SpendEdge’s Supply Chain Analysis Helps a Leading Auto Parts Manufacturer Realize Annual Savings of US $300,000

Overview of the global auto parts industry

The global automotive industry is accelerating and facing stiff headwinds, spawned by a highly-congested marketplace, increasing regulatory scrutiny, and extended car ownership lifecycles. Additionally, the increasing demand for high energy density battery, rising demand for an advanced pump for mid-size segments, rising adoption of hybrid powertrains, and increasing automotive production are driving the growth prospects of the global auto parts manufacturing industry. As a result, auto parts manufacturers, OEMs, and other players in the automotive value chain must find ways to extract greater revenue and profit from the auto parts manufacturing space.

However, our analysis of the global automotive industry shows that auto parts manufacturers are facing challenges in terms of:

• Technological advancements: Today, technology is a major threat to companies operating in the auto parts manufacturing industry. Over the years, the global automotive industry has witnessed rapid transformations with a considerable number of competitors offering a differentiated set of products. Consequently, to stay relevant and updated with the current market scenario, establishments should rely on innovations while offering end products.
• Fluctuations in brand loyalty: Today, customers have become more informed and confident about their purchasing decisions. Customers are rethinking their buying preferences, and to retain the potential customers, leading companies in the auto parts manufacturing space are planning to redefine their product offerings in the automotive industry.

Due to such challenges, auto parts manufacturers across the globe are leveraging robust supply chain analysis solutions. Supply chain analysis solutions provide business strategists with the latest growth opportunities. Additionally, automotive industry players can accomplish better product differentiation and gain a comprehensive understanding of the core competency of each activity involved in the supply chain.

The Business Challenge and Journey

Client background: One of the world’s leading manufacturer of auto parts for over 20 years.

Client issue: The auto parts manufacturer was in the process of reviewing their distribution center contracts and wanted to optimize their locations and distribution costs without jeopardizing the level of service to their customers. Additionally, they wanted to reduce distribution costs without affecting customer service negatively. Furthermore, the client wanted to review their high safety stock levels caused by forecast procedures and long lead times for transshipment.

The supply chain analysis experts at SpendEdge conducted a comprehensive research and carried out discussions with prominent stakeholders in the automotive industry space to help the client save logistics cost.

Client journey: Gained a holistic approach, including soft aspects such as ocean and air connectivity, transit time, transportation cost, warehouse operating cost, and other business needs of the customers. Additionally, the client simplified the process of comparing their suppliers’ total logistics costs per package and implemented a new solution.

Key questions answered in this supply chain analysis engagement

The Results

SpendEdge’s supply chain analysis engagement helped the client achieve US$700,000 in logistics cost savings for the first year, with subsequent annual savings of US$300,000. Additionally, US$110,000 savings was identified from changing current warehouse location, obtained from lower inbound freight cost and lower security stock needed.

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