Common standards to alleviate uncertain demand and distribution changes

Automotive supply chains could respond more quickly to the volatile powertrain mix in today’s car production and the flexibility that is required since Covid-19, if outbound communication was more standardised.

Cameron was part of a panel on finished vehicle logistics collaboration at this week’s Automotive Logistics and Supply Chain Live conference, discussing the work Odette International is doing with ECG (the Association of European Vehicle Logistics) and the major carmakers in Europe to further digitalisation and standardisation in FVL communications. 

Addressing the fact that OEMs are now making not only internal combustion engine (ICE) vehicles but also hybrid and electric versions, Cameron said: “We are faced with the challenge that the demand for the different propulsion systems is very volatile, which means that you cannot do a stable production planning.” He added that the mix can be 10% EVs one week and 50% another.

“This means we need a closer connection between the OEMs and the tier one and tier twos. We will need different organisations in production and logistics, and we will also have to use the information that our machinery and our equipment give us. We have intelligent production machines, we have automated guided vehicles (AGVs), we have automated maintenance, and all this information has to be used to flatten the production curve and to integrate this volatile environment into the process.” 

Part of the solution to this problem will be a larger amount of stock than would previously be usual, something that has been reinforced by the Covid-19 pandemic.

“The question of bound capital is not going to be as severe as it was in the past,” he said.

“We’re going to build up stock because we know we need it, especially from suppliers who are in our region. To give you the example of Germany, during the lockdown, China wasn’t our problem – we had six weeks of material on the oceans. Italy was our problem: we had between half a day and one day of stock, so we’re going to change that.”

Another benefit of sharing standards was highlighted by Hervé Moulin, co-chairman of the digitalisation working group between the ECG and the OEMs, who was also on the panel. Moulin is also project leader for telematics and finished vehicle logistics at Renault-Nissan-Mitsubishi Alliance.

Lately, new ways of distributing cars to the final customer are emerging that are different from the traditional dealer system, which brings changes to the outbound logistics. Moulin explained that the complete visibility that the combination of connected cars and common standards offers will be a real asset to prepare for this new phase of the industry.

Videos from Automotive Logistics and Supply Chain Live can be viewed here.