By Jim Burleigh
The U.S. auto industry is facing the greatest adversity in its history. One segment of the industry, however, has thrived—aftermarket auto parts. This segment has grown exponentially during the economic downturn, as consumers have been forced to repair their aging vehicles instead of buying new ones.
In an industry where specialization and customer service are keys to success, effective supply chain management is paramount for long-term sustainability. But several factors make this a difficult time for automotive logistics.
•Auto industry supply chains faced consolidation.Component supplier mergers, acquisitions, and financial difficulties created a lack of available suppliers. This shortage impaired delivery, upgrade/repair time, and, ultimately, profit margin.
•Inventory levels have dropped.Faced with inconsistent demand and the need to reduce inventory carrying costs, shippers have kept less inventory in stock, relying on road transport and route consolidation to make up for these shortfalls. Shipping parts via truck and air for quick, local departures and deliveries closer to the manufacturing site can raise transportation costs. Route consolidation, which focuses on making more pickups, but with less frequency, can also increase costs.
•As suppliers disappear, new sources will likely be located farther away.Overseas manufacturing growth means that component suppliers may now be located halfway around the globe instead of in the next state.
With these issues complicating aftermarket auto part supply chains, shippers must plan now or pay later. For the aftermarket parts business, where materials handling is as important to the bottom line as execution, planning now begins with implementing a warehouse and inventory management system (WMS). The development of Web-based or software-as-a-service WMS solutions has significantly cut implementation time and improved accessibility.
Automotive component facilities operating without a WMS typically achieve inventory accuracy of 90 percent and less, compared to 99-percent accuracy in operations using a WMS. Improving shipping accuracy can lower labor costs, reduce time spent re-creating shipping documents due to errors, and present consolidation opportunities resulting in time and fuel savings. It can also help secure new business through higher service levels, and increase customer satisfaction with faster response times.
Web-based WMS solutions also offer an advantage in establishing supply chain collaboration with new suppliers and customers, because they are accessible over the Internet.
Auto parts companies’ relatively simple inventory management and order fulfillment requirements are suited to Web-based WMS solutions, which can handle functions such as purchasing, receiving and putaway, inventory control, order fulfillment, shipping, integration, and mobile computing. Web-based inventory systems work particularly well for online stores, which tend to stock larger varieties of general and specialty parts.
Auto parts companies that have put off implementing a WMS solution can benefit from a Web-based WMS that offers the right features and flexible configurations at a lower cost. When considering a WMS, no longer is it just about what’s in the warehouse. It’s about creating a complete supply chain execution strategy that saves as much money as it brings in.
(Resource from: Inbound Logistics)