“I think we are over some of that attitude that said ‘this is my proprietary competitive advantage as far as delivery goes’,” he told Automotive Logistics News. “Now we are pretty much all in it together and we have finite capacities, and we have constraints that we can identify.”
Sharland is pleased that the vehicle industry is benefiting from what he describes as very robust demand for new vehicle sales in the US and the NAFTA region, despite ongoing uncertainty over fiscal policy there involving debt ceilings, credit availability and sequestration. But that optimism is also checked with concern that there are widespread constraints in terms of material availability, parts availability and logistics capacity.
“The near-term concern is that by the second half of this year we are going to start feeling the pinch and the pain,” said Sharland.
So the AIAG, in conjunction with some its sister organisations, is looking at ways of bringing the key stakeholders together to work on avoiding some of this potential pain.
On the logistics side Sharland said that stakeholders need to look at a better utility of existing capacity so more can be brought into the market to help handle the spike in the movement of units.
“The more efficient and effective we can be the more capacity we can get out of the system,” he said.
This also involves looking at the processes by which vehicles are handled and how to minimise the potential in-transit damage at any point in the logistics delivery system.
“It is incumbent upon us to take a long, hard look at the existing capacities and how to optimise the utility of those assets, but at the same time minimise the potential for in-transit damage,” he said.
Amongst the initiatives that the AIAG is keen to get off the ground are a rail optimisation initiative for OEMs, a national visibility tool across North America for car movements and a quality manual for the industry based on something similar to that produced by the European Association of Vehicle Logistics (ECG).
Sharland said it was important to establish a common process in handling for vehicles, including on damage codes, and to make it work more efficiently and effectively than it does today.
This year AIAG is providing what he calls “an open, professional, neutral and legal environment” for the stakeholders to get together and develop a best practice that all those involved can sign up for and use.
“Then it is up to them to say ok and elect to work together, look at co-loading as a concept, and ask whether combinations of OEMs would be interested in that kind of a play and how would it work,” he said.
But just how likely is that sort of collaboration? As Sharland was willing to admit, the interest in it was not across the board. But he said there was a pragmatic answer.
“In the aftermath of the recession there are fewer suppliers than there were, so there is more interdependence on the surviving ones,” he said. “There is a great concern that if suppliers are on the brink of financial insolvency, if they suddenly leave the supply chain, it will exacerbate our problems.”
Service providers handle multiple tier ones and OEMs and it is not good for anyone involved if one of them collapses.
