Operating in the automotive industry has always been challenging� Long and complex supply chains, unpredictable demand patterns, changing regulations — not to mention planning-to-production processes that can take up to five years — have all caused headaches for car manufacturers, or original equipment manufacturers (OEMs), for many years�
The global recession in 2008 and 2009 and the lasting damage it caused to the global economy have made things even harder� Collapsing demand and many other factors have squeezed the car industry and hit suppliers particularly hard�
Now, demand is picking up, and OEMs are responding by increasing their production and parts orders to suppliers� But the suppliers are still being cautious after the recession and have neither the capacity nor the capital expenditure plans necessary to deal with the increased demand�
In this new environment, the constraints on the automotive supply chain are even more prominent, and OEMs are struggling to manage these problems as demand levels rise�
In today’s globalized market, OEMs are challenged to forecast demand and their parts orders to suppliers with accuracy� With planning and development lead times of four or five years, changes in demand are inevitable� But the OEMs also struggle to manage these changes efficiently� The complexity of automotive supply chains and the lack of spare capacity at the suppliers make this even harder�
via Edward Niedermeyer.