Supply chain issues: Creativity is the answer
There is a real need to think outside the box to ensure supply chain issues do not affect key-to-key times on the workshop floor
Published: 22 May, 2023
By Martin Pinnell-Brown, Director, Repairify Innovations
Unless you have been living under a rock for the last 12 to 18 months, you will have noticed that numerous industries are dealing with shortages and issues due to the ongoing global supply chain issues, and the automotive sector is no different.
In the automotive sector, parts are key to any repair, but with an acute shortage of components, ranging from semi-conductors to the raw materials that are required to make them, has led to issues that businesses are now having to deal with on a daily basis. An example is a part that would normally take a few days to arrive can now lead to months of waiting or in some cases they are simply unavailable until more can be manufactured.
The delays are leading to vehicles either being written off rather than repaired because of two monetary related reasons. The first is the overall cost of the ‘delayed’ repair can end up being more than the car is worth. The second is the overall cost of the loan vehicle for the duration of time it would take the repair to be completed and the potential for the customer to have it for an undetermined amount of time.
To combat the supply chain issues, businesses are having to get creative to stop delays leading them to work smarter, not harder. The way this is achieved is by technicians reviewing work ahead of time with the help of Repairify’s products and services and then ordering in the relevant part. This is because they know that the item will potentially be delayed in transit, so the more lead time they have before the job the better. It also means the technicians can manage the workflow of the workshop, so vehicles waiting for repairs do not need to be sent into storage that in turn will drive up the price of the repair.
Moving forward, the supply chain issues will not stop anytime soon, so it is important that businesses think creatively to ensure repairs are completed and the key-to-key times for jobs are not affected, so cars are off the road for the least time possible.
- Getting to green
With the sale of new petrol and diesel cars on track to be phased out by 2030 as part of the UKs 2050 carbon neutrality strategy, every stage of the automotive market supply chain is at a pivotal juncture of strategic and operational transformation.
As of May 2023, SMMT figures showed that 17% of new car registrations were electric vehicles with the UK's roads currently having approximately 1.25 million electric and plug-in hybrid cars. While it sounds significant, this figure is equivalent to only the total number of Ford Focuses on our roads.
Herein lies a key tension within the automotive sustainability agenda. As alternative-fuelled vehicles are steadily adopted, the automotive industry also needs to ensure the existing legacy vehicle fleet is operating in the most economical and eco-effective manner possible. With the average age of UK vehicles estimated to be close to nine years, the next decade represents a critical window for responsible decision making and informed product choices to achieve this.
Both the goods and services on offer and the operational and logistical systems of the aftermarket industry are well positioned to amplify rather than undermine the carbon reduction efforts taking place at the top of the funnel while supporting the sustainability of the existing fleet.
The importance of high-quality lubricants
Using high-quality oils can enhance engine performance, including reducing emissions, and extending the lifespan of the vehicle. Well-maintained vehicles that use high quality, effective lubricants can increase their fuel efficiency by approximately 4%.
Furthermore, extending a car's lifespan can generate an environmental impact comparable to, if not greater than, the effect achieved by transitioning to a new vehicle with a more fuel-efficient engine.
Making informed decisions about the oil used in vehicles can significantly improve their overall carbon impact.
Firstly, the first-fill oil - utilised for the initial filling of a car's engine before it leaves the factory - can significantly impact the overall longevity and long-term efficiency of the vehicle. Rightly, manufacturers seek a high-quality first-fill oil to provide their vehicles with the best possible start which can reduce technical issues like plug fouling, damage to diesel injection systems due to a lack of lubricity, and oxidisation. Secondly, cars require an exceptional lubricant for optimal fuel efficiency on an ongoing basis. While driving, the moving components within an engine are exposed to unavoidable wear and tear. A superior lubricant plays a crucial role in reducing friction, cooling the moving parts, and maintaining engine cleanliness. A high quality lubricant that can enhance engine cleanliness while also providing anti-wear protection is a key factor in extending the lifespan of an engine.
Not all engine lubricants are created equal and when looking to extend the performance and lifespan of an engine, it is recommended to continue using the same lubricant as was applied in the first-fill throughout the maintenance process to ensure a consistency of quality and efficacy. In 2008 alone, nearly 3 million PSA vehicles were equipped with Quartz Ineo First 0W-30 as their first-fill oil and it continues to be a popular maintenance choice for optimum engine protection.
TotalEnergies has since developed a new first fill product for vehicles which require the latest new generation engine oils and which further reduces emissions. Quartz Ineo First 0W-20, designated by the ACEA as a Fuel Economy lubricant, demonstrated a remarkable 3.3% reduction in fuel consumption. Created using TotalEnergies' proprietary eco-sciences technology, it protects against wear and ageing while delivering optimal performance and is now adopted as a first fill and recommended after sales oil by Stellantis.
Optimising every point on the downstream automotive journey
While extending the lifespan of vehicles themselves represents one of the most significant levers in redressing the automotive sector’s carbon footprint, there remain sustainable opportunities across every stage of the automotive journey that have the potential to accelerate the industry’s green transformation.
Alongside environmental pressures, the push for sustainability is being driven by a combination of top-down and bottom-up pressures framed by regulatory, consumer and commercial pressures.
Garage technicians, for example, are facing the need to stock a larger number of lubricant references in their workshops to meet evolving consumer demand and regulatory compliance, including environmental standards. Whilst accommodating a wider range to cater to evolving eco requirements, it brings challenges to legacy businesses in terms of available space, logistics, and waste management.
Customer demands are also evolving, with a growing awareness of the environmental impact of driving and the lubricants used affecting consumer decision making. However, a truly sustainable product is more than just the technical characteristics of specific lubricants. The entire supply chain, including packaging, waste, and recyclability, must be examined holistically to assess and mitigate the carbon footprint.
Sustainable solutions
Each step in the journey, from ordering a product to the disposal of waste oil, offers an opportunity to contribute to reducing emissions. When it comes to making more sustainable choices regarding what products to stock, there are a host of new developments on offer to aftermarket operators framed by the waste hierarchy of ‘reduce, reuse, recycle’. This includes everything from the recyclability and circulatory of the packaging, to the volume of product that can be delivered and stored to reduce transportation-related emissions, to ensuring product design reduces to as close to zero as possible the risk of spillage and waste.
TotalEnergies, for instance, has recently introduced its QuartzBox, an eco-efficient packaging solution designed to meet the requirements of garage technicians and the motor industry.
Housed in a 100% recycled cardboard box, the packaging design reduces the use of plastics by 86% compared to equivalent volume rigid containers. The design also enables efficient stacking of six boxes per shelf when full and folding flat when empty, optimizing space utilization. This reduces the mileage associated with the product as the design allows for 20% more volume to be packed per pallet, leading to fewer deliveries and reduced road traffic.
In addition to packaging considerations, addressing the carbon footprint of lubricant production, distribution, storage, and disposal is essential in achieving incremental environmental improvements in the automotive industry. Tailored waste oil collection services can make a significant impact by collecting waste products and recycling them into new, high-performance lubricants, thus enhancing the circularity of operations.
In the ongoing mission to combat climate change, distributors and motor factors have a crucial role to fulfil in enabling the transition towards a more sustainable motor industry. The worldwide focus on reducing carbon footprints necessitates that the automotive industry becomes adept at facilitating and embracing change, all while ensuring the smooth functioning of transportation systems that are vital for people and the economy.
Fortunately, solutions exist. With a collective readiness to tackle the challenges ahead, the automotive sector can contribute significantly to its achieving sustainability goals and creating a greener future.
- DIGITAL SUPPLY CHAIN
Supply chains across the globe have been plagued by disruptions over the last several years. A global pandemic, political and economic instability, and parts shortages have run rife, grinding supply networks to a halt. Few industries have been hit harder than the automotive sector.
Retailers and distributors in the automotive aftermarket must be agile and adapt to the ever-changing conditions or risk losing business. Those who digitised and automated their supply chain operations were the most successful dealing with disruptions and maintaining smooth day-to-day operations. While recent supply chain pressures have eased, an adaptable supply chain is more critical than ever. Here are five areas where digital information can transform day-to-day operations for automotive distributors and suppliers.
Set up new items faster
Automotive distributors need accurate and complete item data from suppliers to add new products to their assortment. With continuous new car model introductions, responding quickly is essential to fulfilling customer demand. This is where item data management solutions can help. These solutions provide distributors with the most up-to-date product data from suppliers, including information on new products, product updates, discontinued items and pricing.
Other distributors will use electronic data interchange (EDI) to exchange this item information. The most popular documents used for this are EDI 846 Inventory Inquiry or the EDI 832 Sales Catalog. Both allow for an easier exchange of item data between distributors and their supplier partners. Having the right item data helps distributors place accurate orders, pay invoices precisely, comply with industry regulations, and deliver current information to both their own teams and customers. In addition, item data such as digital assets, product videos and images ensure consumers can access the product information they expect.
Improve order management
A recent study found that 43% of businesses either track orders and inventory manually or not at all. Because the automotive aftermarket industry almost relies entirely on the rapid replenishment of parts and products, this number is alarming. Manual tracking is not only time-consuming and inaccurate but costly, too.
Without timely order status information from suppliers, distributors can’t tell if there is a problem with an order until it is too late. As a result, they often hold more inventory than they need to prevent running out of stock. Digital supply chain management systems help automotive distributors gain confidence in what inventory is coming and when. An automated system can help distributors prioritize orders that need attention or updates and adapt for partial or late orders.
For example, a large auto parts retailer notices an uptick in parts requests. An automated system could source them from the closest suppliers, plan the most direct route and manage costs in the blink of an eye – far quicker than any human could.
Enhance receiving efficiency
Receiving goods efficiently is impossible with partial or missing data. Distributors often lack a clear understanding of what goods will arrive from suppliers or when. In addition to not knowing what a shipment will include, they also don’t know when an item will not be shipped on time or back-ordered.
Inconsistencies in suppliers' use of EDI transactions, such as advance ship notices (ASNs), can cause receiving bottlenecks and slow inventory turnover. In addition, without critical data, distributors must hire additional staff to open boxes, count items, and redistribute products manually. A digital supply chain communication system provides distributors with the necessary data from suppliers to track and organise shipments before they arrive. This enables distributors to schedule the right amount of labour needed to receive goods and move them to the right location at the right time.
Automate invoice reconciliation
Invoice reconciliation is a matching process between goods ordered, goods received and invoices. Simply put, it ensures you pay only for goods received and avoid paying for inaccurate, mis-keyed or even fraudulent invoices. Because the automotive aftermarket industry heavily relies on the shipping of parts, there is obviously a substantial number of transactions involved – meaning a greater chance for mistakes in the process. Despite its importance, 86% of small to medium-sized businesses manually reconcile invoices, leading to costly and time-consuming errors.
Automotive distributors carry tens of thousands of SKUs to meet customer needs. Because of the number of unique line items on an invoice, poor invoice processing means more errors, increased costs in addressing those errors, and lost or missing invoices hampering productivity and causing further delays. Often, documents get lost in the shuffle, which can result in paying for the wrong quantity, price or shipping costs. If reconciliation and the subsequent payment don’t happen quickly enough, the retailer can miss out on promotions and discounts for timely payments.
Automated invoice reconciliation reduces or eliminates the bulk of these issues. By exchanging critical data with suppliers electronically, automotive distributors can let an automated system do the heavy lifting and manage invoice reconciliation by exception.
Drive higher supplier performance
Despite advances in supply chain management over the past several decades, many distributors still rely on gut feel to evaluate their suppliers’ performance. They often can’t track supplier performance relative to their expectations in areas like fill-rate and on-time shipments.
The lack of consistent measurement leads to a vicious cycle of missed expectations and friction in supplier relationships. Distributors perpetually order more inventory than they need, and suppliers continuously ship less than what was ordered.
If distributors aren’t measuring vendor performance and suppliers don’t understand how they’re being measured, supply chain performance will suffer. Empty shelves and missed delivery dates are nearly inevitable. Using supplier scorecards, distributors can use data rather than instinct to manage supplier performance. With this data in hand, they can understand which suppliers they should be doing more or less business with. A scorecarding effort with insightful supplier metrics can help distributors and suppliers make positive changes in their supply chain performance.
In the end, when distributors and their supplier partners exchange digital transactions and item data their total supply chain costs go down while inventory performance and sales go up.
- Digital supply chain
By Scott Luckett, Strategic Account Executive, SPS Commerce
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