Delays at suppliers’ facilities accounted for almost twice as many late deliveries as failures in logistics processes, according to a new survey of European vehicle manufacturers and first tier suppliers.
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Automotive supply chains may reach increasingly deep into lower cost regions, but simple issues like the unavailability of packaging were still a significant cause of supply chain failure.
The cost of late deliveries has escalated to as much as EUR1m an hour in penalties imposed by vehicle manufacturers if production lines have to be stopped.
The annual Supply Chain Strength survey, conducted by emergency logistics specialist Evolution Time Critical, asked vehicle manufacturers and first tier suppliers for the reasons underlying supply chain problems over the past year and the results were consolidated into seven categories.
The most frequently occurring were transportation problems, production delays and order processing.
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By GlobalData“It’s astonishing how many of the failures are due to scheduling issues, a significant number of which arise from a change in demand for a particular vehicle or option,” said Evolution managing director Brad Brennan.
“Transportation problems are often as simple as the lorry not leaving the supplier on time, or the driver’s break not being factored into the travel time leading to a missed connection. Similarly with production delays, which are often attributed to second tier suppliers not providing components or materials on time. Dispatch has even been delayed due to lack of product packaging.”
Robust supply from eastern Europe
Another surprising finding was that the new, extended supply chains from low-cost manufacturing regions in eastern Europe have not led to a rise in late deliveries.
“The frailty of east European transport networks has increased the overall incidence of transportation problems from 19% last year to 25% this year, but high levels of contingency are protecting the customers from late deliveries,” said Brennan.
“This is certainly a good policy when in the ramp-up phase, but subsequently the additional costs can substantially reduce the savings made through low cost manufacturing.”
Growing use of high-speed deliveries
Another growth trend highlighted by the survey was the strategic use of high-speed deliveries.
“Ultra lean supply chains tend to be inflexible, which can have an impact on their ability to service spikes in demand or to provide rare parts for unusual customer orders,” said Brennan. “Appropriate use of high-speed deliveries improves the supplier’s responsiveness to customer demand and also allows further supply chain leaning. It’s a clever development that reflects the sophistication of the best automotive logistics operations.”
