Evolution Time Critical: What does the next 3 months hold for automotive supply chains?

In a few short weeks, COVID-19 has spread on an unprecedented scale, touching every corner of the globe and impacting all walks of life

In a few short weeks, COVID-19 has spread on an unprecedented scale, touching every corner of the globe and impacting all walks of life. In our industry we have seen automotive supply chains ground to a halt as manufacturers shut down plants in order to prevent the spread. Of course, we see annual shutdowns and even ‘unplanned’ shutdowns in normal business, but we are now in unprecedented territory with factories shutting without notice and without any real knowledge of how long for. This means that when things return to normal we will be facing one of the biggest threats to supply chain resilience – confusion.

Before a planned shutdown starts, the return to production and the increase back to full capacity is carefully considered before the plant closes. But with this shutdown initiated so quickly, businesses will need to be flexible and reactive when it comes to decisions on shift patterns and speed of return to capacity when production does recommence. The situation is so fluid that we don’t know which markets will recover from a consumer demand point of view, and therefore which models vehicle manufacturers will need to make. We also have no idea, from a supply perspective, which countries will be able to restart production first. The supply chain will continue to shift and evolve as time passes and restrictions are lifted in each country. Evolution is constantly consulting with key customers to assess the impact of the sudden stop, identify existing gaps in supply and put in place plans to react quickly as customer demands change when production resumes.

The question will not only be are there enough parts to produce cars, but also will there be an availability of labour to fit those parts? Car dealerships are also seeing a substantial decline in demand, with reports of a drop of 22% in some areas hardest hit in the first half of March. While the shutdown is ongoing, manufacturers are having to review their order banks and forecasts, which will have implications deep in the supply chain. Focus will be on which areas are recovering quickest and capacity will be focused on supplying these regions.

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SOURCE: Evolution Time Critical

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