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Automotive Supply Chain Management in India: KPIs, Current & Future

Challenges, Risks, and Solutions

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Compliance Engineering Journal ISSN NO: 0898-3577

Automotive Supply Chain Management in India: KPIs,

Current & Future Challenges, Risks, and Solutions

Jagdeep Singh*1, Apurva Sarupria2, Gyaneshwar Singh Kushwaha3, Mamta Kumari4

*1
PhD Scholar, PAHER University, Udaipur, India
2
Assistant Professor, PAHER University, Udaipur, India
3
Assistant Professor, MANIT, Bhopal, India
4
Assistant Professor, Junagadh Agricultural University, Amreli, India

*1
Email:jagdeepscm@gmail.com, 2Email:jainapurva90aj@gmail.com,
3
Email:gyanbhu@gmail.com,4Email:mamta.kumarti27@gmail.com,

Abstract
Currently, automotive industry is passing through a turmoil which consists of automobile and
auto-components manufacturers. It was grown very fast after liberalization not only in terms of
production capacity but also adoption of best supply chain practices. Currently, automotive
industry is passing through a serious crisis after a very long time due to global slowdown and
supply & demand mismatch within India. Industry has seen a lack in demand since many
quarters and recently, in August 2019, CV sales dropped by 39 per cent, PVs by 32 per cent and
two-wheelers by 22 per cent. Automotive Mission Plan (AMP-2016-26) says that India could
stand first in the world in production/sale of small cars, two-wheelers, three-wheelers, tractors,
and buses, 3rd in passenger vehicles and heavy trucks. Currently, automotive industry contributes
about 7.5 per cent in country’s GDP while AMP (2016-26) has a vision to make it 12 per cent by
2026. This study focuses on the key performance indicators (KPIs), current challenges, risks
associated with automotive supply chains & its management, and proposing the possible
solutions based on the reviews. To achieve 12 per cent contribution in GDP from Auto sector, it
needs to reduce overall supply chains cost, bring in efficiency in the current supply chain
processes and improve visibility, collaboration, Innovation and use of modern Information &
Communication Technologies (ICTs) quickly across the automotive supply chain ecosystem. It
also requires a comprehensive monitoring & control on supply chains, risks and KPIs related to
individual businesses.
---------------------------------------------------------------------------------------------------------------------
Keywords: Supply Chain, Supply Chain Management, Auto, Automotive Industry, Automobile,
KPIs, Supply Chain Risks, ICT

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INTRODUCTION
According to Wikipedia, the first imported car ran on Indian road in 1897 and continues import
of cars until 1930 which was in small numbers. A developing ‘automotive industry’ emerged in
1940s with launch of Hindustan Motors in 1942 and a long-time competitor Premier in 1944.
After that many automobile companies established what we could see today. Automotive
industry (automobile and auto-components) has grown at a fast pace in India. The penetration of
passenger cars per 1000 person in Maharashtra, Delhi, and Gujarat is at 29, 98, 35 respectively
compared with India’s average of 21 (ET, 2018). It shows that there is a huge potential in long
term for automobile industry in India. Current situation is not good for automotive industry as
auto industry feels a downturn and it is continuing for 9 consecutive months in almost all
segments. Automotive industry produced a total 1.2 crore vehicles including Passenger Vehicles,
Commercial Vehicles, Three Wheelers, Two Wheelers and Quadricycle in April-August 2019 as
against 1.37 crore in the same period last year which shows a negative growth of 12.25 percent
(Siamindia, 2019).
Automobile demand has been decreased due to huge job cuts in automobile and other industries
due to demonetization as well as GST implementation (Charumathi et al., 2019). Also, there is
no growth in jobs while lay-offs happened in recent past and continues. Everyone witnessed that
BJP had promised during 2014 campaigns to provide 2 crore jobs per year but could not be
achieved and hence due to lack of earnings, upper middle class & middle class which
contributes much more in purchasing of two wheelers and low & medium range cars, could not
contribute in last many quarters. It seems that demand & supply mismatch will continue for few
more quarters except Diwali sales in October 2019.
According to Jenatabadi (2015) Organizational performance can be defined as “a set of financial
and nonfinancial indicators which offer information on the degree of achievement of objectives
and results.” Company’s profit largely depends on its supply chain management and the supply
chain management is a valid path to reinforce the enterprise’s competition (Li and Xie, 2009). It
is seen that supply chain can easy influenced by unwanted factors, both from the outside
environment and from the entities in the chain (Cunlu and Peiqing, 2006). Selective KPIs also
play an important role in organizational performance. According to Wang, Heng and Chau
(2007), performance indicators support supply chain management (SCM) goals and provides
useful information on long-term decisions. Supply chain related key performance indicators are
important tools for monitoring and improving the supply chain performance to gain competitive
advantage (Taylor, 2004).

IMPORTANCE OF THIS STUDY

There has been a no. of studies conducted on supply chain management in automobile industry
however there are multiple challenges faced by Indian automotive industry including
components. This is a review paper attempts to understand the current situation of automotive
supply chain and how it is being managed under demand constraints and what are ‘supply
risks’(Sasha et. al., 2013) associated with it and finally proposing a suitable solution.

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MATERIALS AND METHODOLOGY

This study is conducted based on the review of literatures available in the form of books,
magazines, newspapers, journals, reports, white papers, conferences and other digitals forms
such as websites, blogs.
FRAMEWORK OF AUTOMOBILE SUPPLY CHAIN AND MODERN DEFINITION
According to automobile supply chain framework (Singh, et al., 2019) “The automobile supply
chain framework clearly shows that there is an integration of the activities from supplier’s
supplier to the end customer through supplier, manufacturing/ assembling operation, dealer,
including logistics management activities, information & communication technology, and
finance flow followed by coordination & communication among the internal (within
organization) and external (outside organization) stakeholders. It could be considered as modern
definition of automobile supply chain”.

Figure-1

Source: Singh, J., Sarupria, A., Kushwaha, G. S., & Kumari, M. (2019). Supply Chain Management Practices in
Automobile Industry in India: ICT perspective. International Journal of Management, Technology And Engineering,
9(6), 4303-4314

HISTORY OF AUTOMOTIVE SUPPLY CHAIN MANAGEMENT IN INDIA

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The term supply chain is very new comparatively if we talk about the evolution of cars from
imports until manufacturing begins in India in 1940s. Supply chain management was coined by
Keith Oliver in 1982 first time. However, the concept of a supply chain in management was of
great importance long before, in the early 20th century, especially with the creation of the
assembly line. Six major movements can be observed in the evolution of supply chain
management studies: Creation, Integration, and Globalization (Movahedi et al., 2009),
Specialization Phases One and Two, and SCM 2.0. Supply chain has got evolved in 1990s and
adopted fully by all organizations in the just beginning of the 21st century. Now, automotive
supply chain is considered to be complex and sets the roadmap for other fields in the area of
product and production management. More complex the interactions and the tighter coupled the
supply chains; the more prone the supply chain is to unpredicted, unpleasant events (Wagner and Bode,
2006). Likewise, supply chain disruptions can have significant impact on a company’s ‘short term’
performance and ‘long term’ financial performance (Tang, 2006).
CURRENT SITUATION OF AUTOMOTIVE SUPPLY CHAIN MANAGEMENT IN
INDIA
Automotive industry is passing through a serious crisis after a very long time due to global
slowdown and supply & demand mismatch within India. Industry has seen a lack in demand
since many quarters and recently, in August 2019, CV sales dropped by 39 per cent, PVs by 32
per cent and two-wheelers by 22 per cent. Automotive Mission Plan (AMP-2016-26) says that
India could stand first in the world in production/sale of small cars, two-wheelers, three-
wheelers, tractors, and buses, 3rd in passenger vehicles and heavy trucks. Currently, automotive
industry contributes about 7.5 per cent in country’s GDP while AMP (2016-26) has a vision to
make it 12 per cent by 2026. Supply chain innovations are happening globally and everyone is
talking about Industry 4.0, means 4th revolution in industrialization was already started. This is
the era of technology and innovation not only in automotive but also all across the industries.
FUTURE AUTOMOTIVE SUPPLY CHAIN MANAGEMENT IN INDIA
In the 21st century, changes in the business environment have contributed to the development of
supply chain networks. First, as an outcome of globalization and the propagation of multinational
companies, strategic alliances, joint ventures, and business partnerships, significant success
factors were identified, complementing the earlier "Just-In-Time", Lean Manufacturing and
Agile manufacturing practices. Second, technological changes, particularly the dramatic fall in
information communication costs, which are a significant component of transaction costs, have
led to changes in coordination among the members of the supply chain network (Coase, 1998) .

SMART SUPPLY CHAIN CHARACTERISTICS

Same as other industries, cost control is a prime concern which affects the automotive industry.
However due to its global market and logistics visibility positions even higher compared to cost
control. To effectively address cost control challenges, automotive companies may require not

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only extra efficient supply chain but also it requires smart supply chain with consist of four
important characters.
Instrumented - Using smart devices and sensors to increase visibility across the supply chain
network, reduce cost, mitigate risk, and manage rising complexity.
Interconnected - Integrating the entire supply chain, to share information, make decision
collaboratively and manage the things in real time.
Smart - Believing more on advanced analytics, simulation and modeling tools to evaluate
increasingly complex and dynamic risks and act on better imminent.
Process Driven – It should rely much on process and very less on people.

THREE IMPORTANT ELEMENTS OF EFFECTIVE SUPPLY CHAIN RISK

MANAGEMENT STRATEGY
There are inbuilt risks with every choice a business makes. The major risk to almost every
company is not an unplanned supply chain disruption such as a flood, fire or earthquake but it is
the risk of not being competitive on an operational basis versus the other companies in the
market. There are three important elements of supply chain risk mitigation as below:
1. Supply Chain Visibility: What is the current structure and flow of goods through my
supply chain?
2. Case basis scenario analysis: What if we try this? How would my costs or service be
affected by this?
3. Speedy response: How should I react to an unexpected event?
Right Supply Chain Modeling technology empowers businesses to build end to end living
models to visualize the current supply chain based on what constitutes the most risk to the
business. Then it will be able to promptly react to unexpected events. Right supply chain
planning, design, and Implementation provide the basis for a really effective risk management
strategy, enabling sustainable competitive advantage no matter what market conditions are.
SUPPLY CHAIN FLOW IN AUTOMOTIVE INDUSTRY:

Figure-2

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OPTIMAL SUPPLY CHAIN DESIGN FOR COST REDUCTION AND IMPROVING

CUSTOMER (INTERNAL AND EXTERNAL BOTH) SATISFACTION IN
AUTOMOTIVE COMPANIES
There are many ways to achieve the cost savings or in other words, to improve supply chain
design to achieve maximum satisfaction along with to improve bottom line of a company. These
are as below:

 Right Location Decision

 Network Design and Optimization
 Supply Chain Network
 Transportation Network
 Capacity Planning for long term
 Warehouse Optimization
 Raw Material, WIP, and Finish Product Inventory Planning, Classification and
Optimization
 Material Flow Path Optimization
 Regular Risk Analysis & plan to avoid it through a Contingency Plan

SUPPLY CHAINS AND ITS MANAGEMENT

To measure performance of any process, people or organization, we need to have some key
performance indicators (KPIs) which will help to monitor its efficiency and performance. Let us
understand the definition of KPI, As per Oxford's dictionary; KPI is defined as a quantifiable
measure used to evaluate the success of an organization, employee, etc. in meeting objectives for
performance. KPI is also termed as Key Result Area (KRA).
How will you define KPIs as per requirements? You need to ask below questions and then
decide.

 What do you expect as outcome?

 Who is responsible to deliver the set KPIs?
 What do you want to improve?
 Why do you want to improve?
 What is your Measurement?
 How do you want to improve?
 What is the frequency to review or when do you want to review?

There are various KPIs for supply chain managers which help them to monitor and control the
entire supply chain operation and resultantly the bottom-line of an organization. Some of them
are explained below:

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Table-1: The List Of Important Performance Indicators Of Supply Chain Management -

Definition and Formula to Calculate
KPI's
DEFINITION FORMULA
NAME
It is the familiar KPI used by managers in
measuring the efficiency in supply chain. It is
Days of Days of Supply =
calculated by dividing the average inventory on
Supply [Average Inventory /
hand (as value) by the average monthly demand
(DOS) Monthly Demand * 30]
(as value) and then multiplying it by a month (30
days).
It determines the percentage of SKUs, items or
On Time On Time Shipping Rate =
order value that arrives on or before the requested
Shipping [(Number of On Time
ship date. It helps to improve customer
Rate Items / Total Items) * 100]
satisfaction.
It is the percentage of inventory to be consumed
within the next period. It helps to understand how
well the inventory on hand corresponding the
demand. It is calculated by dividing the opening
Inventory Inventory Velocity =
stock by the sales forecast of the subsequent
Velocity [Opening Stock / Next
period. While calculating this on monthly basis
(IV) Month’s Sales Forecast]
will provide considerable hints in terms of aligning
inventory level to the optimal level for matching
the supply & demand and preventing unnecessary
stock in the warehouse.
Average Average Payment Period
It determines the average time from receipt of
Payment for Production Materials =
materials and payment for those materials. Longer
Period for [(Materials Payables/Total
payment period signifies the more efficient
Production Cost of Materials) * Days
business.
Materials in Period]
GM-ROI denotes the amount of gross profit
earned for every average investment made in
Gross
inventory. It is calculated by dividing gross profit
Margin - GM-ROI = [(Gross Profit
by the average inventory investment. Tracking
Return on / (Opening Stock -
GM-ROI on a monthly basis provides a significant
Investment Closing Stock) / 2) * 100]
trace in terms of having a clear understanding of
(GM-ROI)
which brand produce, SKU has more gross profit
in the inventory.
TEI helps us to combine the gross margin and
turnover. Logic behind TEI is to keep high ITR for
Turn-Earn TEI = (ITR) x (Gross
SKUs or brands generating low margins and to
Index (TEI) Profit %) x 100
satisfy with medium- or low-level ITR for SKUs
or brands generating high margins.

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ITR = Cost of Goods Sold

Inventory / Average Inventory
Number of times a firm’s inventory turns per year
Turnover Average Inventory =
is known as Inventory Turn.
Ratio (ITR) (Opening Inventory +
Closing Inventory) / 2
It determines the number of days it takes to run out
of supply if it was not replenished. Efficient
Inventory supply chain always seeks to minimize inventory Inventory Days of Supply
Days of days of supply in order to reduce the risks of = Inventory on Hand /
Supply excess and obsolete inventory. It helps to release Average Daily Usage
extra cash flow in the system for business
operation.

Normally, it is measured as the cost of freight per Freight cost per unit =
Freight cost
item or SKU. Efficient supply chain always seeks Total Freight Cost /
per unit
to minimize freight cost per unit. Number of Items

It is defined as the percentage of freight bills that

Freight Bill Accuracy =
Freight Bill are error free.
[(Error Free Freight Bills /
Accuracy Billing accuracy is important to customer
Total Freight Bills) * 100]
satisfaction and profitability.

It is defined as the number of days between paying

for Product/materials and getting paid back
(Receiving cash back or into your account) for
Product/materials.
Normally, it is averaged for all orders for a week,
Cash to Cash Cycle Time
Cash to month, quarter etc.
= Product/Materials
Cash Cycle Many Product/Materials are usually required - a
payment date –
Time (CC weighted average Product/Materials payment date
Customer/Buyer order
Cycle Time) can be calculated
payment date
Cash to cash normally measures the sum of time
operating capital is tied up. It means that during
tenure cash will not be available for other
purposes. A fast cash to cash indicates a lean and
profitable supply chains.

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This determines the percentage of a customer’s

order (Quantity) that is filled on the first shipment.
This could be represented as the percentage of
items, SKUs or order value that is included with
Fill Rate = [1 – ((total
the first shipment. The formula for fill rate is as
Fill Rate items – shipped items) /
below: If fill rate is 100%, it means that all orders
total items)) * 100]
fulfilled in 1st shipments only. It helps to improve
transportation optimization and planning for
customers and hence it helps to improve customer
satisfaction.

No. of Perfect Order =

No. of
It is defined as the percentage of orders that are [((total orders – error
Perfect
error free. orders) / total orders) *
Orders
100]
Supplier Order Cycle
Supplier This determines how long it takes to deliver a Time = Actual Delivery
Delivery customer order by the supplier after the purchase Date – Purchase Order
Cycle Time order (PO) is received at supplier end. Received Date from the
customer/buyer

Table-2: The list of important performance indicators of supply chain management

Attributes Supply Chain - KPIs
Total SCM Cost (For Entire Supply Chain), Cost measures
Cost within the Firm
Meeting Quality Performance Standards, Defect Detected Per
Quality Unit Produced Per Unit Purchased, Quality Certificates &
Awards, Products Per Unit Sold
Frequency of New Product Introduction, Annual Investment
Innovation in Research and Development, Radical and Incremental
Changes
Production Flexibility, Service Flexibility, Supply Chain
Flexibility Response Time
Identification of Suitable Suppliers, Supply Capacity of
Quality Material of Suppliers, Effectiveness of Suppliers,
Supplier Reliability
Improved Supplier Communication, Higher Supplier Risk
Management
Fulfillment of Orders 'On-Time', Delivery of Product in
Customer Order Cycle Right Condition, Complete Delivery As Per Order (No Back
Time (Lead Time) Order), Delivery Meets Customer's Needs
Final Product Delivery Delivery Performance, Fill Rates, Perfect Order Fulfillment
Reliability

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Cash-To-Cash Cycle Time, Inventory Days of Supply, Asset

Asset Management turns/Inventory Turns
Product Line and New & Innovative Products at Cheaper
Product Variety Price, Processing Cost and Flow Times, Range of Products
Offered

SUPPLY CHAIN DESIGN STRATEGIES FOR AUTOMOTIVE COMPANIES TO SAVE

COST AND OPTIMIZE ENTIRE SUPPLY CHAIN OPERATION:
Cost savings could be improved through strategic supply chain design as below-
 Right Location Decision
 Network Design and Optimization
 Supply Chain Network
 Transportation Network
 Capacity Planning for long term
 Warehouse Optimization
 Raw Material, WIP, and Finish Product Inventory Planning, Classification and
Optimization
 Material Flow Path Optimization
 Regular Risk Analysis & plan to avoid it through a Contingency Plan

AUTO INDUSTRY - DOMESTICS CHALLENGES & TRENDS

Supply chain firm’s within the automotive supplier industry put in to manufacturing excellence
in many ways, including cost, quality, and delivery to their original equipment manufacturers
(OEM) and subsystem customer base. A competitive supply chain capability not only assures the
on time delivery of the component/material, but also the carrying out of inbound supply to make
sure the shipment of quality finished goods at a competitive price while delivering on target
margins for the producers. To accomplish these goals, continuous improvement in global supply
chain execution became center supply ability necessary by most automotive OEM’s. Strategies
about lean replenishment and logistics must be placed to achieve performance objectives. Based
on the opinion across the industries and also within automotive, supply chain executives have
sorted out challenges in Automotive Industry.

 Fluctuating market demand is a key challenge in the automotive industry.

 Lengthy New Product Development cycles
 Lack of supply chain visibility such as supplier, material, and production constraints
cause scheduling delays, and short term production changes.
 The domestic financial crisis led to increase pressure on the competitive performance in
auto sector.
 Liquidity crunch in the market due to poor economic growth and job loss put brake on the
automobile demand.

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 Global climate change concern has put pressure on automotive executives to make the
right decisions in many areas including R&D & manufacturing technologies like BS-VI.
 High cost and low profit margins are constant challenges faced by auto-industry
everywhere.

AUTO INDUSTRY - GLOBAL CHALLENGES & TRENDS

External Challenges
 Exchange & interest rates
 Environment & safety related etc.
 Raw material & energy cost

Competition:
 Moving targets - everyone optimizing or restricting
 Quickly entering every segment
 Global competition (aggressive new entrants worldwide)

Customer:
 Segmentation and polarization (based on cost, low vs. premium)
 Stabilize demand and price pressure in established markets
 Decreasing faithfulness

Industry:
 Complex alliances, partnerships, M&As
 Global overall capacity
 Consolidating ecosystem (dealer groups and suppliers)

Based on these trends, five major challenges are identified in automotive supply chain by the
supply chain executives as below:
1. Supply Chain Visibility
2. Risk Management
3. Cost Containment
4. Globalization
5. Turbulence in Customer Demands

ADDITIONAL READS ON SUPPLY CHAIN CHALLENGES:

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Establish and Outline Operations Process for Service furnishers: Draw

Standard
Operating procedure detailing warehouse inventory system process,
warehouse
operations process, as well as documentation process. Establish
M. Ramamurthi inventory visibility at every location through MIS Reports: Initiate daily
(2018) merchandise count procedure to be carried out at all of the locations and
reported return to the inventory desk. Daily merchandise count should be
able to reflect location, Monthly audits and archive count should be
implemented at all locations without fail and insist on one hundred
percent adherence, Visiting major sites and being present during physical
stock audits on periodical or half yearly base is extremely significant
Poor information system capability: Homegrown application with
basic functionality, IT investment required in all functions.
Jayaram, Dixit, Supply chain management capability: Weak strategic vendor
Motwani (2014) partnership, information sharing, trust among partners, delivery lead
times (coordinated supply chain, supplier performance management).
High cost of customer service: Poor forecast, planning of schedules.
Bhushan, Tirupati, Supply chain visibility, increasing customer demands, risk management,
Suresh (2013) globalization, and cost containment.
High levels of inventory, fragmentation of logistics, demand side
(market penetration, customer reach, sophistication of product features),
Jayaram, supply side (infrastructure, information technology, availability of
Avittathu (2012) competent suppliers, managerial skills), limited information sharing and
integration with partners, high process complexity (different types of raw
materials and processes, and large supply base).
Key challenges faced in the automotive industry are – managing
Kumar (2012)
vendors, tracking products, visibility and coordination.
Mangal, Gupta Demand, lead-time, supplier problems, internal conflicts, market trends,
(2012) product life cycle, information flow, government policies.
1. Supply of Material: Import Material, inferior quality of supply
material, unavailability of resources, natural disasters, supplier selection,
Mahendran, and costs
Narasimhan, 2. Production: Machinery malfunction, human risks, wrong packaging,
Nagarajan & power and electricity
Gopinath (2011) 3. Demand: Forecasting errors
4. Miscellaneous: Transportation, quality, storage, information sharing,
safety and regulations.

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1. Operational: Supply disruptions, demand uncertainty, machine

failures, improper planning, information & security risks.
2. Market: Price variability, customer behavior and expectations,
competitor moves, exchange rates, environmental risks and disasters.
3. Business/strategic: Adverse effects of strategies such as outsourcing,
Hochfelder2 single sourcing, lean manufacturing, improper supply network design,
(2011) forecasting errors, lack of coordination and information sharing.
4. Product: Short product life cycles, complexity in product design and
manufacturing, desire for variety of products, need for multifunctional
products.
5. Miscellaneous: Political risks, credibility risks, brand image risk,
social risks, ecological risks

SUPPLY CHAIN RISKS

Royal Society (1992) defined risk as ‘the probability that a particular adverse event occurs
during a stated period of time, or results from a particular challenge’. Production risk concerns
any undesired consequences in the production process, such as damage, loss, the possibility of
danger, and injury (Harland et al., 2003). Modern supply chains are more complex and global
than ever before. But that also leaves them open to a wider variety of risks and disruptions.
Supply Chain Risk Management (SCRM) is a process of identifying potential risks of complete
supply chains, analyzing and determining characteristics and sources in order to handle the risks
(Neiger et al., 2009) which could affect market, operational and financial performance. The
modern economy relies on the smooth operation of complex and modern supply chains. The
ability to move materials, components, and finished products in a timely and efficiently has
delivered benefits such as
 Reducing the cost of finish products
 Improving access to advanced technologies
 Opening new markets and new business opportunities for manufacturers.
Yet modern supply chains are also vulnerable. A shift in Domestic, and international trade and
regulatory policies can upset the fundamental economics of established supply chains.
Transportation delays, natural disasters, theft, bad weather, cyber attacks, and unanticipated
quality issues can disrupt cargo flows, creating short-term costs and delivery challenges.
Organizations are normally aware of supply chain risks but due to underestimation of the impact
and lack of knowledge about tools, supply chain managers neglect to implement suitable
instruments (Wu, 2010). Supply chain risks can be divided into two main groups: internal risks
within a company such as machine breakdowns or IT problems and external risks such as natural
disasters or man-made activities. Internal risks generally have higher possibility to occur whereas
external risks generally have a higher impact. Perspectives of risk could be about organizational
buyer behaviors, procurement and supply, purchasing strategy selection, and strategic risk, such
as outsourcing risk, environmental risk and e-business risk (Harland et al., 2003). Few trends that

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you should keep eyes in the upcoming years which may check up their implications for your
supply chain network.

 Recalls and safety scares

 Climate change across the geographies
 Trade wars
 Raw material shortages
 Strict environmental regulations
 Economic uncertainty and structural change
 Industrial turbulence
 Drones & aviation safety
 Battles at the borders
 Container ship fires

EFFECTIVE SOLUTIONS

1. It is the right time to re-examine your supply chain design and related KPIs

The supply chain risk atmosphere is dynamic and continually developing. Risks are
progressively more being called out in companies publicly filed financial statements, and as
supply chains become more strategic & disruptive are turning into board-level issues. It is the
right time to reassess and evaluate your current supply chain design to catch the Industry 4.0 bus
with ultra modern technologies which are the integrated part of the modern supply chain
management (Singh, et. al, 2019). Right KPIs are important to monitor and control the supply
chain operation therefore the KPIs should be reviewed & revised based on the business interests.

2. Go with the flow

Organizations have to introspect and find out their strengths, weaknesses and workout on to
improve. Also, they need to look at other areas like opportunities of businesses and threats from
new entrants like MG motors has made an internet car and has been in demand since opening of
the booking, technology or any other country specific policies like in India, Government is
focused on BS-VI & then BS-VII technology along with electrical vehicles (AMP-2016-26).

3. Right Risks being resolved on right time

Supply network complexity increases the supply chain (Harland et al., 2003). Normally, raw
material prices change is measured the highest risk for the supply chain whereas supplier’s
failure and supplier’s quality problems have the second rank. Thun and Hoenig (2011) suggested
that supplier quality must be treated as the most vital risk since it has both high probability and
high impact. According to Li and Xie (2009), selection of vendors and selection of clients play

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the major roles amongst all the factors and awful record of partners is the most outstanding risk
factor. According to (Harland et al., 2003), the current business trends of increasing products &
services complexity, outsourcing, globalization and e-business that have led to more complex,
dynamic supply networks, have resulted in risks shifting around supply networks. To diminish
these risks, strengthen the monitoring mechanism based on the cooperation records may improve
the mutual trust and power communication between business partners.

CONCLUSION
Old ERP system and process may not be good enough in near future. Due to cloud based
technological systems available and hence companies might not require changing their processes
to accommodate the technology. Now days, technology provides flexibility in systems to control
across multiple trading partners. It does not only provide considerable benefit in improving
supply chain performance but also it helps the lowering costs. However, there are major
challenges in managing the scale, scope and complexity of today's automotive supply chain. E-
commerce, Materials Management, and Finished Vehicle Logistics initiatives are influential and
have a considerable impact on supply chain efficiency whether the goal is to reduce in-transit
damage, improve visibility of information, or increase in the velocity of the parts flow & finish
vehicles, guidelines, training and educational / opportunities to understand and effectively reduce
the complexities. Lastly, the supply chain redesign and risks must be monitored and should be
corrected before they get rupture.

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https://www.aiag.org/supply-chain-management

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