Overview of the Global Automotive Tires Industry
Globally, the market for automotive tires is expected to reach 2.5 billion units by 2022, driven by the strong focus on fuel efficiency and the resulting demand for low rolling resistance tires. The global automotive tires market is also benefiting from the growing popularity of green tires against the backdrop of rapidly growing concerns over the environmental burden caused by inadequate recycling efforts and overflowing landfills of scrap tires.
The Business Challenge and Journey
Client background: A global leader in automotive tires manufacturing. The company mainly focuses on innovations that are thoughtfully designed based on extensive consumer insights to meet the real needs of end-users across the globe.
Client issue: With an aim to build competitive strength, the client decided to tweak their sourcing model from 80% of goods manufactured in the US for the domestic market to 80% manufactured in China.
To help the client develop a robust supply chain model, implement it successfully, and assist them in going through the major change, the supply chain analysis experts at SpendEdge conducted a comprehensive research and carried out discussions with prominent stakeholders in the automotive industry space.
Client journey: The client established a dedicated customer team of qualified industry experts to develop and deliver the solution. The solution included:
- Booking coordination and pro-active follow up with factories in China
- Purchase order and SKU data collection at the origin
- Carrier management and exception handling
- Full system integration (EDI) and in-transit online visibility on every shipment and SKU
- Deconsolidation and delivery at destination
- Direct delivery model (DC bypass) for selected products reducing inventory holding and shortening product lead time
Key questions answered in this supply chain analysis engagement
The automotive tires manufacturing client achieved a cost savings of USD 400,000 per annum. An additional cost savings of USD 700,000 per annum was achieved from the restructuring of their domestic transportation model and delivery process in the US.
Challenges Facing the Automotive Tire Manufacturers
Our in-depth analysis of the global automotive industry shows that the manufacturers are facing challenges in terms of:
- Inventory: Managing inventory with the right technology support to provide automotive tire manufacturers with better control and visibility – on a real-time basis – is a major pain point.
- Supply chain: The pressure to reduce cost, manage shortened order-to-delivery cycles, and establish a highly efficient logistics network is a huge concern for stakeholders in this industry.
Therefore, to capture the competitive advantage and increase overall profitability, automotive tires manufacturers are leveraging solutions that aid in supply chain analysis. Supply chain analysis helps companies to map out its specific activities within the supply chain and look for ways to create efficiencies.