The automotive sector was one of the most hit industries during COVID, and the devastating effects are still felt today. Companies are struggling to stay profitable amidst a shortage of raw materials, new motor vehicle safety developments, and surging labor costs, among other issues.
For instance, some use collapsible corrugated boxes, which offer a better ROI by reducing waste and saving space. On the other hand, other automotive companies leverage automation to maximize efficiency and improve product quality.
Since there are many trends to pull through challenges, this post has narrowed down to top trends that improve efficiency, cut costs, and enhance product quality.
Improving Logistical Efficiency
From the scarcity of truck drivers to ever-changing cross-border regulations, logistics is one of the problems affecting automotive companies. Fortunately, many logistical issues in the automotive industry are manageable. Savvy automotive companies are already using interventions like automation, offsite warehousing, and frequent training and development to overcome problems.
Investing in Automation and New Technology
Many logistic issues result from hectic data processing, human errors, and time wasted doing various logistic processes manually. That is why automobile giants have heavily invested in automation to address pressing pain points like traffic.
For instance, savvy companies have invested in cloud-based transportation management systems (TMS), versatile software with several benefits. They help analyze freight data in real time and automate manual tasks.
Setting up More Offsite Warehouses
Investing in multiple warehouses across the market is an ideal way to speed up delivery to the end customers. The warehouses are essential for international or multinational companies, which would take several weeks or months to ship products.
The offsite warehouses also give automotive companies an edge over unforeseen issues that limit shipping. For example, in the face of the COVID pandemic, when countries restricted cross-border movement, entities that have stocked warehouses kept operating as usual.
Keeping Raw Material Levels High
COVID-19 acted as an eye-opener for inventory management. Companies, even the giant automakers with robust logistical infrastructures, ran out of raw materials like semiconductors, batteries, steel, and computer chips. Extra inventory should be a norm for forward-looking businesses that want some preparedness for unforeseen challenges. The extra inventory:
It gives additional protection Against Unforeseen Eventualities
Calamities, pandemics, and other uncontrollable eventualities lead to increased demand or reduced production of raw materials. Worst of all, the eventualities always happen abruptly, giving automotive companies no time to adjust.
Therefore, progressive automotive companies should acquire more than enough raw materials when the business climate is suitable. That way, in the event of scarcity, the companies will keep running while adjusting to the shortage.
Caters for Cyclical Demands
Typically, the demand for automotive products fluctuates on season, macroeconomic control policies, exchange rates, and festivals, amongst other market forces. Holding up huge inventories puts companies in a position to increase production rates whenever product demand rises unexpectedly.
Holding extra inventory also saves them from buying raw materials at exorbitant prices when demand increases. That means manufacturers won’t be forced to increase the prices of products due to unexpected, short-term market fluctuations.
Take Advantage of Quantity Discounts
The manufacturers of raw materials used in the automotive industry often provide huge discounts for large purchases. Therefore, forward-looking companies can take advantage of the discounts to cut down production costs or recover some of the revenue they lose in inflated labor and logistic costs.
Reduced Logistic Cost and Time
For companies importing raw materials from a vendor who is far away, buying in bulk cuts down the cost and time for logistics. The saved time could be used to make more products, while the reduced costs will help keep production costs at a minimum. In return, companies will have the advantage of selling end products at a competitive price.
Optimizing Physical Operations
Operational optimization is the act of updating business operations according to market changes. It helps companies cut costs, improve efficiency, and ensure business compliance. While there are several ways to optimize their efficiency, automotive companies struggling to improve the bottom line should prioritize the following:
Improving in-house traceability
In-house traceability is a set of actions to identify a product from the point of production to the point of sale. This type of traceability generates the bits of information that help enterprises optimize production lines, run leaner, trace problems, take control, and enhance customer confidence.
While there are several ways to upgrade internal traceability, experts recommend QR coding as the best. This helps companies identify products quickly and uniquely throughout their product cycle.
With QR coding, automotive companies can know a product’s date, time, and location of manufacture, amongst other important details, by simply scanning a code engraved on a particular automotive code.
Organizing Work Spaces Professionally
The way companies organize their floor space determines their overall efficiency. For instance, well-ordered spaces help employees maneuver the workstation smoothly, saving time and improving productivity.
Furthermore, a well-ordered space improves employee productivity and burnout. How? It eliminates the stress of dealing with the consequences of poor organization, letting them focus on delivering the most during their work shift.
Contrarily, poorly ordered spaces make employees feel overwhelmed, an issue that reduces productivity. Therefore, keeping the workplace organized should prioritize companies that want maximum employee productivity.
Container systems
Research shows that by 2027, automotive companies will be spending up to $10 billion on packaging various parts. The experts link the soaring cost of packing single-use, low-quality trays, crates, boxes, and pallets.
Industry leaders are turning to modern packaging solutions like collapsible corrugated boxes. These reusable boxes help them pack items like engine components, batteries, cooling systems, and lighting components at a low price.
What is more? As their name suggests, the collapsible corrugated boxes consume little storage space in warehouses. Therefore, companies that need to stock more containers don’t have to use up more space to accommodate the collapsible boxes.
The boxes are also made from rigid corrugated plastic, which can endure rough handling during transportation. They are an excellent alternative to single-use, non-collapsible packaging with a short lifespan.
The Bottom Line
Like other sectors, the automotive industry keeps facing new challenges as market shifts keep changing. For instance, today’s companies face challenges like raw material shortages, new compliance issues, inflated packaging costs, logistic challenges, and labor shortages.
Although most of these challenges are unavoidable, savvy enterprises can still stay productive amidst them. They can automate logistics to streamline day-to-day operations and invest in collapsible corrugated boxes to minimize packing costs.
Moreover, automotive companies can pull through everyday challenges by optimizing physical processes to maximize productivity.