U.S. Sales Fluctuation Offers New Threat to Automotive Supply Chain
The dip in April vehicle sales in North America is synonymous with the fluctuating demand experienced within the automotive industry, which can lead to increased inventories, production rescheduling, and subsequent supply chain ramifications, advises emergency logistics expert Evolution Time Critical. The potential supply chain turbulence caused by production fluctuation is indicative of the factors that have led to an increased demand for the specialist’s services from auto-makers and OEMs in the United States, and which inspired the recent opening of the company’s first North American control centre in Atlanta, Ga.
“Optimized production is the holy grail for vehicle manufacturers, but the high inventory levels that are necessary during a period of unpredictable sales are expensive. Reducing production is one way of controlling inventory, but the knock-on effects of fluctuation in demand can negatively impact the ability of suppliers to respond when stepping back up to full production,” explains Evolution Time Critical managing director, Brad Brennan. “The United States traditionally reaches a new car sales peak in summer, but if the ability to maintain full production is not safeguarded then affected manufacturers may find it difficult to ramp up production in time, meet original targets, or clear inventory ahead of new model launches in Autumn.”
“Demand fluctuation is encouraged by fuel prices, consumer tastes, and legislative pressure for improved emissions, leading to fluctuating purchasing patterns ahead of the seasonal sales resurgence typically experienced during the summer,” continues Brennan. U.S. vehicle manufacturers enjoyed a record year in 2016 as production peaked, selling over 17.5 million vehicles, but according to figures from Autodata Corp. manufacturers sold a total of 1.43 million vehicles in April, a 4.7% drop when compared to 2016, ahead of the traditionally best-selling months.
“Forecasting will have ensured that early 2017 production matched demand when it was at its highest point for many manufacturers, but the lean production strategies now employed by the automotive industry mean that, fortunately, inventory levels should remain at a more manageable level than five years ago,” explains Brennan. “The significance of the supply chain and its role in enabling higher -risk, flexible strategies has been embraced by vehicle manufacturers, who are now more prepared to safeguard longer-term operational efficiency in the face of challenges such as demand fluctuation – an agile emergency logistics partner is able to analyze the entire supply chain for solutions that can provide a crucial time advantage for any increase in production and safeguard operations. This realization has inspired the establishment of our new Atlanta control center.”