Thursday, 14 August 2014

What are the Nine Pain-Points in the Automotive Industry and How to Cope With it – Part One

The automotive industry is struggling at the moment where growth and profit is concerned. Increased costs and reduced profits mean there are several problems that have to be resolved and these are known as pain points.  Over the next two days we’re going to take a look at the nine pain points:

Inaccuracy in sales forecasts
The inaccuracies that are sent in the sales forecasts from the dealers have an effect on the downstream units.  If too many vehicles are made the dealers are left with overstock, too few and there won’t be enough to fill demand.

Disconnections between manufacturers and customers
Inventory levels can be reduced by using lean manufacturing, however as this isn’t linked up to actual demand it can result in stock piling in warehouses.

Self-fulfilling Cycle to provide inaccurate sales forecasts and increased sales costs from incentives
The first two pain points cause the third one which is when the dealers of high levels of stock that customers don’t want. They try to push the sales through using promotions and promotions. As a result the demand can be distorted as customers only buy the cars because of the incentives.

Unreliable and vulnerable information provided to manufacturers from suppliers
Suppliers aren’t able to rely upon the scheduling that the suppliers send to them.  The schedules rarely match the forecasts and they don’t match the final call offs. The assembly point will use the just in time method suppliers told just 8 to 10 hours before the final call off is made.

The delay in the order entry
Orders take several days before they are put into the list of required parts even though the checks and allocations only take a couple of hours to process.

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