Today, the automotive industry is one of the most rapidly growing industries globally. Furthermore, being the most innovative sector, a fierce competition is at the core of the automotive industry. In fact, it would not be wrong to say that the success of both the manufacturers and the suppliers in the automotive industry is completely dependent on their collaborative behavior against the need of the customer. One of the most common issues currently impacting the automotive industry supply base is keeping up with the growing volumes, which has resulted in shortages in supply. Aiming at the outcomes, a competitive supply chain capability not only assures the delivery of component material on-time but also the execution of inbound supply to guarantee the shipment of quality finished goods at a competitive price. Therefore, improving procurement and supply chain process in the automotive industry is a significant challenge as well as an opportunity today. So, in this article, we have discussed a few very important ways to boost the supply chain and procurement which in turn can result in improved cost savings as well as better customer experiences in the automotive sector.
Digitalization has been the talk of the town in any business function ranging from marketing, finance, operations to procurement and supply chain. Industry 4.0 has been the most significant driver for digitalization in organizations that augment the management’s capabilities to improve efficiency and productivity. Industry 4.0 incorporates various game-changing technologies ranging from Internet of Things (IoT), cloud-based systems, and data analytics. The advent of such technologies has changed the way how supply chain and logistics department functions. It has also contributed to saving time for operations professionals by automating mundane tasks. The future looks bright for supply chain digitalization with ideas from the automated warehouse and robotics to drone delivery looming around. So how is technology unfolding in the area of digital supply chain and what trends are set to gain traction in the coming years?
Traditionally, procurement and supply chain information existed in silos and managers from one department had less transparency of other departments. The digital supply chain will be marked by the ability to understand activities and events of multiple players. Digital supply chains will augment to such a level that transparency will increase not only for internal stakeholders but also for external supply chain partners. One day, the technology will advance to enable global trading network or global commerce hubs.
A typical supply chain generates a huge amount of data, and with so much data available, advanced analytics seems to be the perfect candidate for in-depth analysis. The advancement in data storage and processing technologies has enabled companies to crunch mountains of data within minutes and not months. The power of such advanced analytics can be utilized in areas such as making buying decisions, inventory planning, supplier network optimization, and supplier collaboration. It will significantly help companies in improving productivity and reducing the cost.
AI and robotic automation
The world of the supply chain may see personal assistant such as Alexa and Siri on the consumer-facing side. Such an AI personal assistant will be able to give instant information into the company’s supply chain and help managers track the progress of their operations. Additionally, AI and automation systems can enhance workforce productivity by performing repetitive tasks such as supplier on-boarding, assisting with invoice compliance, and processing help-desk orders. Such automated digital supply chain will shorten lead times, eliminate errors, and improves stakeholder experiences.
Transportation management system (TMS) is one of the crucial parts of any logistics network. Cloud TMS can provide remote monitoring to logistics professionals and the ability to track progress along the supply chain. Cloud TMS also eliminates the troubles of on-premise deployment and breaks silos to create an interconnected network of 3PL providers, carriers, and matching providers. Cloud TMS has the ability to develop into a central marketplace which offers a connection to all stakeholders in a supply chain.
Apart from technologies like IoT and data analytics, which evolves from the software part, technologies like mobile robotics can also significantly improve workforce productivity. It will allow warehouses to reduce labor requirements and help DCs keep pace with the current e-commerce growth. The use of mobile robotics may not be limited to material handling but also in automated guided vehicles (AGVs). Mobile robotics/smart AGVs that can carry or pull materials to workstations, or function as smart, driverless lift trucks which would alleviate the manpower needs at the DC level, and allow for DC automation which is quicker to install and reconfigure.
For more trends in the digital supply chain, IoT systems, and big data analytics:
Electric motors power nearly every electrical devices in the world, and it would be an incredibly difficult task to get through our day without using one. Electric motors are mechanical devices that convert electrical energy into mechanical energy through the process of electromagnetism in the stator and rotor windings. Recent advancements in technology have even made it possible for motors to be as small as a nanometer consisting of a single molecule. The electric motor finds applications across multiple industries including automobile, energy, manufacturing, HVAC, consumer appliance, and industrial automation. Amongst these, the automotive industry is expected to drastically drive the demand in the global electric motor market due to the increased production of electric vehicles. (SpendEdge – Procurement Market Intelligence Report)
Energy efficient electric motor
The demand for energy-efficient motors from end-user industries such as power and energy, automobile, and others has been strong. However, they are demanding energy-efficient electric motors to reduce their energy costs. Additionally, such engines also reduce the carbon emission, which helps companies to meet their sustainability goals. Also, some governments have imposed strict regulations that will increase the demand for energy-efficient electric motors in the future.
Rise in prices
The increase in global steel prices is expected to increase the price of electric motors by 15%-20% by 2022. Such changes will affect the prices of motors related to efficiency standards such as IE2 and IE3. Though the price of energy-efficient electric motors might increase, buyers can reduce their energy costs.
Customized electric motor
The supply market of electric motors is highly fragmented due to the presence of several regional and global suppliers, which intensifies competition. To increase competitiveness, suppliers are customizing their electric motors to differentiate their products and provide products according to the needs of buyers. Consequently, buyers require customized products to avoid compatibility issues such as load efficiency.
Increased production of high power-to-weight ratio motors
Industrial buyers form the automobile, electronic device, and aircraft sector are focused on reducing the overall weight of their product without compromising on functionality and power. As a result, they demand motors with high power-to-weight ratio. For instance, in aircraft manufacturing, the use of electrical drives in aircraft up to 2.20 ton had a limitation in take-off weight because of the high weight of the electric motor. This issue can be addressed by the use of a high power-to-weight ratio electric motors
Read more about the emerging trends in the electric motors market along with supply market insights, procurement challenges, sourcing insights, and key suppliers in SpendEdge’s upcoming report on the global electric motors market.
Supply Chain Management
As the year comes to a close, we take a look back at the news and events that have shaken the world of the supply chain, logistics, and procurement. At a time when the pace of innovation is advancing rapidly, supply chain managers are having a hard time adjusting to new technologies. However, the changes are here for good, with companies being able to realize a multi-fold increase in efficiency and gains with new technologies and strategies. Apart from such technological innovations, various other factors have had a significant impact on the supply chain; some brought about by the people themselves such as the appointment of Donald Trump as the president of USA and others out of their control like hurricane Harvey.
Supply Chain, Logistics, and Procurement News Making the Headlines in 2017
Nike cuts Lead Time from 60 Days to 10
When it comes to improving supply chain efficiency, most notable changes that make the news report marginal gains or improvement of few percentage. But what Nike did with its logistics network by cutting down lead time from 60 days to 10 is just phenomenal. The sports goods manufacturer redesigned its logistics network, nearshored from more facilities, invested in automation, and invested in contract manufacturer relationships. Two years back Nike set up a 125,000 sq.ft. Innovation center which found a way to produce footwear uppers using 50% less labor and 30% fewer steps. They also made a strategic change to their sourcing model by adopting consumer on-demand model by digitizing their end-to-end supply chain. It enables the company to deliver exactly what consumers want with shorter lead times to deliver.
Policy Changes Under Trump Administration
The trump administration won the presidential election even after making conflicting claims and promises. However, it also promised increased employment opportunity, affordable healthcare, federal and corporate tax cuts, and decreasing dependency on China. The policy changes would widely affect the organization’s supply chain functions. For instance, in a bid to promote Made in USA, slapping a border adjustment tax (BAT) of 20% inevitably increases the cost of procuring goods from outside USA. Also, procurement and supply chain managers had to rethink their offshoring strategy, when Trump proposed a 20% reduction in the corporate tax rate.
Hurricane Harvey Sweeping Away the Ethylene Production
The Hurricane Harvey was the costliest tropical cyclone on record causing economic damages of about $200 billion and affecting 132 petrochemical sites located along the Houston Ship Channel. The hurricane resulted in chemical spills which released a large number of pollutants into the nearby ecosystem and also caused around half of the chemical facilities to go offline. The hurricane-induced chemical plant explosion caused an ethylene production setback of about 50,000 tons per day. Limitation in the ethylene supply also affected other industries along the supply chain such as plastics and natural gas. For instance, after the fall in ethylene supply, the majority of the polyethylene plastic manufacturing plant had to shut down.
The Brexit Referendum
Procurement management across the world could not have ignored the impact of Brexit on their procurement function keeping in mind the interconnectedness of the global trade. The effect was felt soon after the Brexit announcement as the value of pound sterling dropped by over 10% over the Euro, affecting the import and export of goods and services. Laws and regulations would impose increased tariff levels, and the UK would lose some of the free trade benefits they were enjoying. Additionally, it also impacted the labor market as it limited the availability of low-skilled migrant labor. Businesses across the UK will suddenly have a smaller pool of candidates to consider for filling their procurement positions.
China’s Greenest Supply Chain: Apple
The Chinese NGO Institute of Public and Environmental Affairs (IPE) named Apple the greenest supply chain in China after measuring environmental performance in the supply chain across 250 brands. Apple received a rating of 82.5 out of 100 with Dell following with a score of 81. The evaluation takes into consideration responsiveness and transparency, energy conservation and emissions reduction, and compliance and corrective actions of the companies.
For more information on supply chain, logistics, and procurement function of an organization:
The term crowdsourcing is an extended version of the proverb “the more, the merrier.” The idea of soliciting ideas, services, or information from a large pool of people has been there for quite some time. Traditional companies function within their closed boundaries with few people in the chair making a decision based on what they think would be good for the company. However, the more customer-centric companies involve multiple people in the ideation process, collecting feedback from a large group of people to deliver a truly great product. The advent of the internet era has made the crowdsourcing process even more easier. Procurement and supply chain professionals are now turning their focus towards crowdsourcing to bring such valuable inputs for their supply chain.
Why are supply chain professionals emphasizing on Crowdsourcing?
On-time, Cost-Effective Delivery
If there is ever a company that provides on-time, cost-effective delivery delighting the customer, Amazon would be the top name in people’s mind. Their delivery services are so impressive that even after choosing standard 4-5 business days delivery, they show up on your doorstep the next day, or sometimes even the same day. They are able to do this because of the vast distribution network and independent delivery fleet. Part of this success can be credited to their effort to crowdsource their delivery to service providers such as Cargomatic, who connects local shippers with carrier companies having extra space in their trucks. Delivery companies are also trying to solve the last-mile connectivity problems by crowdsourcing traffic apps, which help drivers find the most efficient routes with data from other real-time drivers.
Supports Risk Management
Most companies put in proactive risk management strategies to limit the damage and be adaptive in case of unavoidable circumstances like a natural disaster or geopolitical turmoil. In order to be prepared for situations like this and avoid manufacturing and transportation breakdown, companies are resorting to crowdsourcing. For instance, a project called zeean, enlists public feedback to collect data on economic responses to extreme weather. The company uses such data to improve supply chain responsiveness and resiliency. Additionally, crowdsourcing technology can enable companies to communicate and collaborate with their suppliers in real-time in order to mitigate supply chain risks.
The advent of social media platforms has allowed brands to communicate and engage with their customers and gain valuable inputs on product development. For instance, Lego has a dedicated site for their fans and customers who can contribute design ideas for the new product. Additionally, users can vote for their favorite idea and state how much they are willing to pay for it. In case the idea gets support from more than 10,000 people, the official Lego board will decide for its production. Companies not only crowdsource ideas for the product but also for marketing and communication as Oreo did by devising the brand positioning for new Mini-Oreo cookies. The company received more than 500 ideas from over 42 countries and was able to identify ten potential ideas for their brand positioning.
It is estimated that around 30% of annual retail sales occur between Black Friday and Christmas. In 2016, consumers spent a staggering amount of US$655.8 billion in retail purchases. With such insane amount of purchasing happening in such a short amount of time, companies are having to find innovative ways to adjust their logistics and supply chain in order to cater to such considerable demands. So, with companies selling their products at such a throwaway price and battling to get their logistics and supply chain right, how are they managing to churn out profits? It all comes down to proper planning and a little novelty in their logistics and supply chain. Here are some of the tips to help your company gain an edge to manage the supply chain to remain effective for the next holiday season.
Align and Communicate with Your Partners
The holiday season usually calls out for managing a large amount of stocks and delivering it to the consumers. It is essential that all entities along the supply chain such as buyers, suppliers, and 3PL vendors communicate their goals, expectations, and performance metrics so that everyone is in the same line. This helps to alleviate any disruption occurring in the supply chain as each party makes unified attempt to address the issue. Numerous manufacturers have a fair idea about the customer expectations and demands, and communicating the same to all parties across the supply chain facilitates the end-goal which will help in reducing the overall logistics cost.
Expanding Sales Date and Offers
Big retailers and especially e-retailers have realized that handling the crazy Black Friday traffic for a single day can be disastrous. So they have started their Black Friday and other holiday sales much earlier in advance. Most of the retailers are starting the sales a week before Black Friday. For instance, this year Amazon began their Black Friday sales a week earlier offering Amazon Alexa at a discounted rate. Expanding the sales dates eliminates supply chain bottlenecks by distributing the total traffic throughout the week and makes the demand more manageable.
Incorporate Big Data Analytics
The retail industry has embraced big data to gather meaningful insights. With such significant amount of data accumulated on historical sales and user behavior, it is possible to accurately forecast what items will be on demand during the holiday season and in what quantities. This equips the supplier to be prepared to adjust their supply chain as per the requirement. Also, retailers can identify factors that can cause disruptions for holiday season sale by using real-time data from optimization tools to discover risks. Carefully monitoring data trends helps to identify outliers that can cause disruptions which can lead cause the logistics function to fail. Additionally, it also helps to increase supply chain efficiency by improving order-to-cycle delivery times and enable procurement teams to respond to arising crisis effectively and efficiently.
Taking Advantage of Omni-channel Logistics
When it comes to making deliveries in the holiday season, the shipments are usually delayed. This is because the same logistics partner has to cater to the multi-fold increase in demand, which is quite impossible. This can mean that your parcel can be delayed by as much as a week. To avoid this scenario and maintain customer satisfaction companies can leverage omnichannel logistics of nearby. For instance, if a customer orders any product from the online store, instead of sourcing from the distribution center, the company can get that item from the closest brick and mortar store so that it reaches to the customer quicker.
For more information on supply chain and logistics in Black Friday and holiday season along with retail sales, store promotions, and online sales:
People across the world are more inclined to using molasses instead of sugar as a sweetener because of its multiple health benefits. A byproduct of the sugar-making process, it offers unique health benefits such as relief from headaches, constipation, anemia, diabetes, stress, obesity, cancer, and skin ailments. Although molasses are formed as a byproduct of the sugar-making process, various other types of molasses exist such as blackstrap molasses, sulfured molasses, unsulfured molasses, and hydrol. A recent report from SpendEdge states that the rising popularity of molasses can be attributed to increasing consumer preference for clean-label products in the food and beverage industry. Additionally, such preference for clean-label products is urging the molasses suppliers to manufacture products that do not contain artificial additives, preservatives, stabilizers, enhancers, and thickeners.
Top 5 Molasses Suppliers
One of the leading molasses suppliers, Imperial Sugar is a US-based sugar producer established in 1843. It also manufactures molasses crystals that can be used in dry mixes, candy bars, cream centers, beverages, toppings, cereals, and pie fillings. Imperial Sugar is involved in producing, processing, refining, transportation, customization, and distribution of commodities with Europe and MEA being its largest trading hub.
ED&F MAN was founded by James Man in 1783 as a sugar cooperage and brokerage, in the UK. Apart from its involvement in sourcing, storing, and distribution of agricultural commodities, the company aids customers in managing pricing risk through financial products. One of the key molasses suppliers, they source four million tonnes of molasses from more than 50 countries to enable industrial companies to use it in fertilizers, renewable energy, fermentation, construction, and to treat waste.
Archer Daniels Midland Company
Archer Daniels Midland Company was founded by John Daniels in 1902. It is a global food processing and commodities trading corporation operating more than 270 plants and 420 crop procurement facilities worldwide. One of the top molasses suppliers its product line includes Dri-mol molasses powder, Dri-Mol 604 dry molasses powder, Sweet’n’Neat 4000 dry molasses powder, Sweet’n’Neat 65 spray-dried molasses powder, and De-Mol® dry molasses powder.
Bloch & Guggenheimer, popularly known as B&G Foods, started out in 1889 by selling pickles in the street of Manhattan. Their product Grandma’s Molasses is one of the leading premium-quality molasses sold in the US. Bear Creek, Green Giant, Ortega, Baker’s Joy, and Wrights are some of the other brands owned by the company. The company reported revenues of US$1.39 billion for the year 2016.
Peter Cremer is a German manufacturer of agricultural commodities, raw and basic materials, and oleochemicals. The company is involved in the trading of molasses in over 40 countries. Apart from being one of the notable molasses suppliers, the company also deals in maize, rice, barley, wheat, and oleochemicals.
Read more about the top molasses suppliers along with procurement best practices, cost modeling, risk analysis, sourcing strategies and procurement best practices in SpendEdge’s upcoming report on the global molasses market.
Over the past few years, the dawn of information and communication technology has paved the way for the use of promising technologies including optoelectronics across several applications. Additionally, leading manufacturers in the optoelectronic devices space are have started leveraging the use of supply chain analysis to offer cost-effective and best-in-class product offerings owing to the relentless demand for innovations among the customers. The supply chain analysis solutions help optoelectronic devices manufacturers to increase their profitability across the supply chain.
With years of expertise in offering a plethora of services, SpendEdge’s supply chain analysis experts help optoelectronic devices manufacturers client determine effective ways to handle the products in a short lead time while optimizing cost and limiting the inefficiencies across procurement processes. Moreover, these solutions offered by SpendEdge help clients enhance customer service, decrease inventory costs, and ultimately lower the handling costs.
The Procurement Pain Point and Insights Offered
A global optoelectronic device manufacturing client was facing predicaments in forecasting the bottlenecks and speed up the procurement processes across the supply chain. Additionally, they wanted to identify the inefficiencies in their supply chain activities and formulate cost-effective strategies to gain a competitive edge over the peers operating in the optoelectronic devices manufacturing space.
SpendEdge’s supply chain analysis experts tailored a comprehensive two-step research methodology which included primary and secondary research coupled with quantitative and qualitative data collection procedure to cater to the client’s specific business requirements.
During the course of the supply chain analysis engagement, the manufacturer of the optoelectronic devices evaluated their supply chain competencies and compared it to that of their peers operating in the industry to serve their customers better. Additionally, client identify their significant areas of spend across office locations, consequently helping them reduce their overall costs across the supply chain.
Fundamental questions answered in this supply chain analysis engagement include
The supply chain analysis engagement helped the optoelectronic devices manufacturing client identify the current inefficiencies in the supply chain. This helped them evaluate and enhance the overall buyer and vendor performance.