The automobile industry is highly profitable and expansive in nature. Businesses in this industry focus on different avenues, including car interior cleaning, servicing, and repairs. One of the most notable sub-divisions car manufacturers focus on is the spare parts supply chain.
Companies need to focus on various strategies to manage spare part businesses' complex structures and services. However, getting the best-quality spare parts is easier said than done for most manufacturers. They undergo various challenges in this field in inventory optimization, demand forecasting for spare parts, and supply of said parts.
In this article, we delve more into why sourcing spare parts is a major constraint for businesses.
Finding the correct car servicing is one of the most significant issues related to the spare parts supply chain. Finding the right auto spare part type is essential to ensure the car works as it should.
The following are the common issues car manufacturing companies notice in the spare parts supply chain context.
One of the biggest challenges for automobile companies sourcing spare parts is that demand forecasting is a common issue. This is because one cannot simply focus on the cost or quantity of the spare parts available. Instead, companies must depend on the time of acquiring the car servicing parts. Some become available after the business day ends, and the clients complete their repair work within a few days. However, often, one needs to wait a more extended period to forecast the availability of spare parts.
To elaborate, companies sourcing car servicing parts get it from select vendors. However, many vendors deal with issues like high demand for spare parts, a multi-tier business structure, and several plant locations. Due to these reasons, it is even more difficult for car manufacturers to collaborate with suitable vendors to get spare parts.
Many automobile OEMs choose the push model for spare part manufacturing or acquisition. They do not trust dealers to provide the best-quality spare parts. Often, many dealers depend on the grey market to buy car spare parts. They do not know whether the high demand for these items' stock is available. This prevents many companies from understanding which dealer to depend on for the supply. They also have erratic patterns when ordering the parts to sell to the car manufacturers. This affects the demand forecast generation and company modelling regarding future spare part purchases.
Any car servicing centre has to consider transferring the car parts to manage the repair task. This is not easy in the auto industry, especially in the lack of transport. Due to the recent pandemic, companies cannot physically move their goods to other locations, and legacy software systems are also fragile. This additionally affects the business data process and supply. To note, China is one of the leading sources of raw materials for automobile parts. But, the country's current state of the automotive industry is at a standstill. Production and transport of items are halted, and information transfer is lacking. Thus, supplying the necessary car parts to car manufacturers in other regions is impossible.
Another common problem for car manufacturers when it comes to sourcing car spare parts is the cost. The original parts come at higher prices, especially for big-name clients, like car servicing Hyundai. It would help if you kept a database and awareness about the OEMs as well as dealers in your locality that have permission to sell such car parts. If you buy from these sources, you will notice fewer expenses in your car parts supply chain.
Many of the automobile industry OEMs work with a Dealer Management System. With this, they can keep track of the genuine demands of car servicing parts among dealers. They can access resources like dealer inventory, job carts, and RDC-centric dealer demands.
This system is good for transparency between dealers and OEMs. However, there are multiple points of origin to measure here since dealers purchase the parts from distributors, OEMs, other dealers, and even the grey market.
Therefore, it is more challenging to manage the demand forecast and focus on other important factors like service level, balance, and inventory optimization.
There is a high level of profit margin available in the context of the spare parts-centric supply chain. It also affects the car servicing demands of customers. After fitting them with good spare parts, the professionals can ensure high-quality car performance. So, for companies, focusing on sourcing the right auto spare parts and planning this supply is crucial.
The many problems related to demand forecasting and supply movement are common issues car manufacturers face when it comes to sourcing parts. With the right planning and organization, companies can find a solution to these issues.