are surging, reoccurring, and have potentially devastating impacts when it comes to delays, just like the vehicle shortages we are seeing and experiencing today.

November 2021